Based on the research results and EY professional’s direct engagement with many leading global insurers, we recommend the following actions for those firms that want to make the most of their investments in the public cloud by taking a holistic approach:
1. Infuse the board and business leadership with cloud knowledge:
As insurance becomes more tech-enabled and data-driven, leaders need deeper and broader understanding to make better decisions and be more fully engaged with IT.
2. Conduct readiness and maturity assessments:
A strong business case starts with a clear sense of current gaps and the best future opportunities. To assess cloud applications, embrace the 6Rs methodology (re-host, re-platform, re-factor/re-architect, re-purchase, retire, retain) to determine the best path forward.
3. Build holistic cloud strategies based on business value created:
Digital transformation is not about achieving the lowest possible cost base, but rather more efficient operations, richer customer experiences, stronger engagement and, ultimately, increased profitability.
4. Define clear success criteria aligned to business objectives:
Embedded metrics must be used to track progress at every step of the public cloud adoption journey.
5. Establish a cloud competence center:
An empowered central team can help develop internal cloud capabilities, keep key initiatives moving forward and foster the necessary culture change.
6. Involve legal, risk management and compliance teams, as well as regulators:
The sooner the potential details and roadblocks are identified in the cloud transformation process, the less likely roadblocks will emerge.
7. Embrace robust change management:
It takes more than the migration or replacement of legacy IT systems for successful public cloud adoption. Effective change management and strong leadership are also essential.
8. Prioritize data security and risk management:
Conducting a cloud risk and security assessment at an early stage can help establish a strong cloud risk management framework.
9. Design a target operating model for the cloud:
A cloud provider management framework is critical when managing multiple providers and ensuring effective long-term governance.
10. Formalize a cost management framework:
Lessons learned by early adopters of the public cloud confirm that robust cost management frameworks are necessary to realize the business case and can also control the deployment of new cloud services.
The cloud in context: converting potential to value
The future for those insurers that can master public cloud adoption looks bright. Powered by advanced data analytics and AI, leading insurers can greatly increase their capacity for innovation and accelerate their speed to market with new products and solutions. According to EY NextWave Insurance research (pdf), the most successful will be able to position as trusted “life and wellness concierges,” increasing customer retention by 30%.
In our survey interviews, we learned that leading organizations are already investing heavily in these key areas. They have more than tripled their overall tech spend (pdf) and are looking to derive much greater value from their data assets. Survey respondents believe that technologies that generate deep insights and predictive power will provide the greatest near-term impact. Their interest in robotic process automation (RPA) and intelligent automation implies that they are looking to empower workers to focus on higher-value tasks, rather than transaction processing. Similarly, they are adopting AI, machine learning and advanced analytics for more predictive insights and better anticipate emerging trends and opportunities.
It’s no surprise that insurers are looking for such transformative benefits by adopting public cloud models. The technology certainly has such potential. The differentiator for tomorrow’s top performers is their ability to convert that potential into tangible and sustainable value.