Insurers have many options to choose from when building out their cloud strategy. Easiest and most commonly deployed is still IaaS (Infrastructure-as-a-Service) which is frequently used to relocate on-premise applications to the cloud (known colloquially as the “lift and shift”). Also common is SaaS (Software-as-a-Service) products (Salesforce, Office365, Workday etc.), which is often deployed for horizontal capabilities.
When it comes to custom development, insurers can choose to adopt microservices architecture which, when combined with DevOps, provides access to elasticity and high-availability benefits offered by cloud infrastructure.
Often neglected in cloud strategy is the Cloud Platform. Also known as cloud PaaS (Platform as a Service), cloud platforms are built on top of IaaS cloud infrastructure but abstract the underlying complexity from users. While cloud infrastructure customers buy resources in virtual machines that require provisioning and configuration, platform customers buy platform capacity that can be used immediately to develop and run applications. Immediately, as in that day, not two months later when the virtual machines have been provisioned, configured, networked and secured.
Cloud vendors offer multiple PaaS variants for different development needs – aPaaS (Application PaaS), hpaPaaS (High-productivity Application), iPaaS (Integration), dbPaaS (Database) are well established categories; FaaS (Function) and CaaS (Container) are closely related. BDaaS (Big Data as a service) is a category that should also appeal to middle-market carriers.
PaaS platforms improve development efficiency by tightly integrating development environments and tools, including continuous integration/continuous deployment capabilities typically found in mature DevOps organizations. Release cycles can be shortened from months to weeks or even days, without requiring specialist DevOps expertise and tool investment.
Elasticity and high-availability are key reasons why cloud is attractive, and cloud platforms provide both, inherently and often transparently, minimizing the staffing overhead needed to monitor, maintain availability, tune performance and scale applications. If additional compute or storage is needed to deal with a spike from IoT traffic or a resource-intensive batch process, these platforms scale automatically to meet the need and then scale back down again when demand abates. This translates to improved cost/value alignment over IaaS, where capacity is often over-provisioned to maintain SLAs during spikes or under-provisioned to meet budget limitations.
While cloud platforms currently represent about 10% of the overall cloud market, there is significant activity and growth, particularly among larger insurers. Most large insurers are using cloud platforms, with Pivotal, Amazon, Salesforce (there’s a platform under the CRM) and Microsoft all well represented.
Adoption is still low among mid-sized insurers. Some of this undoubtedly reflects the lower adoption of cloud in general in that segment – about a quarter of mid-sized insurers don’t use cloud for anything – but there seems to be less interest in cloud-native benefits of PaaS among smaller carriers.
That’s a shame and a missed opportunity, because cloud platforms have a lot to offer the middle market when it comes to delivering custom applications in a cost-effective and agile manner. The number of start-ups using these platforms serves as a testament to that.
Insurers developing their cloud strategy will do well not to ignore the cloud PaaS platforms. Their downsides are minor and manageable, and they offer a compelling alternative to IaaS for enabling cloud-native development and deployment.
For more on the growth of cloud computing in insurance—including information on popular platform varieties, use cases, and prominent vendors—see Novarica’s latest brief: Cloud Computing Platforms in Insurance.
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