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Your step-by-step guide to leveraging the cloud
Our recent webinar on leveraging the cloud to transform insurer operations threw up some interesting insights into where UK insurers are in their cloud adoption journey.
When it came to how many of you had already migrated your business to the public cloud;
67% of you were at the very beginning of the cloud migration process, and 33% had almost completed it.
It will be interesting to see what competitive advantage the early adopters gain over the next 12 months.
Cloud adoption is a long-term, transformational process for both a business and its technology. Despite all the positive aspects of moving to the cloud, the business has to be ready for it in terms of employee acceptance and technical capabilities. It is a business transformer, not a technological shift.
What was the initial resistance to transferring to the cloud?
The insurance industry has historically gained a reputation for being resistant to change. However, in the cloud's case, there are valid reasons for a more measured approach.
Insurers have been reluctant to adopt the cloud until they had some idea of what good looked like from a compliance perspective. Working in a highly regulated environment, it makes sense that they would wait and make sure the cloud could deliver robust controls and risk management capabilities. This is important to insurers with a global presence who must satisfy regulators in different jurisdictions.
Deciding what approach to take to legacy technology has also proved problematic. A housekeeping exercise needs to be carried out to identify and optimise the data and processes which would be transferred.
It isn't as simple as transferring over all systems to one platform. Some early adopters took a 'cloud-first' approach and moved what they could to SaaS. Systems that needed refactoring to use cloud-native features were put on PaaS. Finally, those that needed some technical changed but kept the same functionality moved to the private cloud.
Is it possible to take a 'Big Bang' approach to cloud adoption?
Mass migration to the cloud may appeal in terms of speed of transfer. However, for most organisations, adopting the cloud is a two to three-year journey. Companies who have already made the transition advocate taking a more piecemeal approach.
They advised starting with one business use case and using it to identify everything you need to do to transfer it to the cloud. Besides the technology, you’ll need to understand the governance framework and risk processes.
Transfer applications to the cloud in clusters and identify what risk management needs to be put in place for each one. This is particularly important for interconnected applications that need to be moved together, or one at a time. You’ll also have some which are not cloud compatible so cannot be moved.
What are the drivers for moving to the cloud?
Although cost is a driving factor, firms should see cost savings as a long-term benefit of cloud adoption. Investment in technology doesn’t require as much upfront capital investment, as the cloud providers are the ones shouldering the initial investment. You only pay for what you use and can ramp up use at peak processing times, which also delivers a reduction in costs.
Improved processing times
Processing times are greatly improved by using the cloud, which has infinitely more processing power than in-house servers. Some cloud adopting insurance companies have seen finance reporting processing times reduced by 75%, which has had a massive impact on productivity and costs.
The cloud supports agility. By introducing continuous integration and a deployment pipeline early in the cloud adoption process, you can build in auto testing and auto-deployment. This means insurers can to bring products to market at a much quicker pace.
Other drivers identified include:
How can insurers implement the cloud effectively?
Implementing the cloud needs a collaborative approach. For the optimum chance of success, roll out a business transformation programme with a dedicated team that includes risk, compliance, IT security and data architect representation. By allowing collective decision making, you can establish a consistent approach and standardise which cloud will be used, as people have different ones they prefer.
You’ll also need a change management specialist working on the programme. One of their main tasks will be to help the business buy into the transformation objectives by describing the benefits of moving to the cloud. Explain how moving a large portion of estate into cloud space will allow you to take advantage of cloud capabilities.
Ensure you have a robust governance control function overseeing the programme and subsequent regulatory matters. For example, having the right security and controls in place to satisfy regulators in different jurisdictions.
According to a poll carried out during our webinar, 100% of respondents are planning to migrate at least 30% of their business to the cloud in the next two years. Once they have made the change, they should see the benefits realised in lower maintenance costs, more agile working practices and an easier way to make changes in their business.