How to work out where you are and where you want to be
Most insurance brokers don’t know where they are in their cloud migration journey. This article explores why. It goes on to explain Celent’s 8-tier migration model, how to work out where you are on that model, and the next steps to take to work out which tier is best for your broking business in 2021.
In a recent webinar we co-hosted with analyst Craig Beattie from Celent, we ran two polls with the attendees. The results were surprising.
Brokers are typically less far along with cloud than they thought
It turned out that 74% of respondents were only at tier 3 on Celent’s 8-tier cloud migration model. That’s the lowest tier of cloud migration, as you’ll see in a moment. Sixty-two percent of respondents then said they wanted to be at tiers 6, 7 or 8.
So there’s a gap between where most brokers are now and where they want to be. And many brokers are surprised by this.
“Who knew there were 8 levels?”
“Who knew there were 8 levels [of cloud migration]?” said Keith Bucknall, IT and Projects Director at London-based broking group SRG. SRG is a fast-growing speciality risk broker named one of Insurance Times’ Top 50 Brokers. Yet even Keith was surprised to learn about the 8 tiers model. Keith was a guest on our webinar, and he was explaining his group’s experience with cloud migration.
“Before this webinar, I would have said ‘of course we’re number 8 and we’re at the top’. It’s interesting to understand the scale and where we lie,” he said.
Another guest on the webinar was James Willison, Managing Director of Web Connectivity, a software provider and consultancy for insurers and brokers. He commented that learning about Celent’s 8-tier system had caused “a lot of debate and conversation internally”.
From having thought they were at the top when it came to their cloud infrastructure, his company would now “put ourselves as a 5-plus”.
If even a software provider is surprised to find out where they are on the cloud, it’s no wonder many brokers are confused.
Why is cloud migration so confusing?
The reason for this confusion is simple. As Craig Beattie explained in our webinar, most software vendors offer cloud technology to brokers. Many of them claim their software is “cloud-native”. Yet there’s no common definition among vendors as to what this means.
At the same time, Celent has seen an increase in the number of brokers and insurers asking vendors for “cloud-native” technology – and they also mean different things when using the same term. As a result, the potential for confusion is huge.
Because of this, Celent set out to analyse the cloud offerings of vendors, as well as what insurers and brokers mean when they ask for “cloud-native” tech. After researching the market, they published a report on their findings which ranks the stages of cloud migration into 8 clearly defined tiers.
Understanding the 8 tiers of cloud migration
According to Celent, the 8 tiers of cloud migration are:
Tier 1: On-premise legacy
An older system hosted physically onsite by the broker. Often a barrier to change because maintenance takes up valuable time and resource and because legacy systems are hard to integrate with newer technology.
Tier 2: On-premise
More modern systems, but still run onsite, requiring on-premise servers, storage and hardware.
Tier 3: Hosted on the cloud
“Lifting and shifting” an on-premise application onto the cloud. Because this application resembles on-premise models, it doesn’t require a huge mindset or behaviour shift within a broking business. It’s good for fast adoption and easier change management in your business but offers limited cloud functionality.
Tier 4: Enterprise Cloud Native
Cloud environments intended for use by large enterprises and designed to solve common enterprise challenges. Typically built with on-premise in mind. This tier tends to increase the agility/speed of change within an enterprise compared with tier 3.
Tier 5: Open Source Cloud Native
Typically involves accessing libraries of ready-made cloud-based applications built for general purposes that can be adapted for a specific industry or business needs. Insurance software vendors often adopt these models as a way of moving their software services into the cloud. This tier is fast and flexible but still requires in-house IT resource and expertise.
Tier 6: Cloud Tied
Some vendors are leveraging capabilities from one specific cloud but going a little deeper, which improves productivity and often also agility. When tied to one cloud, you can no longer operate on-premise or in other clouds.
Tier 7: Serverless Application
A real step change. In steps 6 and below you’re still thinking about how many machines do I need and how do I organize them? From tier 7, you’re no longer worrying about what machine’s running it. You can focus completely on the business functionality you want to deliver. However, this tier typically requires significant internal IT resource and expertise to manage multiple clouds.
Tier 8: Extreme Cloud Native
Even more focused on the optimal way to deliver business functionality. Major benefits include performance, scalability, and the flexibility to develop and configure the system quickly, with minimal or no coding. This tier allows huge numbers of users high-performance access to the platform from anywhere using tablets, mobiles and other devices. It also offers the ability to integrate with other ecosystems.
Working out which tier you’re at now
On the webinar, Keith from SRG was clear that understanding where the group was on the tier model made it easier to set goals for future migration.
“As we’re going through now changing our line-of-business applications, we have a number of applications that are cloud tiered,” he said.
“Where do we want to be? My mission is not to have anything in any of our offices that means we’re tied to any location,” he added.
If you need more help working out where you are in your cloud journey, why not check out our 12-page ebook The 8 Tiers of Cloud Migration For CIOs, COOs and IT Directors.
Next steps for working out which tier is best for your business
Different tiers suit different businesses. “Not every business needs to be an eight,” as Novidea’s UK Managing Director, Ben Potts likes to say.
For example, tiers 3, 4, 5 and 7 are typically “multi-cloud”. But going multi-cloud means you need the capability in your organization to manage this.
“That’s fine for a massive multi-national operation with a huge IT department, but it won’t work for everyone in the insurance industry,” Craig said on our webinar.
So the next thing to do is go through these three simple steps:
- Step one: think about your business goals and priorities.
- Step two: think about how the cloud can help you meet those goals.
- Step three: think about how much IT resource and expertise you have in your organization. How are you going to fill the gap – or how will you choose a vendor to help you? And what kind of support do you need them to provide?
If you’d like more guidance thinking through these steps, download one of our helpful guides:
For more technical details, check out The 8 Tiers of Cloud Migration for CIOs, COOs and IT Directors.
For more high-level business strategy, check out The 8 Tiers of Cloud Migration for CEOs, Heads of Broking and Heads of Sales.