For carriers, moving core systems to the cloud is a change in culture and processes as well as technology. That reality surprises some carriers and intimidates others.

Exactly what will your company get from cloud technology? And how do you ensure that the benefits are operationally transformative and not just technically oriented? Careful planning provides the answers. If done properly, it will result in managed costs and fulfilled expectations.

The following guidelines can help carriers begin to build a solid foundation for adopting cloud technology and creating a digital experience:

Align executive management. Unity around a strategic vision with a clear business case is the first step to breaking into the cloud. It’s essential that the entire leadership team analyze the strategic operating model that is driving them toward a cloud platform.

For example, say the goal is to boost direct written premiums by $45 million in the next three years using a direct-to-consumer sales channel and digital self-service for policyholders. Cloud can get you there. Be sure the executive management team agrees on the details, however. In this situation, for example, a clear business case might specify writing 25,000 additional personal auto policies with an $1,800 annual premium per policy average in three to five states. It might also call for mobile applications to perform the lion’s share of the work—80 percent of policy changes, bill payment and distribution of electronic documents—and result in a market rate 20 percent lower than a current base rate in a new or existing state.

Crafting a distinctive view of the competitive advantage gained by the cloud—such as the ability to defer capital investment or the accelerated implementation of solutions and infrastructure—is key to attaining the commitment that makes the difference between talk vs. action and between project success vs. failure.

Identify the digital capabilities and benefits you want to gain. Cloud technology is a means to an end, rather than an end in itself. That is, while your company’s digital strategy is likely to be a driving force in your cloud adoption, moving to the cloud is not in itself a digital strategy. It can, however, be positioned as the most timely, least expensive and integrated way to implement your digital objectives. (For more information on cloud’s advantages, see sidebar, “Cloud’s Benefits for P/C Carriers.”)

To define the capabilities that the cloud proposition should deliver for your organization, consider taking a digital view of all operations. For example, when it comes to products, process and distribution, what are the limitations of your current system? What do you want to do differently? What are the digital capabilities that will ensure you can retain and attract new customers? Answering these questions will underscore the importance of the cloud strategy to the digital business case and the need to break into the cloud.

Own your configuration of cloud applications and services.Cloud’s flexibility is one of its strengths. Against the backdrop of the technology’s scalable infrastructure are a variety of services that your organization can choose—à la carte style—to support the business plan and sequencing of operational objectives. For example, your organization might choose to implement software as a service (SaaS) for its core systems with integration to back-end enterprise services. Or it might opt for business process as a service (BPaaS), or to utilize the cloud to enter a new line of business or expand geographically, or to develop an end-to-end cloud-based processing platform.

Finding a strategic cloud partner with a robust set of services and a willingness to configure the solution to your needs should help you to properly design your cloud solution. Understand the costs and pricing structure and how it supports your business case. One size doesn’t fit all.

Ensure your organization is ready for change. Adopting cloud-based core systems is likely to be one of the largest and most transformative projects your company will undertake. After management has aligned around a clearly defined digital operating model, your company needs to ensure the larger organization is ready for the changes. One way is by conducting a Readiness Assessment.

Be prepared to answer the tough questions:

• Are you committed to doing business in a different way? If not, why are you doing this?
• Has the organization satisfied board concerns regarding security? Does the board understand how present security frameworks compare to the cloud provider?
• Have personnel considerations been addressed? Are employees on board with doing things the new way? If necessary, how will staff redeployments or reductions be managed?
• Are you committed to partnering with a provider, do you have confidence in them, and are you willing to let them lead where necessary? If not, how will you establish accountability for implementation, and why did you choose this provider?

Plan to execute the first key deliverable quickly.Your cloud plan needs to underscore cloud’s quality of speed. Cloud projects should take months compared to years required for traditional projects. It’s important to deliver on one of the key workstreams within a short window of time. A fast launch can demonstrate cloud success and build commitment to the initiative. Failure to identify a “quick win” can diminish commitment and result in inaction.

Understand pricing. Another of cloud’s major advantages is the ability to scale up and down depending on organizational needs. Be sure the cloud contract pricing reflects this flexibility as it relates to your corporate requirements.

First, understand the separate cost components, such as infrastructure, application configuration and support services. Next, evaluate the costs at your company’s present level of business for policies, direct written premiums and transactions. Then, assess how the costs will be impacted by growth through rate increases or new products, for example, and by contraction as a result of, say, rate decreases or market withdrawal. What you find should strengthen the business case and your resolve to leverage cloud economies of scale.

Insurance is commonly viewed as a commodity product where competition is based on price and service. Cloud adoption can reduce infrastructure costs, drive more efficient business processes and provide a better digital customer experience. With careful planning, any carrier can break into the cloud and gain its benefits.