For owners and principals in the insurance industry, the landscape for deploying new technologies within agencies has experienced great change. Non-tech savvy owners may often find it difficult to understand conversations about the cloud, Software as a Service (SaaS), or managed service providers. Below are six frequently asked questions (FAQs) about shifting operations to the cloud.
1. What should be considered when upgrading computer hardware?
Not too many years ago, businesses would purchase and store computers, software and servers in one physical location—installing and maintaining software applications on on-premise hardware. Today, cloud computing is replacing physical products with SaaS solutions. SaaS solutions deliver software products and systems over the Internet. Often referred to as “on-demand software,” applications are hosted on a SaaS provider’s servers and are not located on the premises. This may include core processing systems, servers, email, and day-to-day desktop applications such as Microsoft office.
SaaS is an evolving area of opportunity that more brokers and agents should take advantage of. As agencies look to upgrade aging technology, it is worth evaluating agent management systems that support cloud-based, vendor-hosted, solutions—eliminating software and hardware management and server equipment. Modern cloud technology removes the physical boundaries that once constrained small business environments.
2. What are some of the best cloud hosting solutions?
Microsoft, Google, IBM, and Amazon have some of the best known and leading cloud hosting solutions available today. Utilizing a cloud based solution allows brokers and agents to reduce the cost of maintaining server infrastructure by using a pay-as-you-go or consumption based service plan. These plans help to improve cash flow – a critical need for the soft market or brokers building their book of business. Instead of having to make a larger upfront investment, they can now pay in smaller increments. Using cloud services also provides excellent levels of scalability.
3. How does using the cloud improve scalability?
If a principal purchased another agency or adds additional staff, the cloud provides the ability to quickly ramp up without buying additional back office equipment. It can be as simple as logging into the system and increasing the service plan. Without the cloud, the business might need to hire additional IT staff to manage the increase in infrastructure and physical hardware costs, including the on-going maintenance of that hardware. More brokers and agents are moving to the cloud to skip this step, providing greater flexibility for their business’ future. Another area that follows this same construct is evaluating the software that is used.
4. How does software play a role in minimizing costs for businesses?
If an insurance agency is looking to minimize or avow an investment in dedicated, on-site IT resources, one approach is to look at their software portfolio. Much of today’s business software can be provided as SaaS. This is becoming a common practice by insurance software vendors where they offer online solutions in a hosted environment. We have seen this continue to expand to other desktop software such as Microsoft 365. With this approach, businesses no longer have to install and update software on each machine. SaaS solutions can also be used to replace server based applications. For example, traditional email servers, including the Microsoft Exchange Server, are more and more often being replaced with cloud based solutions. Many startups and small businesses might also consider replacing traditional desktop tools with a growing list of less expensive or free cloud based applications. This could include approaches such as using Google Docs instead of Microsoft Office or leveraging software such as Prezi to create low cost, engaging presentations. As with any software, there are both pros and cons to each approach, and many of the non-traditional applications are still building out features and functions.
5. How else can the cloud reduce costs?
If a small business has IT support needs, but does not feel they need to hire a full-time employee to handle the work, they should try looking at a managed service provider. These are third parties that will host and manage IT functions such as desktop service support. This gives businesses access to technology at the click of a button and avoids bringing on a costly new hire. Many agencies find this a more flexible and nimble way to accomplish and achieve their goals while reducing costs.
6. How is the best solution found?
To ensure the viability of an insurance agency, owners should look for ways to communicate and engage with clients. Owners should inquire as to what they find valuable in terms of technology and the relationship they have with the agency. This information can guide the conversation with insurance partners. As a wholesaler and managing general agent (MGA), Burns & Wilcox is dependent on feedback from retail brokers and trading partners on how they expect to do business as a new technology strategy is implemented. Retail agency owners should seek the same sort of feedback from their clients to ensure they are providing them with excellent client service.
Cloud-based services help to minimize operating expenses for business owners. This is a key trend in today’s market, and should be a consideration for even the most seasoned offices. The cloud is here to stay.
Michael Paulin is the Chief Information Officer and Vice President of Information Technology at H.W. Kaufman Financial Group. With more than 20 years of experience, Michael is uniquely positioned to understand, interpret, and foresee technology trends.