WHITE PAPER

Data in the Cloud:

Opportunities and Challenges

Introduction
Insurers today require data that is complete, highly curated, and available in near-
real time. However, these data forces are often in conflict with each other. The
emergence of data lakes and new streaming techniques — coupled with migrating
core systems to the cloud — offers both opportunites and challenges. This white
paper discusses these opportunities and challenges in detail and shows how
Guidewire Cloud Platform enables a seamless and rapid transition to the cloud.
 DATA IN THE CLOUD: OPPORTUNITIES AND CHALLENGES

Managing insurance data is hard. CIOs are constantly juggling to keep data consistent across multiple
source systems, meet stringent financial and regulatory reporting requirements, and provide detailed
operational insight to the business. Each of the following use cases has typically required a trade-off
in data scope, curation, and latency.

• Scope: Typical reporting needs are structured and focused on key financial metrics. On the other
hand, data science and actuarial use cases typically require the largest scope of data elements
(in terms of depth and breadth) so that all potential predictive factors can be exposed.

• Curation: Source system data is structured to maximize operational and data entry performance.
In its raw form, it’s not typically usable for reporting and analytics. Simple curation such as
decoding a line of business code into its human readable description is often required. More
complex derivations include calculating earned premium, allocating financial measures, or
performing audit and control balancing. Combining multiple, disparate source systems into a
single version of truth is even more challenging — especially when those systems have different
contexts, different granularity of data, and different coded values and formats. The use case
dictates the required level of curation. Financial and regulatory reporting tend to require the
deepest level of curation, since they are mandated by regulations and must be accommodated.
Data science use cases, on the other hand, tend to require less complex curation. But all use
cases require some level of curation.

• Latency: Different use cases require data to be delivered in different time frames. Most point-
to-point integrations need data in synchronized real time; typically with a small data payload
and little curation. Use cases such as operational reporting and dashboarding require near-real-
time availability. Management and regulatory reporting may need only daily, weekly, monthly,
quarterly, and annual frequency.

These three driving forces — scope, curation, and latency — are often in conflict with each other.
As the level of curation increases, latency typically increases as well. Complex curation is also very
expensive, and tough choices need to be made about the data elements to include in the scope.
Until recently, insurers’ data strategies started with meeting financial and regulatory reporting
obligations. This was due to business realities as well as limitations with available technologies.
That is why most insurance data environments today are made up primarily of relational databases
linked together with ETL (extract, transform, load) and SQL (Structured Query Language)
data transfer solutions that run on a batch schedule. Business operations and/or data science
requirements were typically layered on top of the financial and regulatory reporting base. Insurers’
IT teams hired resources with ETL/SQL skills to keep the environments running efficiently.
 DATA IN THE CLOUD: OPPORTUNITIES AND CHALLENGES

Opportunities and Challenges

Over the last decade, new data streaming solutions have emerged that improve completeness and
latency for data science and operational business needs. For example, many insurers have moved from
traditional ETL to ELT (extract, load, transform) approaches. At the same time, they’re implementing
data lakes in parallel with their existing data warehouses to take advantage of the new technologies
while ensuring business continuity that relies on existing financial and operational reports.

In the long term, most industry experts acknowledge that an ELT approach to a target data lake
will overtake and replace traditional data architectures for access to operational source system
data. Business leaders won’t accept waiting a week for operational insight. The next best action for
customer retention and cross-sell also requires real-time insight. Modern digital use cases require
more complete data, higher curation, and lower latency.

Rapid migration of business systems to the cloud have served only to accelerate this transition. As
core systems move to the cloud, the underlying assumption is that these new platforms will leverage
modern streaming data approaches while also continuing to meet all current and future financial and
regulatory reporting business requirements.

The current situation provides both opportunities and challenges. Business system migration to the
cloud is probably an insurer’s best opportunity to modernize internal enterprise data architectures.
But budget constraints, existing skill sets, the need for business continuity, and associated risks are
barriers to a “big bang” adoption of modern data technologies.

Solutions
For InsuranceSuite customers migrating to the cloud or adopting cloud for the first time, Guidewire
recognizes that leveraging modern data solutions is inevitable and will happen over time. Core
system cloud migration projects must leverage as many of the new capabilities as possible while
reducing risk, staying on schedule, and remaining within a reasonable budget. Guidewire has taken
the following steps to help our customers make the transition over time and as rapidly as possible.

• Prebuilt, near real-time data streaming from InsuranceSuite for ELT (i.e., Cloud Data Access):
Data is delivered from source systems into the platform via streaming technology. This preserves
all source changes and picks up custom fields automatically. This brings data to rest in near-
time, generally within minutes, and is suitable for most “real-time” use cases, operational
reporting, and data science needs.
 DATA IN THE CLOUD: OPPORTUNITIES AND CHALLENGES

• Cloud integration frameworks including Apache Camel–based Integration Gateway and App
Events business triggers: Satisfies true real-time use cases where small-payload, low-curation
activities are needed to share data between applications of an ecosystem.

• Cloud hosting of traditional conformed operational data store (DataHub): A subset of curated
data at rest with relational structure and fidelity (i.e., audit and control balancing); satisfies the
needs of curated data consumers such as data science, bulky integrations, and data warehouses

• Cloud hosting of traditional data warehouse data marts (InfoCenter): Satisfies the needs of
management, daily operational, and regulatory reporting

• Production database schema access (Production Data Access): Enables direct access of core
database environments either as a periodic snapshot or real-time replica; a temporary offering
to enable customers to make the core transition and then switch to the regular Guidewire Data
Platform access methods

• Consulting partners with specialized skills around streaming data technologies and Guidewire
Cloud data integration approaches: System integrators (SIs) continue to be an important part of
Guidewire implementations. SI’s have the skill sets in streaming technologies and Guidewire’s
data platform access methods. They can augment the insurer staff to speed implementations
and transfer knowledge

• Solution partners with prebuilt connectors to Cloud Data Access, Cloud APIs, and/or Cloud
Integration Frameworks: These are third-party providers with capabilities that can be leveraged
either through the Guidewire Marketplace or directly to help customers connect to and from
the data platform

Conclusion
Guidewire believes that insurance data in the future will be universally accessible and complete,
highly curated, and offered with very low latency in near-real time. Guidewire Cloud Platform (GWCP)
offers a modern data architecture and product roadmap to realize this promise. With this platform
offering, we’ve taken discrete and concrete steps to assist and accelerate our customers’ transition
to the cloud.

Guidewire is the platform P&C insurers trust to engage, innovate, and grow
efficiently. We combine digital, core, analytics, and AI to deliver our platform as
a cloud service. More than 450 insurers, from new ventures to the largest and © 2 022 Guidewire Software, Inc. For more information about Guidewire’s trademarks,
visit http://guidewire.com/legal-notices. Document Published: 2022-05-26
most complex in the world, run on Guidewire. For more information, contact us
at info@guidewire.com.