Cloud migration benefits insurers with increased agility and innovation opportunities, but challenges like data security and legacy system compatibility require attention. Collaboration between IT and business stakeholders, alongside methodologies like the 7R Approach, aids in prioritizing migration efforts. With the right expertise, insurers can confidently navigate this transformation, paving the way for innovation in insurance.

Benefits of cloud migration for insurance

How many conversations about moving to cloud-based systems have you had in recent years? The topic is discussed everywhere and touted as the next big thing with countless benefits. But between all this excitement, it’s worth to pause and think: does a full shift to the cloud bandwagon make sense for every insurance organization? Let’s dig deeper into this question.

It is essential to consider that this transition can offer many benefits. According to McKinsey (“What every insurance leader should know about cloud”, Sept. 2022), using the cloud has many benefits, from rejuvenation to refreshment. By leveraging cloud services, organizations can reduce time to market thanks to the flexibility of the variable cost model. Additionally, cloud adoption increases resiliency, ensuring operations continue smoothly even in the face of disruptions. Moreover, the flexibility and responsiveness provided by cloud computing insurance enable enterprises to quickly adapt to changing market dynamics, giving them a competitive advantage in today’s dynamic environment.

McKinsey highlights the transformative potential of cloud technology in supporting innovation. The cloud’s flexible operating model opens new opportunities for companies to serve previously neglected customer segments and markets. This newfound flexibility enables organizations to tailor their services to changing consumer needs, thereby enhancing their value proposition. Cloud-based policy and claim management solutions offer enhanced scalability, real-time data analytics, and streamlined processes, driving efficiency and improving customer experiences. This combination of technological advancements and strategic innovation positions insurers to thrive in a dynamic and competitive landscape.

Cloud migration strategies for potential challenges

When considering the cloud migration journey, insurers may encounter several challenges unique to their industry. Firstly, data security and privacy concerns loom large, given the sensitive nature of insurance data. Insurers must ensure compliance with strict regulations regarding the protection of customer information, which can be particularly complex when data is stored off-premises in the cloud. Additionally, legacy systems pose a significant threat, as many insurers still rely on outdated software and infrastructure that may not seamlessly integrate with cloud technologies. This can lead to compatibility issues and increased migration complexity.

Another challenge is the need for robust disaster recovery and business continuity strategies. Insurers process huge amounts of critical data, and any downtime could result in significant financial and reputational losses. Ensuring continued access to data and applications in the event of disruption or disaster is critical but requires careful planning and investment in a resilient cloud infrastructure.

Moreover, cultural resistance and organizational inertia can block the implementation of cloud solutions in insurance companies. Traditional thinking and established processes can confront change, leading to employee doubts about cloud technologies. Overcoming those reservations requires strong leadership, effective change management strategies, and comprehensive training programs that educate employees on the benefits of cloud transformation and address concerns.

Interestingly, insurance companies often stay behind other industries in adopting cloud solutions due to a combination of these challenges and industry-specific factors. Unlike sectors such as technology and retail, which have rapidly adopted cloud technologies to drive innovation and agility, insurance has traditionally been more conservative and risk-averse. This inherent caution, combined with regulatory restrictions and the complexity of insurance operations, has contributed to a slower pace of cloud adoption across the industry. However, as the benefits of migrating to the cloud become more apparent, insurance companies are gradually overcoming these challenges and leveraging the cloud to unlock new opportunities for growth and efficiency.

How to prepare a cloud migration strategy

Creating a successful cloud migration strategy depends on establishing a strong partnership between IT and the business from the very beginning. Instead of treating cloud migration solely as an IT project, organizations should consider it a collaborative effort involving both technical and business stakeholders. This cooperative approach ensures that cloud initiatives are closely aligned with overarching business goals, such as improving performance, enhancing customer experiences, or gaining insights from advanced analytics.

To facilitate this collaboration, organizations should integrate cloud discussions into broader strategic dialogues early. This enables both IT and business leaders to understand how cloud services can support and enhance various business functions and initiatives. For example, leveraging cloud-based artificial intelligence capabilities can enable advanced predictive analytics, offering valuable information for decision-making across the organization.

A comprehensive cloud migration strategy begins with a meticulous initial assessment, which entails inventorying all systems and infrastructure within the company. This step is crucial for gaining a clear understanding of the organization’s current IT landscape and identifying potential candidates for migration to the cloud.

Following the assessment, the next step involves evaluating the business impact, technical complexity, and alignment with cloud benefits for each system. This evaluation helps prioritize which systems are best suited for migration based on their strategic importance, compatibility with cloud technologies, and potential return on investment.

One approach commonly used in prioritizing migration efforts is the 7R Approach, which categorizes systems into seven different options:

• Retire: remove obsolete systems, reducing complexity and costs
• Retain: keep systems on-premises due to regulatory or performance reasons
• Relocate: move systems to the cloud with minimal changes
• Rehost (lift and shift): migrate systems to the cloud as-is
• Replatform (lift, tinker, and shift): modify systems for cloud optimization
• Refactor (re-architect): redesign applications for full cloud benefits
• Repurchase: replace systems with cloud-based alternatives

By employing the 7R Approach, organizations can make informed decisions about the best migration strategy for each system based on its unique characteristics, business requirements, and alignment with cloud objectives. This structured approach ensures that cloud migration efforts are prioritized effectively and optimized for maximum value and efficiency.

There are insurers who already operate in cloud environments but are exploring diversification by considering alternative cloud providers and leveraging a multi-cloud or hybrid cloud strategy. This strategy offers benefits such as reducing dependency risks, optimizing costs, and enhancing flexibility in workload allocation.

Examples of cloud platforms insurance companies can use for cloud migration

Moving the Guidewire platform to the cloud is a perfect example of Replatforming. This strategy involves optimizing applications for cloud environments while minimizing changes to the existing system. Moving to the cloud not only ensures a seamless migration but also unlocks a wealth of new features and capabilities inherent in cloud-native architectures. These may include increased scalability, real-time data analysis, and improved collaboration tools.

With the cloud version, organizations can take advantage of streamlined upgrade processes, benefiting from automatic updates and continuous enhancements provided by Guidewire. This iterative approach to system upgrades ensures that insurance companies stay at the forefront of technological advancements and maintain a competitive edge in the dynamic insurance landscape.

The right approach for updating Guidewire Cloud can help insurance companies get the most value out of new features.

How Sollers help insurance companies with cloud data migration

External specialists, like Sollers Consulting, can provide invaluable insight into the latest developments in cloud technologies and help tailor solutions to the specific needs and goals of insurance companies. Whether it’s optimizing infrastructure, implementing advanced security measures, or leveraging AI-powered analytics, our specialists offer tailored guidance and recommendations to enable you to successfully implement the cloud.

Moreover, collaboration with us facilitates access to cutting-edge tools, methodologies, and resources that may not be readily available within one’s organization. From conducting thorough cloud assessments to designing custom migration strategies, our specialists can streamline the entire migration process, minimizing risk and maximizing results.

Our expertise guides customers through inventorying, prioritization, and assessment phases, ensuring a smooth transition. With our deep product knowledge, we identify dependencies, assess impacts, and chart a roadmap tailored to the organization’s needs. Our proficiency spans technical aspects, ongoing operations, and organizational readiness, enhancing the likelihood of success.

Mariusz Kaczor – IT Architect at Sollers Consulting

Mariusz Kaczor is an IT Architect with 20 years of experience, pioneering neural networks since the outset of his career. With 8-year proficiency in Guidewire, specializing in insurance software solutions, Mariusz seamlessly integrates diverse systems, demonstrating leadership and adaptability. His commitment to staying at the forefront of technology defines him as a forward-thinking professional shaping the future of IT architecture.