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The Platform as a Service (PaaS) approach for IT systems is attractive for many insurance providers along their cloud transformation journey. Business agility and cost efficiency are the significant drivers to make a move from on premise infrastructure to a cloud-hosted platform. The advantages of deciding to move to cloud are compelling, but the majority of insurers still need a clear understanding of the challenges and the benefits that will be encountered along the way.
Migration plan approaches
The most successful technology initiatives begin with a plan in order to reduce disruption to regular operations and manage costs. There are multiple approaches to implementing a migration plan. They include:
- Lift and shift. This approach consists of mapping the hardware to the resource-sized cloud instances. If the front-end application of company server has 64GB of RAM and 512GB of the local storage, they will prefer cloud instance that matches the configuration. The main challenge with this approach is that solutions are over-provisioned with the resources to meet peak loads as they do not effectively utilize cloud’s auto-scaling and elasticity features. It further leads to increased infrastructure cost and is suitable for a short-term approach only.
- Refactor and re-architect. In order to realize the benefits of features such as auto-scaling, high availability the applications should be restructured and re-architected.
- Shelve and spend. This approach involves restructuring the monolithic application and moving to the solution of SaaS. One example of this method would be human capital management, which has a set of codes integrated into a relational database. Moving to a new solution, such as workday HCM, can result in modernization of business functionality, and infrastructure will become the responsibility of the SaaS provider.
Challenges of cloud migration.
While there are definite advantages to cloud migration, there are also challenges that arise during design and implementation. Here are a few:
- Existing application design. The complexity of migration of any system to cloud also depends on the existing design of applications. One of the critical challenges in the cloud migration is influencing the business continuity and failing to plan for the problems like availability zone failures, drive failures, and network misconfigurations so the cloud based applications should be designed to be highly available despite of any issues. Such complex requirements often result in a lot of effort in re-architecting the application due to tightly coupled components and monolithic nature of the system.
- Regulatory requirements and data governance. Based on the industry, insurance companies need to adhere to regulations like secure PII (personally identifiable information) data and payment data. When the cloud does not change the conditions to meet regulatory standards, businesses need to facilitate new technology and the approaches like audit logging, anomaly detection, and incident response and identity, and access management must be implemented. It should be ensured to have a defined data access policy to make sure that users can’t move/modify data unless they are authorized. Additionally, data must be encrypted at rest and in transit.
- Infrastructure and application security. A critical change to infrastructure security in the cloud is moving to software-defined security model instead of a perimeter-based and hardware defined model. The application security testing must be executed at every new update, which can offer continuous security assurance. When discovery is completed, it is essential to evaluate what resources need to be migrated and what can be retired. The organization must focus on the elimination part of the platform strategy and determine the architecture components which can be offered by the cloud providers.
Reap the benefits of PaaS:
Insurance companies that invest in planning and address the challenges associated with cloud migration reap the benefits. First, the cost of ownership is lower than with other approaches. The fact that there is no need to own, maintain and manage the hardware resources helps in reducing the total cost of ownership of platform. Most of the management is now vendor’s responsibility. Second, there is less risk when it comes to disaster recovery. Cloud migration helps small and large companies to create an effective mechanism of disaster recovery, which secures their data at the time of contingencies. Third, is a license management benefit.
When it comes to software updates and security, companies do not need to worry about administering them because the servers in cloud computing are off-premise. It can reduce management costs and relieve personnel from managing the in-house storage infrastructure. Last but not least, the bottom line benefit is speed, agility and performance. By enabling a predictable application infrastructure, enterprises can add speed and agility to the development of new products and can meet the customers’ needs more effectively and quickly. While cloud migration is not an easy task, it enables insurance companies to shift the IT backbone of the business operations and experience the benefits.