---

Before moving to the cloud, insurers need to ask: how can I make sure my migration to the cloud is cost efficient and suitable for my business?

One of the oft-touted benefits of cloud is that it reduces costs. This was also one of the benefits I mentioned in my previous post, but it comes with an important caveat:

Moving your existing business and apps to the cloud can be costly, if not done correctly and with the right considerations in mind.

Take for example a prominent bank that Accenture recently helped with its agile transformation. The bank had great business ideas and was able to use an agile methodology—powered by the cloud—to remove the gap between business and IT and realize its innovations with faster time to market.

However, in the pursuit of speed and agility, the organization lost control of its productivity and efficiency. Its off-premise cloud infrastructure became three times more expensive as the development team used more and more of it (and hence spent more) to achieve its desired speed to market.

It is important that insurance companies work out how to manage cost in the cloud. Before embarking on a journey to cloud, they need to ask pivotal questions, such as:

1. How do I choose the right cloud for my business needs?
2. Do I aim for complete services?
3. How do I manage cost when moving to the cloud?

What type of cloud solution would best suit your business: private or public cloud or a hybrid solution? Cynthia Harvey writes in an article for Datamation that a multicloud strategy holds many benefits, for example managing costs and improving reliability, security and compliance. However, there are also challenges to a multicloud strategy, such as vendor lock-in and complexity. It also makes it more difficult to perform data integration and monitor applications.

In the article, Harvey provides advice on multicloud best practices, including how to avoid vendor lock-in, ensure security and compliance, avoid complexity and manage multiple providers. She also shares five tips on how to optimize cost in a multicloud strategy:

1. Match workloads to vendors
2. Adopt a microservices architecture
3. Consider a cloud services broker
4. Investigate cost optimization tools
5. Negotiate with vendors

For more insight, read the full article here.

Ready to move to cloud? How to get started

For insurers, the journey to the cloud should start with a blueprint for their new business model. This means putting technology at the core of their operations and creating new business models from three perspectives:

 

Infrastructure	Architecture	Functional
Insurers will need a new infrastructure model that is based on a shared pool of resources that can rapidly be configured, provisioned and released.	Insurers will need a new architecture model that enables new levels of agility, flexibility and security and allows them to implement cutting-edge services to meet business needs.	Insurers will need a new application model to help them provide end-to-end business solutions with low configuration and scalability.
Benefits: · Infrastructure fixed-cost reduction (estim. 20% total cost of ownership saving) · More control over operations and infrastructure service levels · Faster and more efficient distributed infrastructure provisioning	Benefits: · Evolve from monolithic complex apps to flexible and scalable services · Increase speed and reliability of services development and provisioning · Highest levels of security / compliance	Benefits: · Standard and highly scalable solutions that can be provided with low configuration · Seamless introduction of state-of-the-art features in applications · Abstraction of technological complexity
Enabled by: · Server / network / storage automated provisioning · Non-disruptive, and fast approach with minimal application transformation· Cost optimization through rightsizing infrastructure and eliminating servers when not needed	Enabled by: · Decoupled architectures and APIs · Microservices execution architectures · Mainframe to microservices · Big-data architectures · Lightweight front-end architectures · DevOps models	Enabled by: · Vendors’ portfolio of aaS solutions for: core insurance, HR, ERP, CRM, project portfolio management, mail and collaboration, etc.

Five core principles of cloud migration

If insurers follow the five core principles of cloud migration as described below, they will be able to make their journey to cloud cost efficient, seamless, and safe and secure.

1. Transition non-core services to cloud

With business platform as a service (BPaaS) solutions, insurers can hand over non-core business functions—such as human resources, procurement, accounting, etc.—at a lower cost with higher quality.

2. Increase SaaS coverage

By increasing the use of software as a service (SaaS), insurers can reduce software development and maintenance costs. It is key to understand the cost model of a specific SaaS solution however to manage and contain costs.

3. Access and migrate other applications to IaaS/PaaS

Insurers can use standardized infrastructure as a service (IaaS) and platform as a service (PaaS) to reduce support costs for custom codes that provide a real competitive advantage.

4. Reduce cost of custom code

Insurers should reduce custom code in the organization. To do so, they can move to alternative platforms for better quality and a lower cost to maintain. Leverage PaaS platforms to drive productivity in development teams.

5. Reduce vendor count but maintain competition

Insurers should cultivate a well-designed provider ecosystem that reduces operational complexity yet still maintains pressure on pricing through competition.

When we helped our client overcome its challenges around cost and complexity, Accenture leveraged years of research and expertise to smooth its transition to a digital world. We can help you navigate your cloud journey as well. Read our study on cloud investment in the EU or get in touch with me here.