Enterprising Developments

Why Cloud is Here to Stay

Joe McKendrick
Insurance Experts' Forum, July 30, 2012

I recently worked on some research on cloud computing adoption that came to an interesting realization: comfort levels—including those toward security—rise dramatically among companies with more than five years' experience with cloud computing. (And, yes, there are companies who have been doing it that long, even before it was called “cloud,” it may have previously been a “hosted application” or something like that.) The study of 364 companies, part of my work with Unisphere Research/Information Today Inc., in conjunction with the Oracle Applications Users Group, finds that the longer a company has been working with cloud, the more confidence it has regarding hot-button issues such as loss of control and security. However, as time goes by, integration becomes a bigger concern.

With that finding in the background, I set out to explore if the same effect was being seen and felt within the insurance industry, known for its caution toward new technology approaches. My discussions with insurance industry CIOs and independent experts will be part of a special report on cloud computing in the August issue of INN.

In preparing the article, I had the opportunity to chat with Stanton Jones, analyst with Information Services Group, who finds that both enthusiasm and confidence in the cloud among insurance companies is rising just as fast as it is with banks, financial services, and for that matter, retailers and business service providers. “There are very strong examples of insurance companies moving to SaaS platforms,” he relates. “Insurance companies are definitely getting more comfortable with cloud computing in general.”

In fact, cloud computing know-how is rapidly maturing among carriers—to the point where the focus with cloud is now shifting from security to risk management, Jones says. “After you get past the traditional security concerns, then you start to look at risk. As organizations realize that not only is their data no longer on premises, but also potentially on the same infrastructure as other clients, they start to get into these risk questions, such as: "What happens if we're subpoenaed, and we have to put a legal hold on our data? And what happens if we have a personal information audit?"

Don't fret about turning over the data center to a cloud-based operation just yet, Jones adds. Most cloud projects at this time are “greenfield opportunities,” being built around new application deployments, versus replacing the old. “They're trying it out in small pods across the organization,” he says.

Ultimately, however, many carriers and their IT managers will recognize that data and applications may be more secure in the hands of an outside cloud provider than an internal IT department.

In many cases, cloud has moved from an experimental platform to simply a day-to-day way of doing business. And for an industry that makes risk its business, that may be a sound approach.

Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.

Readers are encouraged to respond to Joe using the “Add Your Comments” box below. He can also be reached at joe@mckendrickresearch.com.

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.

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