Enterprising Developments

Before Insurers Move to Cloud, They Need Service Orientation

Joe McKendrick
Insurance Experts' Forum, August 24, 2012

A discussion being heard in many insurance company boardrooms and IT offices is how cloud-based services, whether internal or external, can work to implement new applications or streamline current business.

It's important to remember, though, that adding cloud computing to an existing infrastructure or organization doesn’t ensure a path to profitability and new opportunities. In fact, security concerns aside, adding cloud services may actually gum up existing processes that are working quite well. Consider an instance in which one department decides to put its CRM into a Salesforce.com-type system online, departing from the company's own established CRM system. The cloud system may work fine, but in the process, the end-user department is paying additional costs for a duplicated system that it already may indirectly pay for. Plus, the department may be generating an entirely separate data set of customers.

That's why an architectural practice that has been steadily perfected and tested over the past decade—service-oriented architecture (SOA)—is needed to ensure that the business is seeing the greatest value to budding cloud efforts. While many see cloud as the next evolution of cloud, they're actually different concepts – SOA is a philosophy which advocates that applications and systems be broken into sharable, accessible services, while cloud is the delivery mechanism of those services. SOA says that business services – and the processes they support – should be independent of any vendor or technology that gets implemented underneath. Cloud, on the other hand, is very dependent on vendors.

My colleague, David Linthicum, is a tireless proponent of an architectural approach to cloud—and has even written a book on the topic. Without a solid, well-planned SOA, cloud adoption becomes a tangled web of services crisscrossing one another. He warns that many organizations moving to cloud don’t have a good grasp of SOA, and do so at their own peril.

A few years back, Donald Dehne and Jay DiMare of the IBM Institute for Business Value published guidelines for developing SOA within insurance companies, which are as valuable today as when they were written.

In fact, there may be applicability to today's internal cloud model. Dehne and DiMare described how claims processing systems, policyholder self-service systems and agency management systems can be represented as discrete business services. The advantages of the SOA approach include the ability to retain and continue running existing systems—be they “legacy” or webified—while evolving key functions to the network.

As services are developed and deployed, other areas of the business may be able to take advantage of the new capabilities. Is this not the foundation for a private cloud, in which services are available, via some type of directory or catalog or app store, to any and all users from different parts of the enterprise?

Much of the difficult work of cloud has already been sorted out in SOA.

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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