It’s time for insurers to overcome their cloud fears
Insurers should move into the cloud following the upheavals caused by the COVID-19 pandemic. Instead, many stop. Seven great myths are blocking their cloud advancement.
The COVID-19 pandemic has put cloud computing at the top of the strategic agendas of insurers around the world. Without the flexibility and resilience of on-demand cloud services, many insurance companies would not have been able to keep their businesses going during the upheavals triggered by the pandemic.
With insurers’ premium income already under pressure, productivity gains stalling, asset returns unchanged, and claims volumes almost certain to increase, now is the time for insurers to move ahead with their cloud strategies. They should take advantage of the benefits they have already taken and bring more applications and resources to the cloud. The cost savings and revenue growth achieved through such strategies will be critical in the post-pandemic economy.
Many insurance managers I speak to hold back. They hesitate to accelerate their migration to the cloud. Our research shows that insurers only have 10 percent of their computing workloads in the public cloud. That is surprisingly low. Even more so when you consider that almost 90 percent of insurers use some form of cloud service.
“Walking on tiptoe into the cloud is not a good approach.”
Walking on tiptoe into the cloud is not a good approach. By delaying migration to the cloud, cautious insurers risk falling behind their more advanced competitors. You’ll miss out on opportunities to improve efficiency, innovate, scale applications, and bring new offerings to market. They could even endanger their very survival.
Why aren’t insurers taking advantage of cloud computing?
Cost, Caution, and Confusion.
Few of the insurance managers I speak to fail to see how their companies would benefit from expanding the use of cloud computing. For example, we found that 68 percent of insurers have already looked at how they can move their legacy applications to the cloud. Additionally, 58 percent of carriers have mapped out cloud strategy execution with performance indicators that mark their expected milestones. Most insurers are ready to move much larger workloads to the cloud.
“Cloud computing has matured significantly in recent years.”
Still, they hold back.
I often hear a familiar list of cloud concerns. These doubts may have been valid in the past. But they are history now. Let’s look at the most common problems.
- Regulatory deterrents. The insurance supervisory authorities do not allow public cloud services or data to be located abroad.
- Security threat. Critical data is more vulnerable in the cloud.
- Legacy burden. The cost of migrating custom applications to the cloud is prohibitive.
- Early disappointment. The first cloud initiatives have not achieved their financial goals.
- Capacity constraints. Early cloud projects could not be transferred to other business areas.
- Addiction risk. Large cloud service providers can involve their customers.
- Employee concerns. Employees are not ready to use the cloud.
Today, none of these objections should stop insurers from moving more complex workloads and critical applications to the cloud. Cloud computing has matured considerably in recent years.
Amazon, Microsoft, and Google, for example, have invested billions of dollars in their cloud businesses to improve the reliability, performance, and security of their services. They have developed a number of tools and systems that their customers can use to migrate their infrastructure, platforms and applications to the cloud. You have also invested heavily in technical and industry skills. Sometimes they even work with their customers to create new business offers that use their services.
Some progressive companies are already using cloud technology to drive their innovative business strategies. For example, Deutsche Bank recently developed a suite of cloud-based financial products together with Google. Allianz has partnered with Microsoft to expand their global insurance platform
Large cloud service providers have also worked closely with regulators, industry representatives and customers to address the specific needs of key markets and regions. Data protection concerns have been allayed by cloud service providers, for example, by installing numerous local data centers. In almost every country in Europe, insurers have access to nearby data centers. In addition, the data protection and system security that the major cloud providers offer their customers are consistent and often exceed anything that insurers could implement themselves.
In addition to Amazon, Microsoft and Google, numerous other technology providers are making it easier for companies to move more of their business to the cloud. For example, leading software applications from SAP, Oracle, Salesforce and ServiceNow are delivered to users as cloud-based software-as-a-service (SaaS) offerings. Several professional service companies are expanding their capabilities and product resources to better guide their customers to the cloud. Accenture recently expanded its cloud functions in Europe by taking over the French service providers Cirruseo and Gekko. The company just announced a $ 3 billion investment in its new Cloud First business. With cloud sales of over $ 11 billion, Accenture is a leading provider of services and tools for companies moving to cloud platforms from Amazon, Microsoft and Google. We have completed more than 20,000 cloud projects in 168 countries.
“The cloud value proposition is stronger than ever.”
There has never been a better time for insurers to push their cloud plans forward. The cloud value proposition is stronger than ever. Look at these facts.
- Cloud costs have steadily decreased over the past five years. Pricing has also become more flexible.
- The market for public cloud services has grown by around 30 percent annually over the past five years. By 2022, sales are expected to exceed $ 411 billion. Service providers, software companies, and other technology companies will continue to invest in this business.
- Security measures and regulatory compliance have improved significantly. Cloud service providers now offer customers more defense and control than most on-premise solutions. They also give customers access to a variety of other services such as data management and analytics functions, as well as rapidly maturing artificial intelligence (AI) offerings.
- Cloud platform providers are now ready to jointly invest in their customers’ projects in order to accelerate their cloud agendas and receive consumption guarantees in return.
- Hybrid cloud architectures are becoming more and more common. They enable organizations to work with multiple cloud service providers. This should allay any customer concerns about becoming dependent on a single provider.
It’s time for insurers to take the plunge and accelerate to the cloud.
In my next blog post, I’ll discuss the biggest payback insurers can get when they accelerate their path to cloud business transformation. The benefits are considerable. Until then, check out the links below. They provide a lot of useful information on how to best accelerate your entry into the cloud.
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