Insurer Perspectives on Core System Modernization and Cloud Computing
The fourth Celent Peer Networking Event was held last Friday at the headquarters of Allied Insurance, a division of Nationwide, in Des Moines, Iowa.Thirty people from eleven different insurers contributed their experience with evolving cloud computing and legacy modernization strategies. As with other events, the discussion was open, active and focused on practical steps that can be taken to transition insurance automation to new platforms.
A review of recent Celent research kicked off the meeting, with Mike Fitzgerald, Senior Analyst, presenting survey data on core systems modernization and on the business case for updating legacy systems.Data from a 2011 Celent report, Still Seeing the Shadow: Groundhog Day for Legacy Modernization (Still Seeing the Shadow: Groundhog Day for Legacy Modernisation (P&C Edition):http://celent.com/reports/still-seeing-shadow-groundhog-day-legacy-modernisation-pc-editionStill Seeing the Shadow: Groundhog Day for Legacy Modernisation (Life and Health Edition):http://celent.com/reports/still-seeing-shadow-groundhog-day-legacy-modernisation-life-and-health-edition) illustrate that the rate of transition to new insurance platforms has increased in the past two years.The group validated that this was the case with their organizations. Approaches, risks and issues highlighted by the study were discussed in turn, with the loss of legacy analysis skills receiving a significant amount of discussion. Several attendees shared steps that have been taken in their shops to address the gap between the supply of, and the need for, analysis and programming skills.A partnership with local colleges and universities, described by one company, was particularly useful. Data from an upcoming report, Reviving the DOA Core Systems Business Case, were also covered and attendees had an opportunity to compare their alternative approaches to justifying a modernization effort.
A panel discussion concerning the use of a rationalized application portfolio followed.Dan Drabenstot, Principal Enterprise Architect, Mutual of Omaha, Ray Wasilewski, Vice President Technology, FBL Financial Group, and Ben Moreland, Senior Analyst, Celent, shared their experiences in using a portfolio approach to plan legacy modernization.They offered several examples of how a system inventory improved communication between business and IT areas.One participant detailed a scoring methodology that prioritized automation projects and highlighted tradeoffs in decisions concerning alternative implementation paths.
In the afternoon, Vijay Gopal, Enterprise Chief Architect, Nationwide Insurance and Ram Rao, Commercial and Specialty CTO, Allied Insurance facilitated a discussion concerning the implementation of a cloud computing platform.Alternatives were identified concerning initial projects involving cloud technology.The consensus of the group was that, eventually, most companies will employ a mixed approach that will include both public and private clouds.Participants mentioned that they currently are choosing specific systems to experiment with in order to learn the skills and processes needed to successfully manage the new environment.A key point was made that any vendor of cloud services to insurance companies must be able to meet the regulatory constraints of the industry.
Celent would like to thank all the attendees and the presenters for their participation in making this a successful event.We look forward to hosting the next Peer Networking Event: Enterprise 2.0: The Social, Mobile, Connected World at Allianz Life headquarters in Minneapolis, MN on Friday, October 7th, 2011 (for information, please visit October 7, 2011 | Insurer Peer Networking Event: Enterprise 2.0: The Social, Mobile, Connected World: http://celent.com/node/29031).