Enterprising Developments

How to Become a Cloud Business

Joe McKendrick
Insurance Experts' Forum, February 29, 2012

Cloud computing holds forth a lot of tantalizing promises, from providing cheaper, on-demand IT resources to greater flexibility to adapt to changes in insurers' business processes. But, as with all tantalizing propositions, it still takes good planning and hard work to make things operate effectively.

A new report, based on a survey by The Economist Intelligence Unit and IBM, finds that among 572 business leaders surveyed, almost three-fourths indicate their companies have piloted, adopted or substantially implemented cloud in their organizations – and 90 percent expect to have done so in three years. The number of respondents whose companies have “substantially implemented” cloud is expected to grow from 13 percent to 41 percent over the next three years.

Industry breakouts were not included in the report, but it can be assumed that the survey included a sizable sample of financial services and insurance companies.

The report's authors, Dr. Saul Berman, Lynn Kesterson-Townes, Anthony Marshall and Dr. Rohini Srivathsa, all with IBM, also provided their observations on what makes cloud work for organizations. The bottom line is that cloud begins to pay off as a force of innovation and disruption when it is seen and applied as a business force, and not just as a way to optimize IT operations. Here are their suggestions:

1. Identify a non-IT executive sponsor. It's important to establish shared responsibility for cloud strategy and governance. Cloud should not be “IT's thing,” or used by one or two departments. It needs to be an effort owned by everyone in the enterprise. “Place a senior executive business leader, in partnership with the CIO, in charge of your firm’s cloud business strategy development.” The executive sponsor will make sure the cloud project remains high on everyone's agendas.

2. Establish a governing committee of business and IT leaders. “Determine which cloud business enablers should be leveraged and how they will be used. Develop and oversee the implementation of business changes (e.g., processes, outcomes) that cloud will enable within your organization and throughout your industry ecosystem.”

3. Determine how a cloud strategy will shape your business relationships. It's important to look within and beyond your organization’s borders to maximize the value derived from cloud adoption, the Economist-IBM report urges. This is a good time to also identify new partners that cloud can help draw into your ecosystem. “Evaluate whether cloud can or should change your role in the ecosystem,” the report adds.

4. Use cloud to respond to your industry’s end customers more effectively. “Explore whether cloud can help enhance your value proposition with your current customers, and examine whether you can reach other customer segments by leveraging cloud.

5. Determine what organizational and market factors will shape your cloud strategy. Once you have decided to move some part of your business to cloud, it's important to identify whether your organization seeks to be an “optimizer,” “innovator” or “disruptor” – meaning how far it will carry cloud, to either improve on what you have, or to open up entirely new avenues of business. This may depend on a range of factors, including corporate strategy, competitive dynamics, customer strategy, your firm’s risk profile, how empowered your customers are.

6. Determine where you are in terms of cloud enablement today, and where you will be in the next three to five years. “Evaluate the opportunities and risks inherent within each archetype (optimizer, innovator, or disruptor) and determine 'who' you want to be and what works best for the company, industry and customer set.”

7. Build business and technology skills and capabilities to move to cloud. It's important “to close the gap between your current and future cloud position or to maintain your current position if that is the goal.”

8. Be willing to challenge conventional wisdom about technology and cloud. “Imagine the possibilities associated with cloud-enabled business models,” the report urges. Some questions to ponder include the following:

• What if your organization had access to unlimited computing resources to scale your business?

• What if you had access to previously unaddressed customers or markets and could target them based on their individualized preferences through analytical insights?

• What if you could give customers access to your products and services anytime, anywhere and on any device?

• What if you could inexpensively and rapidly develop and launch new product and service offerings?

• What if you could easily and seamlessly connect and collaborate with business partners and customers?

• What if you could redefine your role in your industry and change your competitive positioning?

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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