Filed Under:Carrier Innovations, Information Security

Get Your Head in the Clouds

Andy ScurtoBleeding edge technology adoptees in the insurance industry started talking SOA, Web Services and Software as a Service, or SaaS, in one form or another twenty years ago. The names change, but the problems with adoption stay the same. Insurance companies have considerable capital invested in outdated, rigid, legacy environments and the idea of "rip and replace" is just too bitter a pill to swallow.

So, how about a little sugar to make the medicine go down? Whether you know it or not, global cloud computing is already changing the future of how applications are built and how business functionality is provided, and it could be your ticket to salvaging the technology investments your company has made without an additional broad outlay of capital.

Cloud computing is a method of distributed computing that can create a fundamental shift in the way computing is handled and, more importantly, where it is handled. Up to now, the IT folks working at insurance organizations just like yours have been very happy for technology infrastructures to be set up with PCs and servers and networks purchased and maintained by individuals or corporations. And even though many IT professionals would prefer you think there is some magic behind it, the reality is the systems that were built were tangible objects executives could see, hear, touch and even understand (if they really wanted to).

Today, the future is upon us and a transition is already being made to applications which are hosted in cyberspace on a "cloud" of computers or servers not owned by individuals or maintained by your IT department, but accessible by all. Computing is no longer local in this scenario and users of the cloud, your employees, will simply request the application or service they need and the cloud will provide it.

In its simplest terms, through cloud computing the capabilities of SOA and Web Services are extended beyond internal systems modules and a few systems interfaces out to a broad global computing environment where various services are provided by computing clouds around the world. You are no longer utilizing your company's internal IT staff to build and maintain customized applications which may already exist elsewhere in the world, and you are no longer paying for unlimited server space to host applications or additional memory for personal workstations that must have complex programs loaded in order to complete certain specialized tasks.

Individual service providers can enable specialized services on infinitely scalable clouds for subscriber uses. The services can be used in company applications just as if they were hosted inside the company on internal equipment. Business services can be built by combining individual cloud services with proven functionality. For instance, if you wanted to enable several different payment plan options in your company's billing system, you could build an interface for credit cards, another for ACH, another for debit cards, and still more for paper. But then you would still have to find a way to collaborate with all of your existing vendors to understand and test the interfaces and get everything working.

In a cloud computing scenario, your company administrators would find services in the cloud which specifically handle what the company needs and use them. Maybe they find a service that can be called which handles the process of ACH or credit cards. Better yet, the company may find an existing service which processes all types of payments by including the type in the service request. Alternately, perhaps a service is found which handles the entire billing process from start to finish, thereby eliminating the need for a system. Clouds being built today are capable of containing thousands of services doing everything from simple, single functions to complete systems. And the evidence that this trend is building is all around you. is a perfect example. exists as a service on a cloud. Anyone with the right password (purchased for a fee of course), can access it. Intuit is another well-known example and one that can be found in the homes of many consumers as well. Intuit is now offering project management and their popular Quicken financial management application on their cloud. IBM has established its own Blue Cloud initiative for enabling vendors to build and publish cloud-based services and Amazon is publishing Amazon Web Services that will allow vendors to build, publish and bill for services on their cloud. Even Google is in on the act, launching Google Docs and other applications which can be accessed easily by Google email users via the Internet.

The examples listed above are just the tip of the iceberg. Consider the potential impact this can have for business in general and insurance in particular. Computing clouds give vendors of all types and sizes a place to publish and sell their services in a secure, infinitely scalable manner. Vendors can then "allow" customers to use their services for fee or license. If it makes things easier, try thinking of the cloud computing concept as similar to the timeshare mainframe concept of years gone by, except the clouds are all over, built for scalability and ease of management and one can easily change from cloud to cloud. The vision for cloud computing is that business processes will begin to be built that require nothing more than a subscription to required Web Services located in the computing cloud with links that help them perform the business functionality needed.

So you may ask, "What can cloud computing do specifically for the insurance industry?" Well, the benefits are plentiful for those insurance organizations that can overcome ingrained fears about giving up control, security of data and not being able to walk down to IT when there is a problem. As you might imagine, cloud computing mandates computer resources be pooled and managed via software rather than by local IT staff. This fact alone may be enough to reinforce the natural resistance that exists on the part of insurance organizations to adopt new technologies.

As for insurance, industry-specific applications could include bureau-based rating services such as a cloud-hosted service to rate NCCI, or a service which would be sent new policy information and which would return a complete printed output in PDF. For insurance organizations, cloud computing can enable greater flexibility and allow all companies, regardless of size and type, to have access to the same technology and functionality. It levels the technology playing field, forcing insurance organizations to compete, innovate and differentiate based on product and service.

In addition, cloud computing can simplify IT management and increase efficiencies of system resources since IT staff will no longer need to install software and manually set up all the systems. Performance is therefore optimized since computing resources can be consolidated to provide greater power and speed. Further, downtime is minimized and underutilized resources that once would have set idle in a local company situation can be taken advantage of by another subscriber to the cloud.

That means the real questions is, "Is the insurance industry ready for a level playing field where the "mom and pop" mutual company has access to the same billing system and policy administration system as the top 25 comISCSpanies in the market?" Better yet, are you ready? Can you afford not to be?

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