After initial success with back-office cloud enablement, insurers must push their cloud journey into the front-office to achieve the bigger benefits.
Insurers have been fairly quick to recognize the benefits of cloud enablement in the back office. And adoption was fairly straightforward: back-office processes were clear and well-defined; the platform providers and enterprise resource planning (ERP) vendors were encouraging; and the risks were comparatively low.
Yet, progress towards full cloud enablement seems to have stalled at the back door. Insurers seem quite comfortable moving their own data into the cloud, but they have been much less aggressive with their customer and policy data and business processes. And that means they are not yet realizing the true benefits that enterprise cloud adoption can deliver.
There are many reasons that activity may have stalled. Part of the problem relates to the external environment. Most of the policy platform vendors have been very slow to shift their services to the cloud, preferring to stick to the traditional on-premises models.
Insurers are also conscious of increasing regulatory inspection and are concerned that greater cloud enablement might influence their risk profile. Concerns about customer and policy data being hacked are high.
Complexity is another major issue since few have a good grasp of their current technology estate and capabilities and they will need to do some heavy lifting to rationalize their assets before they can think about moving more aggressively into the cloud.
But the bigger problem comes down to cost and benefit. It will take a lot of work and resources to move all of the front-office processes into the cloud, and It is hard to prove the specific ROI – to support their budget requests.
This is unfortunate, since the benefits that greater cloud adoption could deliver go beyond the obvious cost take-out that comes from outsourcing key processes. The most valuable element they would realize from cloud is the improved flexibility and agility. For an industry which must be increasingly customer centric, cloud adoption is a key foundation to enable this.
Through KPMG member firms' work with a wide range of insurers around the world and across sectors, we have uncovered six tips to help get their cloud journey on track.