Platform 9 ¾ – It’s Wizardry!

Like many technological advances, Cloud Computing is thought of as recent but has been the result of a series of incremental advances in a range of technologies over many years.  The signs are that its time has arrived and is about to transform how many carriers operate and what they view as ‘core’ and ‘value add’ will shift as the market delivers increasingly flexible, economically attractive options.

Gartner’s 2014 CIO survey, identified cloud computing as a top 10 IT priority for CIOs; with the majority preferring private or hybrid options.  The market is defined as ‘emerging’ with up to 20% of carriers predicted to leverage the cloud for core operational needs within the next 2 to 5 years.

This ‘tipping point’ has arrived due to the convergence of a number of factors:

  • The lowering costs of hardware and data storage – per dollar, computing power has roughly increased by a factor of ten roughly every 4 to 6 years in the last quarter of a century (depending on which analyst you reference), partly due to ‘Moore’s Law’ – see below
  • The technological advance of ‘shared computing’ through such concepts as VMWare and virtualization
  • Enhanced telecommunications technology supporting multiple data connections to the same level of service as previously dedicated ‘point to point’ systems
  • The growth of processing power, enabling previously custom/high-cost activities to become standardized – doubling approximately every two years (the semi-conductor industry refer to this as ‘Moore’s Law’)
  • The increasing sophistication of data security/authentication systems, removing a key concern for many carriers.

Platform as a Service (PaaS) is now fast becoming a viable option for many insurers.  In this scenario, a PaaS provider hosts the hardware and software on its own infrastructure, freeing carriers from having to install in-house equipment to develop or run parts (or all) of its core applications.

The attraction of PaaS is built around the ‘economic gravity’ of its business model.  Benefits are many and include:

  • Flexibility of service – the ability to expand or contract services and capabilities to match business needs
  • Removal of capital investment concerns – the removal of the need to ‘lock away’ investment dollars in physical systems and infrastructure
  • Modern up-to-date capability – the fact that any system accessed will be up to date with the latest software and run on the latest hardware, ensuring fast, effective performance
  • Pricing – the ability to flex pricing, in some cases moving to a transactional basis for any charges, so that the insurer only pays for the business volumes processed
  • Focus on ‘value-add’ – businesses can focus on the things that generate profit; whether that be risk management, investment expertise or product design and distribution

For those carriers seeking ‘high-end’ capability at competitive prices, the PaaS model has significant attractions, but why would an insurer pass what it may see as ‘core’ to a 3rd party?

The truth is that IT infrastructure is fast becoming commoditized and ‘non-core’ to many carriers.  Yes, access to an infrastructure is needed and having the right applications available to support core capabilities is vital, but the set up and management of the actual infrastructure can be undertaken by specialist teams inside, or outside, the insurer itself.

Freeing up teams to focus on the ‘value add’ is a goal that many are aiming for, enhancing the ability to concentrate on the things that are truly important, encouraging collaboration through the application, wherever it is managed.


For a number of business scenarios, this makes sense; quick-start access to new channels or territories and ‘road testing’ new products and services before wider adoption being two examples that ideally fit the PaaS approach.

For these reasons, we do not view platform services as wizardry; a passing illusion with little of substance.  Far from it. PaaS is a reality now, and a viable option to insurers who wish to leverage its capabilities without investing in the costly infrastructure required over the long-term.


To find out more about Evolut1on, our UK Platform as a Service solution offered with our partner CGI – click here

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