Why insurers should migrate to the cloud and how to do it successfully

The technical benefits of the cloud are also substantial, and the business case starts with the elimination of expensive and potentially high-risk upgrades to core systems. Guidewire constantly invests in new capabilities that are automatically available and configured within the cloud platform – with two or even three releases per year, rather than the annual or bi-annual upgrade cycles for traditional, on-premises software packages. That means business leaders can have faster access to new features and tech leaders can have the assurance that they are operating the latest version of the core software.

Indeed, many industry observers and analysts view cloud migrations as their company’s “last upgrade,” because most of the high-cost, high-touch ordeal of updating to the latest versions of software happens in the background, with no disruption to ongoing business operations.

Without having to worry about the financial implications and logistical challenges of the upgrade process, insurers can focus on innovating in ways that make the most sense for their business. No matter their size, geographical footprint, product lines or growth strategies, insurers need to worry less about their underlying technology and invest their energy in finding ways to satisfy their customers, optimize operations and disrupt the competition. That’s what it will take to navigate through a turbulent era and execute their growth strategies. Certainly, they help explain the steady growth of cloud adoption over the years.

Preparing the business and organization to seize the value of the cloud

Fully realizing the cloud’s substantial benefits requires a thoughtful approach. This is not a simple transition, but rather a profound change for an organization, with impacts felt across multiple dimensions of the business. Operational processes must be refined. Technology infrastructure and data repositories must be optimized. Organizational structures and cultures must be modified to ensure users understand and rapidly adopt the new cloud capabilities. Is it a lot of work? Yes, but the payoff – the ability to take advantage of the unique power of cloud-based business models – more than justifies the effort.

Planning for success: Shifting to a cloud-based environment raises several critical issues. In evaluating platform infrastructure, insurers should assess the financial implications of both technical and nontechnical factors. These include contracts, physical space requirements, initial and ongoing support needs, and the number of user licenses. Financial scenario modeling should also account for the full range of implementation variables, including migration type and speed, disposition, depreciation, reallocation of resources and other factors.

Addressing the technology questions: The ideal platform solution (e.g., SaaS, cloud-hosted) will vary for different types of business. But project teams must understand the many potential dependencies and their impacts on different services if they are to build out suitable migration plans and implementation roadmaps.

Cloud migrations also require teams to address a range of critical technology issues, including security, risk management and controls, maintenance and support needs, data distribution and data-application integration, cloud data management, and analytics and operational applications.

In assessing current platforms, teams should seek to identify potential barriers in terms of technical capabilities and impediments across network, security, infrastructure and operations. For instance, security and network engineering must be evaluated in terms of events monitoring and alerts mechanisms, end-point protection, and security event response capabilities. There must be sufficient network speed and bandwidth between enterprise systems and Guidewire Cloud. Security and safety measures should be incorporated in the network design and configuration.

Getting people and teams on board: Developing detailed user journeys can ensure the new cloud platform delivers what every part of the business needs, and that you have targeted plans to help specific roles and teams embrace the new platform. A shift to cloud often requires IT teams to rethink their organizational and service delivery models, considering the lighter-touch support requirements.

New skills may be necessary, too. Certainly, organizations will need to ensure they have access to the right technical skills (e.g., cloud data management and operations, network engineering and security) to ensure a smooth transition. As an example of other skills needed in addition to technical skills, the inherently different contracting and licensing models between on-premises software agreements and the various cloud models (partner- or self-hosted) require different types of procurement and legal support.

The human factors extend beyond having the necessary skills and talent. In our experience, robust organizational change management is the most common hallmark of successful cloud migrations. The first step is to ensure senior leadership is fully aligned on the overall business case and strategic imperative for shifting to the cloud. Functional and line-of-business leaders should understand the implementation approach and its potential impacts on current operations.

Business and IT leaders must be prepared for more direct collaboration, too, as Guidewire Cloud offers single, common user interfaces that enable everyone to visualize the changes to be made to products, services and processes. That integration can shorten project timelines, but only if business and IT teams are ready and willing to work together.

It’s easy to overlook or underestimate the importance of the mindset shift related to orienting the business around the cloud. Carriers must ensure they are ready for the new ways of working that are best suited to cloud-based businesses. For instance, Agile development methodologies and iterative product development cycles play to the strength of cloud platforms. Some insurers are more experienced with these working styles and collaboration techniques than others. In our experience, it’s safe to say that the more agile an organization is, the more they are likely to yield from their cloud investments.

Across the organization, people and teams affected by the shift to the cloud must understand both the why (the business rationale) and the how (the specific impacts on their roles) of the changes to come. Strong training and communications programs can set up employees for success with new ways of working.

Another critical consideration is organizational readiness and ability to partner. Relying on third parties – including Guidewire, its ecosystem of service providers, transformation specialists and systems integrators – can be a jarring shift for some leaders in an industry that has long focused on home-built solutions. Choosing the right implementation and systems integration partner can make or break a transition. Cultural fit, track record and scale are material factors that can influence the success of a program. The right balance of product-specific experience, broad industry knowledge and technical acumen is another critical consideration. The key is to find partners, like EY, that have deep product knowledge and are skilled as well in all aspects of the cloud, including migration and ongoing operations, and have the organizational, process and technology expertise to increase the likelihood of success.