On-Premise vs. Cloud Solutions for Your Insurance Compliance Management

The cloud vs. on-prem software debate isn’t new. And, while on-premise software isn’t dead yet (not by a longshot), cloud solutions are also growing at breakneck speed. Cloud based services, often identified by their tell-tale “aaS” suffix (as in, software as a service, or SaaS;  infrastructure as a service, or IaaS; business process as a service, or BPaaS) are everywhere. Take AgentSync for example: We’re a provider of cloud based compliance as a service solutions. 

Depending on your use case and needs, there can be numerous advantages to moving to a cloud-based solution including enhanced security, predictable long-term costs, scalability, ongoing software updates, lower energy bills, and many more. We’ll cover some of the basics, along with questions to ask when you’re considering moving to a cloud based insurance licensing compliance solution. 

What is on-premise software? 

On-premise refers to the local installation of software on a computer as well as local data storage. If you’re old enough to remember floppy disks and CD-ROMs, you already know the basics of on-premise, also called on-prem (for short), software. Back in the day, it was normal to purchase a software program from a store. You’d take home a box, unwrap the plastic, and install your shiny new word processing software (or Oregon Trail, let’s be honest) on your state-of-the-art Pentium 486. 

On a more industrial scale, on-premise computing consists of server closets, server rooms, or even server warehouses. However large or small, the key component of on-premise software and data storage is that the software exists on one computer and the data is stored in one or more physical locations. That doesn’t mean you can’t have multiple data backups, just that you need additional physical storage space for every duplicate copy you make. When dealing with large quantities of data, and backups of those large quantities, it’s easy to see why large spaces and large electric bills come along with on-premise services. 

What are the downsides of on-premise computing?

When you count on physical storage space for your data, security is a real concern. As much as cyberattacks are a risk today, we don’t worry as much about someone physically breaking into the server room and walking off with a hard drive. That’s because most of our important data is stored in the cloud (more on that later). 

We also don’t worry about losing our computer or phone and having to eat the cost of an expensive application. In the world of on-premise computing, this was a real issue. If you lost the CD-ROM with your expensive software, or if you lost the box where the one and only license key was printed, your only option was to purchase another copy at full price. 

Other downsides of on-premise computing and on-premise software include: 

• High energy costs associated with running large numbers of servers
• The need for on-site staff to maintain, upgrade, or repair physical hardware
• Steep initial financial investment to purchase the necessary hardware, with no ability to scale down if it’s no longer needed in the future 
• The cost of physical space for storing on-site servers
• Expensive multi-layer physical security measures to protect all those servers (locks, gates, mantraps, biometric identification systems, and much more)

Pre-internet there was no alternative to on-premise computing. Even in the early days of computer networking, when multiple machines communicated with each other, everything was still based on physical hardware being in close enough proximity to run cables between them. That meant people (typically researchers) who needed to share information between computers had to literally pick up and take their computer to another location where it could be connected to other computers. 

Today, things are different and consumers have a choice in most situations whether to go with on-prem software or to buy something cloud based. More and more often, on-premise software options are being eliminated and cloud based solutions are the only offering. 

Why do people still like on-premise software? 

Despite all the disadvantages, some people still think they’re getting a better deal with on-premise software because they like the idea of a one-time purchase instead of an ongoing subscription. Some people are tied to the idea of owning their own software and data (even though you rarely own software anymore, and you almost always own your data either way). This may still work for some organizations, and for some use cases, but on-prem is hardly the best way to do everything the way people once imagined. 

Some other perceived advantages of on-premise computing include: 

• Full ownership and control over your software and data (again, even with cloud based services, customers generally own and control their data) 
• Full insight into physical and cyber security measures pertaining to your data
• Full control over decisions related to hardware and software
• The ability to operate without internet access, as everything can be connected via a local area network (LAN) 

These may be actual advantages for some companies in some situations, namely if the organization is large enough to handle the responsibilities that come along with all that control in-house. And, for some situations, taking a hybrid approach – blending some cloud based infrastructure with some on-premise services – is an ideal way to go. 

But from where we sit, there’s no compelling argument for continuing to manage producer license compliance locally. Not least of all because many insurance companies and insurance agencies who manage their producer compliance locally are doing it with paper files and spreadsheets. If that’s the case for you, then we urge you to modernize whether you choose to do it with on-premise services or a cloud based solution like AgentSync. 

What are cloud computing solutions? 

In contrast to on-premise computing, cloud based solutions use the power of the internet to distribute data storage and processing across regions, countries, or even across the world, depending on what level of distribution a customer wants. Instead of storing their data in their own, single, physical location, cloud customers pay an ongoing subscription fee to have their data stored across a large network of servers owned and maintained by a third party, with multiple physical locations.

Amazon Web Services (AWS) is one of the most well known cloud computing companies, and is used by many of the world’s largest enterprises, from Disney to Pfizer. AWS also partners with Salesforce, a leading customer relationship management (CRM) solution, that also happens to be our beloved partner at AgentSync.

According to Microsoft, another leader in worldwide cloud computing, the terms “cloud computing” or “cloud based solution” can refer to “servers, storage, databases, networking, software, analytics, and intelligence” all existing or taking place anywhere, anytime, in real-time, by accessing data and computing power that’s stored in a distributed fashion rather than a centralized location. 

Advantages of cloud based services

Cloud based services provide companies with 24/7 access to their software and data from anywhere with an internet connection. They’re affordable and easily scalable, often with little-to-no upfront costs and the ability to add or remove users as business needs change. 

Why move from on-premise to cloud?

Companies need fewer IT resources when they use cloud based solutions because everything is included. From information security to software upgrades to bug fixes, the cloud based solution provider handles everything you need to keep the software running. Companies can also say goodbye to physical storage space and high energy costs that come along with keeping data on-premise.

Need a few more reasons to go the cloud route? 

• Cloud based software solutions are more reliable and resilient than on-premise servers because the distributed and redundant nature of cloud data protects against outages from local weather events, power outages, and more. It would take significantly more money and space to have the same number of backups on-prem compared to sourcing a cloud solution. 
• Using a cloud based solution outsources much of the IT “busy work” like performing maintenance and upgrades, so your internal IT staff can focus on higher-level projects.
• Cloud based solutions are often more secure because cloud providers have industry-leading security protocols, top cybersecurity talent, a single-minded focus on security, among other advantages that smaller organizations don’t have.
• Cloud infrastructure allows companies to scale up and down as needed. Whether it’s needing more or less computing power, data storage, or user licenses, an organization can customize what they’re getting much more easily than when purchasing physical data storage and other hardware. 

Questions for your cloud solution provider

Not all clouds are created equal. At AgentSync, we partner with AWS for our cloud computing needs, ensuring a world-class level of technology, security, and service behind our own software. On the other hand, if you learned that a potential solution provider is going to put your data on Big Bob’s Homemade Cloud, you might feel a little less secure in your decision. 

Seriously though, many of the advantages of choosing a service provider that’s based on cloud infrastructure can quickly turn into risks if the solution provider isn’t on top of their game. Here are some questions to ask any solution provider you’re thinking about working with. 

• Which cloud provider(s) do you work with to store your own and your customers’ data? 
• What is your cloud provider’s uptime SLA?
• What level of redundancy does the cloud provider offer?
• How dispersed (or on the contrary, how regionally consolidated) are the servers you’re putting internal and customer data on? 
• What security measures do you (the vendor) and your cloud infrastructure provider have in place?
• Has your company achieved an industry-recognized standard such as a SOCII Report?

A cloud based insurance compliance management solution 

AgentSync provides a modern, cloud based solution to many of the common pain points across the producer management lifecycle. From producer onboarding to carrier contracting to ongoing license renewal, AgentSync eliminates manual and repeat data entry and makes your compliance staff’s lives easier. And we let you do all that from anywhere in the world with an internet connection, thanks to the power of cloud computing. 

If you’re looking to realize all the benefits of cloud computing covered here, and more, see how AgentSync can help!