Enterprising Developments

Cloud Success Means Rethinking, Reorganizing the Enterprise

Joe McKendrick
Insurance Experts' Forum, February 13, 2013

It happens time and time again, every time a new technology appears on the horizon. Everyone gets all excited; analysts get breathless, vendors go wild, and the trade press works overtime. This new development—or paradigm, or shift, or disruption—is going to change the way we do business.

But then the inevitable letdown, dragged out over a period of years before the IT manager has invested enough blood, sweat, tears, and money—lots of money—to get things to work as promised.

It's usually not because there's anything wrong with the technology itself. Actually, the technology is usually very good. But the wiring underneath, the organization of the technology, needs a makeover.

That brings me to the current big thing: cloud computing. Cloud computing itself is really, really cool stuff, and I don't doubt it delivers incredible cost savings and efficiencies. You can build an entire business on the cloud, if you want.

But for well established organizations, such as today's insurance companies, there's no such thing as a solution in a box that can be simply dropped into a suffering or lackadaisical business unit/process, and clear things up.

Technology is merely a tool, and the ability to deliver incredible, transformative results depends on the people and organization using the tool. Think about it—with today's technology, anyone willing to spend a few hundred dollars has the ability to produce stunning, feature-length movies. However, don't expect 20 million Steven Spielbergs or George Lucases to suddenly emerge on the scene. There will still only be a few of these exceptional producers that climb to the top because of who they are, how motivated they are, and how and where they apply their creative and business energies.

Likewise, simply using the same cloud services as the world's most inspiring and profitable companies won't turn a company into the Apple or the LL Bean of the insurance industry.

That point was once again driven home in a new survey issued by the folks at KPMG. The consultancy surveyed 674 senior executives—a large number of whom are from financial services organizations—and found while a majority are using cloud services, many are struggling with integration issues and unforeseen costs. Why? Because moving to cloud successfully means re-thinking or re-orienting business processes.

As KPMG puts it: “As organizations gain more experience in the cloud and start to shift more and more core business functions onto cloud platforms, we are seeing a growing recognition that cloud adoption is significantly more complex than originally anticipated, particularly in terms of data management, system integration and the management of multiple cloud providers.”

The consultancy adds that one of the most important lessons uncovered by this latest research “is that business process redesign must occur in tandem with cloud adoption if organizations hope to achieve the full potential of their cloud investments. Simultaneous process redesign will also better address the complexities that often arise in the implementation and operational phases. Moreover, process redesign programs must also take into consideration the complexities and adoption costs associated with cloud implementation.”

Bottom line: Tools such as cloud may help transform the business, but they are still just tools. It still takes people, led by forward-thinking managers who are open to new ideas and ways of working.

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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