Cross-Ocean Clouds Are Gaining IT Favor

Japan's AIG Edison and others say cloud benefits outweigh latency issues even when apps are hosted on the other side of the globe.

Just over a year ago, Tohru Futami came to the conclusion that AIG Edison Life Insurance Co. needed to upgrade its core applications.

The Tokyo-based insurer's systems were seven years old and often didn't let the back office and the sales staff share information in a timely manner. Furthermore, some of the company's processes were still paper-based.

The primary options were to rewrite the applications or move to the cloud and run hosted software, said Futami, former CIO and managing director at AIG Edison, which was acquired by Prudential Financial Inc. last month.

Spreadsheet calculations determined that an in-house rewriting of AIG Edison's applications would take about 30 months, while a move to Salesforce.com Inc.'s cloud platform would take around 10. And the cost of moving to cloud technology would be about one-third that of any other option.

AIG Edison went with the cloud, but not until it had addressed security, legal and regulatory concerns and was convinced that the location of Salesforce.com's data center on the West Coast of the U.S., 5,000 miles from the insurer's headquarters, wouldn't cause significant network latency problems.

Early in the implementation process, AIG Edison hired services firm Appirio Inc. to help make sure the cloud-based system would provide "almost the same level of response time" as the old system, Futami said.

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