The Cloudy World Ahead for Insurance IT

“In the future, enterprises may be as unlikely to stand up their own data centers as build their own power plants.”

We’ve been hearing this message for some time – that data center capacity would be delivered in the same manner of electricity, in which companies can plug in and receive their service.

However, it appears that cloud computing has achieved a momentum that is on the verge of making this a reality. Is it time for insurance companies to start gravitating away from the business of managing large data centers to depend on the cloud?

In a recent post at InfoWorld, Matt Asay points out that the data center as we’ve known it is moving to the cloud en masse. “We're seeing mega-cloud vendors -- Amazon Web Services, Google, and Microsoft -- drive server costs to lows impossible for any enterprise data center to achieve,” Asay says. “Oh, and they're doing it while retaining significant margins for themselves -- all of which means we may be on the verge of seeing a complete changing of the guard in enterprise IT that will play out over the next decade.”

There are implications for IT executives, managers and professionals, of course. While at first blush it may appear that a lift and shift to cloud means trouble for the job security of insurance IT practitioners, it may not be a job threat. Insurance organizations will always need skilled and knowledgeable people who can identify and manage the best solutions to move the business forward and provide needed capabilities. As insurers move into the digital realm, they’re going to need business technology expertise and guidance like they’ve never needed before. Cloud vendor staff will know how to throw the switch to turn things on and keep everything running, but they will never know enough about the business requirements of their clients. That’s the job of developers, architects, analysts and other technology gurus in the organization.

Still, there’s no question that the technology nuts and bolts are moving outside the enterprise. Even private clouds are seen less as an option, as confidence in public cloud offerings grows. “Public cloud workloads are growing three times faster than private cloud workloads, and both are growing dramatically faster than traditional data centers,” Asay observes.

A new report from North Bridge, a venture capital firm, in partnership with research analyst firm Wikibon, finds growing adoption of public cloud over private cloud services. Corporate cloud computing strategies are focusing on public (up 43 percent) and hybrid (up 19 percent) clouds. Private cloud, on the other hand, has slipped significantly (down 48 percent).

Three quarters of company data in significant volumes now resides in private or public clouds. Company data in hybrid cloud systems is forecast to double over the next two years.

While there will be on-premises systems around for some time to come in the insurance industry, there’s no question that the momentum for new systems and application development is going to public cloud providers.