8 Steps for Well-Grounded Cloud Computing

Joe McKendrick
Insurance Experts' Forum, November 19, 2009

By now, many of you have been hearing all the grand talk about cloud computing: how it enables companies to get rid of their IT costs and instead pay by the drink for capabilities provided by an outside vendor—who assumes the worries about upgrades, bugs, versioning, provisioning and all that other nasty stuff.

But let's face it—insurers are not going to abandon the systems (and processes embedded within) that they have spent years building and refining. In many cases, these internal systems provide competitive advantage. And, there are many concerns about data security and customer privacy.

Still, there are advantages to cloud computing and, within the industry, we're likely to see adoption grow in the form of “private clouds” contained within enterprises and close partners and agents. Private clouds will spring from increasingly virtualized systems and service-oriented architectures.

There is a very practical side to cloud computing. David Linthicum, who first coined the term “Enterprise Application Integration” back in the 1990s, and is a noted industry author and speaker, has just published a book entitled Cloud Computing and SOA Convergence in Your Enterprise: A Step-by-Step Guide, which discusses the business case for considering cloud.

Dave observes that while cloud computing offers compelling economics, it isn't always the most cost-effective option. He outline eight steps to determine your readiness for cloud:

1) Understand the existing business and IT issues. Where are the pain points, and can cloud address these issues?

2) Assign costs. What does the existing IT infrastructure cost in terms of hardware, software and skills, and how much are issues with this infrastructure costing the business?

3) Model “as is.” What does your current IT infrastructure look like?

4) Model “to be.” What will things look like when your cloud strategy is introduced?

5) Define value points. What is important to the business, such as operational cost reduction, preserving capital or innovation?

6) Define hard benefits. How much revenue can be directly linked to your IT infrastructure? An example might be an e-commerce site.

7) Define soft benefits. These include tough-to-measure benefits such as customer or employee satisfaction.

8) Create the final business case. This should include a clear understanding of current issues, how much money these issues are costing the business, proposed improvements, and the hard and soft benefits these improvements will deliver.

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

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

Comments (5) takes security, scalability and latency in the cloud very seriously. We agree that these must be fundamental core competencies for any enterprise cloud computing vendor you consider, and we've been demonstrating for over a decade that we not only meet, but far exceed the requirements (and current capabilities) of the world's largest global insurance companies when it comes to these issues. That's an integral part of our business and operating model.

Posted by: Kardyhm K | December 1, 2009 7:37 PM

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As more and more adoption of SaaS/cloud computing across all segments, including insurance companies and their agents, many are starting with email (as well as ancillary services like email archiving, anti-spam/anti-virus protection, and encryption) which makes perfect sense for a cloud-based model.

Check out for a great overview of the cloud email space, including some key considerations and gotchas for migrating to the cloud

Posted by: Clark P | November 29, 2009 12:07 PM

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Cloud Computing will provide economies that can't be ignored and should at least be on your radar. For more information on the emerging vendors, news and careers check out The Cloud Network (@thecloudnetwork) on Twitter.

Posted by: Gary S | November 20, 2009 1:24 PM

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I agree, next generation cloud computing will enable organizations to leverage existing infrastructure while taking advantage of the benefits of cloud computing technology. In this way we reduce or eliminate some of the current issues the hinder adoption such as security and latency. Beginning to see some moving toward this hybrid cloud technology and I am sure more to come in 2010.

Posted by: Karen S | November 20, 2009 11:06 AM

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You talk of "private clouds" but you should check this out.

Also, many of the public clouds do lack security and control features required by enterprises, but check out OpSource and the way we approach it.

this is also useful:

Posted by: Rick L | November 19, 2009 3:09 PM

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