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The Cloud Concept That Many Miss

Ten years ago, the idea of moving to the cloud was just a vision for insurance companies. Five years ago, the cloud concept became a trend. Today, it’s a necessity. Increasing numbers of insurers realize that the cloud enables organizational agility and digital transformation, two key factors in outstanding customer experience. 

The countless articles and blogs about the cloud seem focused on migration and innovative concepts, such as DevOps and Big Data. But not enough attention is given to a key cloud concept: maintenance. 

Let’s face it, maintenance isn’t sexy, even though most insurance companies spend 10 times more on maintenance than on the transition. What’s more, maintenance contracts with suppliers dictate long-term relationships that last long after the transition has been completed and the go-live euphoria has dissipated. 

This is why it’s critical for insurance companies to choose their software vendor carefully. The functionality of the software product, as well as the delivery capabilities of the integrators, are, of course, important. But you should also examine the quality of service for the business as usual (BAU) period that starts once the software is up and running on the cloud. What are the criteria that should guide the insurer’s CIO when choosing a software vendor providing cloud-based solutions? 

The first thing you should check is if your supplier has an end-to-end operating model. In many cases, software development, integration and maintenance are provided by three separate organizations. Multi-functional vendors (also known as one-stop-shop vendors, or OSS vendors) will take full responsibility for the solution. An OSS vendor leverages its multidisciplinary expertise in IT, database, security and applications to provide end-to-end coverage for any incident that might occur.

The second thing you should look at is the service level agreement (SLA). The SLA must include tangible service level targets and penalties for breaches. Make sure it addresses all metrics relevant to your business, such as availability, performance, incident response and resolution time, customer service window and service continuity (RPO and RTO). 

See also: The Cloud’s Vital Role in Digital Revolution  

It’s important to understand all the service entitlements that represent the extent or frequency of service actions, which could, for example, include an annual disaster recovery drill, a weekly performance audit, quarterly database improvements and running the nightly batches on a daily basis. Also crucial is a monthly report that includes the actual performance against the service level targets and a list of corrective means taken to eliminate or minimize any underachievement.  

The next thing you should consider is multi-cloud expertise and experience. Many insurance companies have hybrid IT architecture, with some of their electronic assets available on-premise and some on the cloud. To remain as flexible as possible, it is essential to choose a supplier with multi-cloud expertise that can cope with a hybrid architecture or CSP switch.

Lastly, the insurance industry is a highly regulated sector, so naturally you should choose a vendor that complies with all the relevant regulatory requirements related to information security and privacy applicable in your country, such as ISO 27001 or GDPR. One way to ensure that your supplier is a professional organization is to examine how the supplier follows industry best practices of IT service management. You could verify this by asking for copies of the documentation of their processes, or by checking if the support managers are all ITIL-certified.

Choosing the right software vendor is not easy, especially because this choice establishes a long-term relationship between the two parties. Make sure you don’t place too much focus on your wedding to cloud transition – it is more important to think of what will happen once you return from the honeymoon.