January 13, 2011 – A lot has been made about cloud computing recently; even to the point of asking if it is more fog than cloud. The focus of these discussions is strictly on the technology which is where they miss the point. It is reminiscent of the early SOA discussions.

Celent defines cloud computing as the use of computing resources — typically a server or part of a server — over the Internet. The implications of this are: companies can leverage a vendor’s server offerings to build or expand their server capabilities; focus is on hardware, not software; and carriers need to package up an image of their software to install it quickly.

While, technically speaking, cloud solutions do leverage the Internet and virtualization, neither of which is new. However, if using these technologies is so easy, why do companies, especially insurance companies struggle with gaining the benefits of cloud? I believe the answer is identical to why many insurance companies were not as successful with SOA at the beginning — a lack of strong governance and an understanding of the full picture.

Many companies when trying to implement SOA solutions, focused strictly on WS-standards and SOAP, although inconsistently across the enterprise. Companies that have been successful in their SOA journey have realized that SOA is more than technology and standards; it also includes architecture, organization, governance, strategy and process maturity.

Insurers that believe cloud and, more importantly, SaaS is nothing more than invocating functions over the Internet, and using virtualization for cost-effective infrastructure implementations will miss the benefits of cloud and continue to struggle with application and infrastructure upgrades and cost savings. Similar to SOA, insurers must look at their architecture, organization, governance, strategy and process maturity to decide if a private cloud is more effective than a public cloud solution. The advantage that most cloud vendors provide is that they will do this for you if you cannot or do not.

Cloud, technically speaking, may simply leverage the Internet and virtualization — both old technologies — but do not be fooled into thinking that is all it is.

This blog has been reprinted with permission from Celent. It originally appeared on Insurance Networking News.

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