SaaS in Life and Pensions; Every Cloud…
Are you in the Cloud? Or, just lost in the fog? Do you have the nagging feeling that everyone else is there and so should you? These are the questions that bedevil CIOs and CTOs these days. If one reads the trade press, one can easily end up with the impression that everyone, but you, is floating on a high, looking down on the Ryanair flights passing below. In practice, the majority of core application implementations in the life and pensions industry have been on-premise, and are likely to remain that way in the short-term.
At first glance, it appears that the answer should be yes, you should be moving to the Cloud. In theory, it seems to be the answer to everyone’s problem – paying just for the software you use sounds beguilingly simple. The problem is that there are wildly different views of what is involved in ‘being in the Cloud’, and the benefits and problems it brings.
This is partly because there is no unified view about what the difference is between the SaaS, cloud-based, and hosted deployment models. Many people use the phrases interchangeably, and so it is difficult to establish the pros and cons, and decide whether there is a business case for your company to move away from on-premise software.
True Software-as-a-Service (SaaS) is cloud-based, and the consumer only pays for what he or she consumes. It is akin to electricity usage where a small standing charge gets you connection to the service, and after that you only pay for every kilowatt you use.
True SaaS is achieved by allowing clients access the software in a multi-tenanted environment where when you release resources, they are available for another customer to use. Hence, the model is optimised to get the maximum use from the underlying hardware. Using SaaS frees up the organisation from the expensive but non-core activities of maintenance, backup, disaster recovery, and data protection issues as these all become the vendor’s problem.
This is fine for utilitarian software such as email and office productivity suites, but when it comes down to the company’s core offerings, things get slightly more complicated. Illustration, quotation, underwriting, policy, and claims are all areas where the data is very personal and highly sensitive. Because of this, putting core information out onto the public cloud in a multi-tenanted environment is potentially a high-risk move for life companies.
Although the chances of the data being leaked may be very low, the consequences of it happening are extremely high with the possibility of huge costs in fines and damages. A safer solution to consider is moving to a private cloud, single tenanted environment, where the benefits of the maintenance can be achieved, albeit at a higher cost, with the risk of data leakage massively reduced, if not eliminated.
Few life and pension companies are truly prepared for the real SaaS offering, where you are charged by transaction, input/output, database size etc. Subscription based charging is a more realistic approach, and gives a reasonable facsimile of per-use charging.
For that reason, true multi-tenanted SaaS is still a leap for life and pension companies at this point in time. While there has been a lot of talk about the SaaS model for life and pension software delivery, actual deployment has been mostly to hosted private versions with subscription licensing, as the industry makes cautious moves in the direction of the cloud.
Software as a service is a goal to be approached in stages, rather than a big leap, if they are to retain the confidence of both their customers and the regulator that they are in full control of their data. Don’t let the silver lining lure you into the Cloud, before you’re ready.
What do you think? Let us know in the comments below!