Why moving to the cloud is no longer a nice-to-have for health insurers

All technologies are contextual, or at least they should be, and that is certainly true for the group of technologies popularly known as the Cloud and their relationship to the insurance industry.

Thus far, the industry's problem with the Cloud is that it tends to mean different things to different constituencies inside insurance companies. For many business people challenged with the pressures of day-to-day competition and profitability, the Cloud promises some relief from having to rely on their own internal IT departments, allowing them to move with the rapidity and agility that the market demands. For many IT people, the Cloud means additional vendor management, data security, and backup and recovery concerns, and it should come as no surprise that Cloud vendors have, for the most part, not helped this situation through plain talk and reasonable expectation-setting to all concerned.

However, the real question for health insurers is what the Cloud can enable them to do that they can't do now, and what benefit it brings to them, their customers, and their potential customers. Several years ago, it could reduce infrastructure costs, thus helping with ongoing expense management efforts, or besides expense management, it could help to offload software development or quality assurance efforts. Today, the answers to that question are weightier. Moving to the Cloud addresses the evolving nature of health insurers, their customers, and their IT divisions.

For health insurers, it means a more digital approach and presence to all facets of the company, an ability to respond quickly to changes and opportunities in markets, an unfailing focus on customer service, and a fundamental move toward operational efficiency and reduced operational costs. For health insurance IT divisions, it means moving from tactical to strategic in thinking and effort, and developing better consultative and advisory skills when working with business people. It also emphasizes the importance of skills such as Architecture (Enterprise, Application, Integration, Data, Performance, Security, and Integration), proof-of-concepts, governance, business analysis, analytics etc., and re-purposing those with skills related to software development, technical operations, quality assurance, etc., to meet the needs of modern insurers and their customers.

The first step is to answer the questions of why do this, and what would I get out of moving to the Cloud? It's important to clearly define the drivers for any movement to the Cloud, such as speed to market, lower costs, product agility, and internal IT avoidance. For health insurers, a good example is Cloud-based CRM. In a highly competitive landscape amongst health plans, a member-centric and seamless experience can be a big differentiator, whether someone is shopping for coverage, enrolling in a plan, administering a plan, or contacting customer service. That's the kind of experience a good Cloud-based CRM can bring to a health insurer. The Cloud can also provide a smoother and quicker way for health insurers to provide the kinds of mobile platforms coveted by consumers, patients, and providers. Using the Cloud for mobile capabilities allows an insurer to spin up infrastructure and software much more quickly than they otherwise could, and those resources can be used on demand by the insurer if desired. Another good example is the move to advanced analytics and Big Data transformation. A Cloud-based approach allows insurers to try out various data tools and platforms to determine what's best for what they need to accomplish. It's a much more cost effective approach than licensing expensive software only to discover later that it's not exactly what's needed.

The second key step is putting the right kind of core team together. Again, it probably sounds like a no-brainer, but if often gets less attention than it deserves. For health insurers, it's the kind of blend in a team that covers all the functions needed to migrate to a Cloud service – IT, business, Legal, Finance, and optimally a C-level presence as the overall sponsor. Once the core team has been established, the third key step is conducting an application inventory and deciding on a migration strategy. It's important to remember here that not all applications are suitable for migration to the Cloud, so the best approach is to be as comprehensive and practical as possible. Some applications will be migrated, some will not, and some will be retired permanently. For example, any web-based applications, like self-service portals, are typically good candidates for migration. However, commercial off-the-shelf applications that are not supported on the Cloud may have to be left in place if they're still in use. Finally, it's an opportunity to retire or rewrite older legacy applications, and focus on the kinds of system that will add value for health insurers and their key stakeholders, like Cloud-based solutions related to ACA integration. Some of those solutions provide a SaaS integration platform between state and federally facilitated marketplaces, as well as supporting all existing business processes and platforms for both public and private exchanges. These kinds of decisions will drive the migration strategy for the applications to be retired, migrated, or added. It's important to remember that one size does not fit all – the applications and migration strategies will be different from health insurer to health insurer, depending on their particular market, regulatory, and system needs. Once those decisions have been made, what's next?

There are plenty of best practice approaches for these steps, so there's no need to belabor them here. What is important and hasn't been as well vetted, however, is preparing the organization for the migration. This is really where the rubber meets the road for any health insurer with a Cloud strategy. Too often, insurers focus primarily on the technical aspects of moving to the Cloud when the real metric for success will be the new Cloud-computing model's value toward the insurer's strategic business goals, and how the new model is accepted and used in the insurer.

From the inception of project planning for the Cloud, health insurers should initiate a parallel track that focuses on the expected changes in the insurer, from training, to suddenly new and obsolete roles, to a general company reorganization if appropriate – these are the tougher parts of any Cloud strategy. New roles created by a Cloud strategy might include vendor management, Cloud SLA monitoring, Cloud architecture, savvy operations in Cloud technology, and savvy developers in "Cloudy" software. There may be an opportunity for health insurers to repurpose resources as well. For example, if as part of the migration strategy the organization moves from a server-based to Cloud-based email platform, (Google Gmail, Office 365, etc.), those resources formerly dedicated to maintaining the insurer's email platform may be used elsewhere in the organization. It's important to recognize that for some people, the kind of work they perform prior to a Cloud migration might be a lot different than the kind of work they might do after a Cloud migration. This mindset change takes time, tact, empathy, and a whole lot of communicating the same things over and over again – the same behavioral model that health insurers should be exhibiting toward customers in this ACA era. Such approaches like new skills training, job mentoring, and even help with job placement if necessary, can all be effectively utilized as the situation warrants. More often than not, it comes down to simple common sense and human interaction. When things change, people want to know what's changing and how it might affect them. A good rule of thumb is to be forthright and clear with communications, and empathetic with any situation that arises. People deserve and respond to that. That said, if the migration strategy is clearly conceived, communicated, and executed, the payoffs are nothing less than the insurer's long-term success with Cloud computing.

Increasingly, the business model of health insurance, and therefore the business of IT divisions in health insurance companies, is moving from a transactional to a consultative model, and from tactical to strategic for insurers. To support this shift, IT skills emphasis is moving from areas like infrastructure, networking, and technical operations, and toward software architecture, business analysis, data analytics, and governance. That is why the Cloud is imperative now for health insurance companies. In order to stay competitive in the marketplace, effective with customer relations and service, and efficient with internal operations, platforms like the Cloud must be utilized. A successful migration to the Cloud should create capacity for a health insurer, financial and human. Freed from the kinds of roles required before the Cloud migration, talented business and IT people can be repurposed to more directly impact the customer-facing reach of the insurer. That's a powerful reason for any health insurer to put the necessary time, resources, and efforts into a move to the Cloud. For health insurers scrambling to keep up with a rapidly shifting consumer and regulatory marketplace, a move to the Cloud can be an important and impactful step.

Krishna Prasad is a senior architect for X by 2, a technology consultancy focused on the practice of architecture for the insurance and healthcare industries based in Metro Detroit.

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