5 Issues For Insurers Migrating to Hosted Private Cloud

Insurers rightly value flexibility, cost savings and fault resilience of moving to a hosted private cloud via managed service provider, but they should be prepared to address five key issues.

Many insurance companies are enticed by the flexibility, cost savings and fault resilience of moving to “the cloud.” Among these, a hosted private cloud delivered via a managed services Provider (MSP) enables an enterprise to enjoy the security, control and single-point management afforded by private clouds without deploying additional in-house data center hardware and software. Enterprises are eagerly adopting the managed services model as MSPs have the data center resources to quickly scale processing and storage, and deliver advanced services to desktops as needed.

Jeff Kaplan, Breakthrough Technology Group

Indeed, prior to moving to the cloud, an enterprise may already be using server and data center virtualization solutions. (Virtual desktops enabled through Citrix and VMware are quite easy to use when installed properly.) A private cloud simply extends the virtualization concept from servers to storage and networks with tools that manage servers, storage and networks as a single resource pool that can be allocated on demand from a single location.

But all is not sweetness and light when moving an enterprise — particularly an insurance carrier — to a private cloud. Here are five issues that can rear up and bite the unwary:

1. Surprise.

The biggest migration problems relate to planning and mapping the transition of protocols, policies and procedures. Most delays will arise immediately in initial discussions involving planning and policy adaptation. Like great software code, great network architectures should be well-documented. Amazingly, many IT teams don't maintain the proper documentation regarding their existing, legacy architecture and the many resources it encompasses. Without it, the subtle and complex relationships among people, operations and processes is lost, and thus the move to a private cloud will be fraught with difficulties, particularly if the infrastructure was not really optimized to begin with.

2. Complications can ensue if the enterprise’s entire data center is not moved to the cloud in a reasonable time frame, or in stages.

It helps if your MSP is using well-known, rapidly deployable preassembled private “cloud in a can” (also called “cloud in a box”) technologies such HP’s CloudStart, or Vblock, a rack of integrated EMC storage, VMware software and Cisco Systems servers and network equipment sold by the Virtual Computing Environment (VCE) Company, a joint venture of Cisco, EMC, VMware and Intel.

3. Will Your “Private Cloud” Really Be Private?

Insurance companies need the kind of privacy and control afforded by private clouds, since the public variety can suffer from security risks. It’s troubling to have important personal data on thousands of people suddenly lurking somewhere outside the company’s firewall on servers governed by unknown technicians. Even so, private cloud services take various forms. The provider may manage a private cloud in the customer's own data center, or the provider may host, isolate and manage many customers’ private clouds in its own data centers, or it may partner with a giant data center.

Now, what if the MSP relies on an infrastructure-as-a-service (IaaS) provider that sells its services to a group of MSPs that share a non-exclusive infrastructure? That’s fine for providing public or hybrid cloud environments, but not for genuine private clouds. Investigate!

4. Does your MSP have the financing in place to handle your private cloud?

Surprisingly, deploying virtualization, automation and orchestration technology for cloud-enablement is a breeze for an MSP compared to getting financing these days to secure the necessary servers, storage, redundancy, and software dedicated to a hefty enterprise private cloud. In their rush to serve a colossal client such as a major insurance firm, an MSP may bite off more than it can chew, so to speak. Have them prove to you that they have the financial chops to take on your business.

5. How will you handle chargeback?

One advantage of a cloud is that there is no fixed capacity as is the case with an on-premise server or data center. However, such easy scalability and “elasticity” can be very expensive, were it not for the basic rationing mechanism of price, which is why chargeback is generally an integral part of private cloud environments. Ideally, billing should be based on actual resource usage, instead of resource allocation or reservation, which provides visibility into resource utilization and helps capacity planning, forecasting, and budgeting.

And remember: There is no single way to move an enterprise such as an insurance company to a Private Cloud. So investigate, plan, check and check again!

About the Author:Jeff Kaplan is CEO of Breakthrough Technology Group, a global provider cloud, managed and professional IT and Telecom Services and Solutions. BTG delivers advanced technology to enterprise, government, education, not-for-profits and other organizations looking to manage anywhere from dozens to millions of users.