(Still from AWS promotional video featuring Alec Miloslavsky, CEO, EIS Group. Link to video below.)
At the end of 2016 several important vendors to the insurance industry announced that they had received Amazon Web Services (AWS) Financial Services Competency for their solutions. Such designations undoubtedly have marketing value, but they are also bound to count for something very real in terms of the cloud-ready quality of a certified vendor’s product. But what precisely? For some vendors, certification from Amazon or another cloud provider may an important validation, proving that they’re finally cloud ready; for others, it may be a validation of a recognizably robust cloud-ready option. In still other cases, a vendor’s reputation as a cloud-ready leader may obviate the need for certification—at least for now.
Don Bergal, CMO, Avoka.
Among vendors serving the insurance industry that announced their AWS Financial Services Competency certification in the last two months of 2016 were core systems vendors EIS (San Francisco) and Guidewire (Foster City, Calif), and customer acquisition solutions provider Avoka (Denver).
Proving a Point
“Achieving AWS financial services competency status was of vital importance to Avoka because it conveys the message that our platform in the AWS cloud has already been proven to meet the security and compliance requirements of large financial institutions,” comments Don Bergal, CMO, Avoka.
Bergal interprets Amazon’s offering of certification as a way of stepping up to increasing demand and providing a way of reassuring financial institutions that they can embrace the economic and management advantages of the cloud delivery option without sacrificing security and compliance.
By creating a formal certification, Amazon has created a standard by which to measure the cloud performance of solutions in the insurance software market, affirms Karen Furtado, a partner at Boston-based research and advisory firm SMA. “This will provide insurers another data point when considering each solution’s capability to operate in the stated cloud environment,” she comments. “This also serves Amazon, as they are now able to present an inventory of software that can operate on the AWS platform—similar to what Microsoft Azure Marketplace provides today.”
Karen Furtado, Partner, SMA.
Cloud providers who don’t currently offer certification are likely to do so within the next year or so, and core software vendors are likely to seek it, suggests Donald Light, a Palo Alto-based director in Celent’s North America insurance practice. “I think the practice of certification will accelerate the movement of insurers putting core applications in the cloud because it provides another form of reassurance that it’s safe, and that potential major risks involved have been mitigated,” he says. “Insurers still have concerns that boil down to privacy and security considerations—there has been and there still is hesitation to embrace the cloud.”
Increasingly Important Differentiator
AWS Financial Services Competency status is likely to become an increasingly important distinction for solutions properly architected for the cloud, according to Rob McIsaac, senior VP of research and consulting at Novarica (Boston). “I think the differentiation point may be the great issue for now—it may take other vendors some time to get themselves re-architected for cloud-deployment,” McIsaac comments.
But that leaves the category of vendors who have proven their cloud-competency and yet have not been awarded the certification.
Doug Moore, VP and CTO, ISCS/Guidewire.
“When ISCS began working with AWS in 2008, the Financial Competency designation did not exist,” notes Douglas Moore, CTO of core system provider ISCS (San Jose, Calif.) whose acquisition by Guidewire (Foster City, Calif.) was announced in Dec. 2016. “ISCS began actively migrating existing clients to the cloud, and doing new implementations only via SurePackage and AWS, well before most other vendors in the insurance space were ready, willing and able to use this technology.”
Insurance Systems’ Cloud-Ready Future
The 12 most recent implementations of SurePower Innovation have all either been deployed, or are in the process of being deployed, via the vendor’s SurePackage cloud deployment option. “This is where we see all industry implementations moving to in the future, and as AWS expands the reach and definition of this new Financial Competency designation, we look forward to being part of the program,” Moore adds.
It’s still hard to imagine all core system implementations going into the cloud. Celent’s Light foresees the “point of equilibrium” where a majority of such systems are in the cloud as still several years in the future. “Certification programs, such as AWS Financial Services Competency are one factor that will bring that equilibrium point a little sooner.”