Return of the Guru

Space, Power Squeeze will Force Data to the Cloud… Slowly

Ara Trembly
Insurance Experts' Forum, May 19, 2011

For some time now, I have been writing about the explosive growth in the volume of data in insurance and our eventual inability to store and access it effectively. Now a recently announced survey from the Uptime Institute has confirmed that data centers are indeed having space and power issues and that many operations currently performed in data centers are headed to the cloud.

According to a news release from the Uptime Institute, their inaugural data center industry survey found that 74% of respondents had deployed or were considering some form of cloud computing, primarily private cloud. Other key points included the news that 36% of data center facilities would run out of space, power or cooling in 2011-2012.

The release also notes that more than 70% of the respondents measure PUE (power usage effectiveness), reporting an average PUE between 1.6-1.99. According to SearchDataCenter.com, PUE is determined by dividing the amount of power entering a data center by the power used to run the computer infrastructure within it. PUE is a ratio, with overall efficiency improving as the quotient decreases toward 1. So the bottom line here is that data centers have some way to go before achieving that perfect state of efficiency.

"Data centers are attracting the attention of more CEOs and CFOs, not just for their energy use, but also because of the cost of facilities and the digital infrastructure–the entire system by which companies satisfy their computing needs," says Martin McCarthy, Executive Chairman of Uptime Institute and CEO of The 451 Group, in the release.

It appears we then have several forces that are pushing data center operations to the cloud, where, presumably, space and power efficiency are not so much of an issue. Yet a move of this kind, especially one that involves insurer’s critical and confidential data, has challenges of its own.

Undoubtedly, cloud solutions offer relief for overstressed power systems and overfull data repositories. But in order to be comfortable with such solutions, insurers will need to believe that it’s okay to put their virtual bread and butter in a place that is not within their own walls. This also means they must completely trust the cloud provider to keep their business heartbeat going by providing secure, infallible and rapid data access and storage.

Are we there yet? Probably not. We are very much a wait and see industry, so widespread migration of critical data to the cloud will take place only as insurers see their colleagues and competitors doing it, and not having problems. That may happen, but it will happen slowly, bit by bit—as indeed most technological advances happen in insurance. To be fair, the cloud still has a lot to prove in terms of security and reliability, two factors that are critical to data-intensive industries like insurance.

In the meantime, I suspect that insurers will begin by dipping their toes in the cloud waters by migrating less critical data there and seeing how things work out. If necessary, there will also be investment in additional data storage technologies and/or equipment. I admit that’s not exciting, but it is a strategy that has served this industry well.

Ara C. Trembly (www.aratremblytechnology.com) is the founder of Ara Trembly, The Tech Consultant, and a longtime observer of technology in insurance and financial services.

Readers are encouraged to respond to Ara using the “Add Your Comments” box below. He can also be reached at ara@aratremblytechnology.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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