- Where Insurance & Technology Meet

IT Budget Trends ‘Cloudy’: New Opportunities; New Challenges

IT managers generally, and Insurance IT managers specifically, are being given additional resources to do more, according to analysts, but these come with serious business alignment requirements.   This is increasing interest in Cloud Computing and Software as a Service (Saas) solutions.

Jonathan Feldman, writing in Information Week on December 18, 2010, notes that a November 2010  survey of 552 respondents found that 55% expected 2011 budget  increases vs. 19% facing cuts.  But he adds a caveat:  “IT has money to spend, but it can’t be allocated using the same old budget process … Business leaders have little patience for high-priced, long-term IT slogs. They’ve seen massive 18-month projects fail and experienced success with lightweight software-as-a-service offerings.”

Novarica has found a similar pattern in the US insurance market.  A recent report based on a survey of 75 insurers concluded: “Cloud offerings (including cloud-based software and platform offerings) and SaaS  solutions are more than just the latest buzz. Large insurers are starting to invest in leveraging these noteworthy technologies …  and small to midsized insurers are following suit.”

A recent Celent report rounds out the insurance business context. It cautions (not predicts)  that the insurance industry may face a prolonged period of flat growth.  One major consequence is that business leaders are demanding increased flexibility offered by cloud computing and software as a service (SaaS).  Commenting on this report in Insurance & Technology, Anthony O’Donnell notes:  “Whatever specific approaches and investments a carrier may make in IT, they can hardly go wrong in moving in the direction of flexibility. In good times and bad, the more agile insurers will minimize waste and maximize opportunity through the responsiveness enabled by technologies such as configurable applications, scalable network and application capabilities such as cloud and SaaS afford, and especially business process management.”

2011 Technology ConferenceDonald Light, Senior Analyst at Celent, will be presenting on Clearing The Air on Clouds and SaaS at the 2011 Insurance- Technology Conference.