September 14, 2012

Web-hosting company GoDaddy’s six-hour outage was initially suspected to be the work of hackers, but turned out to be caused by internal factors, leading one of our InformationWeek colleagues to ask, "What's worse for a website hosting company: getting taken down by hackers, or failing to properly configure your network, sparking downtime and lost revenue for customers?" As potential or actual customers of such a company, the GoDaddy incident offers a cautionary tale about how a public cloud environment can create downstream risks for financial services companies — even when the problem is not directly associated with their data.

Jeff Kaplan
Jeff Kaplan, CEO, Breakthrough Technology Group

The Push towards cloud has created an opportunity for many companies to compete globally and to utilize shared resources in an on-demand model, notes Jeff Kaplan, CEO of Breakthrough Technology Group (BTG), a Morganville, N.J.-based managed services provider. In addition, the maturity of virtualization in the server, desktop and application space has established a strong and compelling ROI for companies of all sizes, he adds.

“The case for a private or semi-private cloud seems to be closer to meeting many requirements and yet delivering a similar value and ROI,” comments Kaplan. “A private cloud is one where all the hardware is dedicated to a particular customer; a semi-private cloud is where some components are shared, yet the server farm is dedicated to a particular customer.”

Insurance carriers who are able to create flexible models with in-house, private cloud and public cloud solutions will enjoy a competitive advantage over those who can’t, predicts Alfred Goxhaj. However, prudence is the byword in Goxhaj’s recommendations to insurance industry technology officer peers, as expressed in his “An Insurance CIO's Guide to Tapping the Benefits of the Cloud.” He advises:

Alfred Goxhaj
Alfred Goxhaj, Philadelphia Companies
Prudent pragmatism in solution adaption will replace the monolithic, risky-to-implement, slow-to-develop, and difficult-to-change internally hosted solutions. Blending in-house solutions with cloud-based options may be a prudent approach until the cloud becomes truly mainstream and secure and inarguably more economically viable than hosting within the carrier's own environment.

[For more on insurance CIOs' evolving views on the cloud, see4 Critical Questions About the Cloud.]

BTG’s Kaplan reports that many of the firm’s customers are gravitating to the semi-private cloud model to benefit from virtual isolation and a physical, private server environment. He enumerates the benefits of the approach:

- Flexibility to be customized to meet specific customer requirements;

- Cost-effective as some of the parts (server, security and networking layer) are shared yet isolated producing a lower cost model;

- 24 x 7 support;

- Can be combined with server, desktop and application virtualization to deliver optimal performance.

The semi-private approach supports the same benefits that would lead an organization to the public cloud, yet does so in a manner that does not sacrifice the requirements and the customization needed to fit into an organization’s business processes, Kaplan asserts. “For insurance companies, banks, investment houses and other financial institutions, this hybrid model offers a level of protection against the inherent vulnerabilities of using a public cloud model," Kaplan says.

ABOUT THE AUTHOR
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek ...