Cloud, Core and Competition

By | Nov 7, 2013

If it ain't broke, don't fix it … that's how many feel about software deployment using an on-premise model. Since the beginning of computers, we got new business software, loaded it on the company hardware, tested, and released the software to the users. Then, we moved on to daily production support and upgrading the environment and business software as needed. After all, the staff had lots of other priorities.  It worked then and works now … so why change?

Well, times have changed, technology and core business software has evolved, and you need to leverage these capabilities to increase your efficiency, effectiveness and competitiveness to stay future-ready and relevant. Oil lamps still work and give off light but would you really want to forget about Thomas Edison and give up light bulbs?

Today, thanks to the cloud, there are alternatives for deploying solutions. Software as a Service (SaaS), for example, is transforming solution delivery making it agile and flexible. SaaS provides a cost-effective alternative, particularly for small to mid-size insurance companies that want the robust core solutions that will make them competitive with the "big boys" without the related infrastructure costs.

A Gartner press release quotes their research vice president Charles Eschinger: "Seeing such high intent to increase spending isn't a huge surprise as the adoption of the on-demand deployment model has grown for more than a decade, but its popularity has increased significantly within the past five years."

Getting SaaS-y

The question is … why do it? Why give up your safe and secure traditional boxes of hardware and software for something you can't touch and feel? Research analysts and others list out the benefits including: lower and more consistent costs; quicker deployment, decreased total cost of ownership, and multi-location access to name but a few. Just search for “SaaS benefits” … you'll be reading for days.

Even with all of that positive information, actual utilization of SaaS remains slow. There is, as with any new technology, unease and misunderstanding. In particular, there is an ongoing "benefits vs. risk" debate between business and IT leaderships. IT has concerns about security, business continuity, securing proprietary information and intellectual property, and a disregard for IT governance. Business leaders counter with productivity, flexibility, meeting the needs of the business, cost savings and redeployment of resources to grow the business.

However, both sides agree that the high, upfront license fee agreements for software and hardware make a SaaS model more attractive and responsive to business priorities and cycles. Other concerns have been or are being addressed by providers and through software and services agreements. IT leadership is also seeing the cost, time and resource savings as benefits which enable them to reallocate resources to other company-unique and strategic projects.

According to the McKinsey & Company: "Cloud computing has developed substantially in the past couple of  years, and IT organizations have made great progress in establishing better governance and risk-management systems around cloud and SaaS applications. IT Functions should carry this momentum forward as the cloud vendors and the organizational demand for cloud solutions evolve."

Is it right for you?

Many have asked … "Is SaaS right for my core systems?" or "Is SaaS right for a mid-size or small insurance company?"  The answer to both is Yes.

Small and mid-size insurance companies need the tools and technological advantages that larger organizations have in order to compete. By opting for SaaS over on-premises solutions and leveraging cloud capabilities, they can have those systems at a lower cost.

An article on VentureBeat put it this way: "Mid-market companies are poised to benefit disproportionately from this trend. By discarding expensive and inaccessible computing infrastructures for cloud-based solutions, they can achieve a much higher level of business process automation for the same or even less IT investment. Risk management is easier, too, with cloud-based backup and disaster recovery solutions."

While larger insurers will always have a financial and marketing advantage, smaller insurers can use SaaS to bolster their capabilities, increase their reach, as well as enhance their current customer experiences. Even better, they can do all of this without jeopardizing their budgets. Smaller and niche insurers can transform their internal business architecture making them more nimble and on a leveled playing field with the “big boys” 

SaaS and the cloud are here, ready, and waiting to support insurance companies of all sizes, helping to level the playing field.  So rather than hiding behind the traditional boxes, become agile and competitive using a SaaS model in the cloud today!

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