Justifying the Value of the Cloud to Your Business

How do you define “moving to the cloud”? The old cliché “Beauty is in the eye of the beholder” applies just as well to the definition of the cloud. It’s become a catch-all phrase for which people have their own definitions. Often when you think of the cloud, the common connotation and benefits are immediately around technology: simplifying IT by eliminating servers, reduced IT risk by removing data center operations, and increased security by centralizing software operations.

However, to successfully adopt cloud technology requires most insurers to identify and quantify business value. In this blog post, I discuss how insurers can justify the investment to move to the cloud beyond just IT benefits.

Certainly, there are dollars at play when your IT operations can be simplified and made more efficient, but quantifying value for the business is different. Unlike changing to a new core system where the user experience is completely different, processes are improved, and data is at your fingertips, a migration of existing applications to cloud technology does not have immediately apparent and visible value to the business. In fact, if executed properly, it should be seamless and unnoticeable to end users. Justifying a move to the cloud for the business is an exercise in long-term benefits.

First, it starts with your company’s strategic goals. Analyze what your company is trying to achieve in the next three to five years, and what initiatives are planned or in-flight to help achieve those goals. Then you must identify the potential roadblocks and risks to achieving those goals, as well as the IT benefits of cloud technology that can mitigate the roadblocks by producing a greater probability of success or expediting execution.

The business justification and benefits are broad, and a wider net must be cast around the benefits themselves. The business team must understand that the cloud acts as an agent for facilitation and enablement. Faster delivery of new business functionality will certainly be the most tangible benefit to the business, but freeing an organization from the heavy toil of IT systems and operations, along with the responsibility of implementing enterprise software, enables an organization to be more nimble, efficient, and proactive.

In my time running strategic workshops with P&C insurers around the world, one of the statements I hear most is, “We have some very important business initiatives we want to accomplish. But our IT team has too much on their plate, so we can’t even think about those initiatives for at least a year or two.”

From a speed-of-business standpoint, a year or two can be an eternity. In that time, a market-changing new product—which could have differentiated your company by giving you first-mover advantage—could be capitalized on by a competitor. What is it worth to you if, instead of a year, that timeframe becomes six weeks? What would happen if a product that was never even going to come to market because of competing priorities now does come to market? This is how an insurer justifies the business value of the cloud: to quantify a business opportunity capitalized or lost.

The cloud is the enabler to free your organization of the low-value tasks and work so that you can focus on high-value innovative initiatives. The business value is your time—and what you do with that time. The following examples of downstream benefits can all be valuable to your organization, and the cloud gives you greater bandwidth to execute on them:

  • Starting a new LOB or product
  • Re-engineering business processes
  • Reorganizing your staff
  • Modernizing your physical office space to enable optimal collaboration between working units

If you can now accomplish and focus on the high-value business initiatives or reduce the time to complete initiatives currently in-flight, cloud technology can be easily justified from a business perspective.

In the second part of this blog, Aaron Davidson (Guidewire Cloud Business Owner) will discuss how your software vendor’s cloud journey can drive increased value to your organization.

For more information about Value Consulting or to request their services, please contact valueconsulting [at] guidewire.com.