IS THE CLOUD SOLUTION READY FOR LIFE INSURANCE?

The potential of cloud computing is currently a hot topic of debate in Vietnam now. A lot of the discussions about cloud computing tends to focus on its ability to reduce IT costs. However, this is only one part of the cloud benefits. Cloud computing allows companies to access IT-based services, including infrastructure-as-a-service (IaaS), software-as-a-service (SaaS), platform-as-a-service (PaaS) and business processes, via the Internet. Cloud technologies allow IT to improve IT efficiency and better respond to the changing needs of the business, create new services and open new markets, thereby helping to achieve high performance.

Currently, most of insurers prefer on premise hosting solution, which has a lot of disadvantages as follows:

·  You have to pay a fixed amount in upfront for software license and hardware and cannot downsize for cost saving if your demand changes.

·   You have to wait for IT to complete all the infrastructure, integration setup, then implement your solutions

·    Your IT team has to do all administration works to address maintenance and support issues.

Therefore, cloud hosting is an option for you to take advantage of the mobility, and scalability and flexibility. Currently, there are three forms of clouds: private, public and hybrid. Private cloud is built within a company’s data center and is designed to provision and distribute virtual application, infrastructure and communications services for internal business users. In Vietnam Life Insurance industry, Manulife built their private clouds since 2011, which are located in Hong Kong and Malaysia (Malaysia is disaster recovery site) so all Manulife Asia countries are sharing resources of their private cloud. In contrast, public cloud extend the data center’s capabilities by enabling the provision of IT services from third-party providers over a network. However, most of companies are worried about risk and data security while considering public cloud. At the end, the hybrid cloud has been more popular now, it can also consist of two public clouds provided by different providers or even a combination of a cloud and traditional IT infrastructure. The hybrid cloud also has some disadvantages such as the manageability of different cloud services because every service provider will have its own management and provisioning environment; and network connectivity, especially if remote cloud services like a public cloud or a hosted private cloud are involved (it is not only must bandwidth, reliability and relevant cost considerations be taken into account, but also the logical network topology must be carefully designed).

For example, you want to use hybrid cloud for your application, but you still want to keep database at your own IT infrastructure. In this case, the main challenge is the performance of the exchange of data between the different services and applications, then you have to invest on the high bandwidth of internet connection to improve the performance. In case, you want to use different cloud services, the biggest challenge is the integration of the different cloud services and technologies. However, the standardized APIs will help you solve this challenge.

Manulife is also using public and hybrid cloud for their customer portal, CRM – Salesforce, Office 365 and Workday. Prudential is using cloud for Office 365 and Workday systems. As CIO of Vietinbank Aviva, I feel more comfortable about putting our non-critical systems into public, private and hybrid clouds such as Portal, BI, Office 365, Workday, CRM, Web conferencing, Network and server monitoring and administration, etc. And we will start to concern moving critical systems to hybrid clouds when the security and audit maters are not our concern. Moreover, private cloud is also in our plans to leverage the IT infrastructure, improve IT efficiency and save cost for Aviva in Asia.

So what are key benefits of cloud computing for insurance industry?

·   Reduce total costs of IT infrastructure and operations as little or no requirement for capital investment to enable usage

·   Pay-as-you go pricing model) and lower ongoing operating costs than IT owned and managed in-house.

·   Better respond to the changing needs of the business, create new services and open new markets, thereby helping to achieve high performance

·   Support integration of third party systems

·   Force a move to a service-oriented model and new innovation in systems design

·   Maximize renewals by customers

·   Unify customer data, enabling customer-centricity. It offers major opportunities for insurers to build a more flexible, nimble and customer-centric business model that can drive profitable growth and help us achieve high performance in the industry

·   Drive new business and engage customers more effectively through new distribution models

So, what does the future of cloud solution look like for insurers, both in the short and long term? In the next few years, I believe that the insurers who move more quickly to embrace the cloud will gain a competitive lead that others may struggle to match. In order to do that, we have to understand the condition and scope of our entire IT infrastructure and apply cloud solution for non-critical systems first, then step by step for critical systems; identify stakeholders should be engaged in making decisions for cloud; define clearly criteria and requirement for selecting cloud providers.

Phan Hoai Nam – CIO Vietinbank Aviva Life Insurance.