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Monthly Archives: April 2015

Establishing Cost Transparency and Changing Your Relationship with the Customer

Today’s IT organizations need a clear picture of what each service costs to facilitate strategic conversations with their customer, the business. This is the only way to continue innovating while operating within budget and competing with the growing prevalence of shadow IT.

To explore some of the most common use cases addressed by IT Financial Management (ITFM), join two of VMware’s most experienced ITFM consultants for this on-demand webinar as they discuss the business issues, solutions, challenges and benefits of a service costing system.

In this webinar, Michael Fiterman, Senior Consultant for vRealize Business, and Brendan O’Connor, Senior Technical Consultant for vRealize Business, will walk you through:

  • Cost transparency:
    • What is real cost transparency?
    • How can it be achieved, and what are the immediate benefits?
  • Customer intimacy:
    • How can we change the conversation with IT consumers?
    • How will it change our business?

IT Transformation in the Insurance and Financial Services Industries

Gowrish_MallyaBy Gowrish Mallya

Insurance and Financial Services companies are undergoing rapid transformation due to the advent of technological innovations. By 2018, nearly one-third of the insurance industries’ business is expected to be generated digitally. In order to be digitally competent, insurance companies need to1:

  • Reduce barriers to customer interaction
  • Use new business models

VMware’s Accelerate Benchmarking Database provides interesting insights into the current state of IT readiness of insurance and financial services companies – and their target state goals. Let’s take a closer look at the two requirements for digital competence.

1.      Reduce Barriers to Customer Interaction

In a perfect environment, all of the Tier-1 applications would be written in lightweight, highly-portable application frameworks, and be capable of harnessing cloud-connectivity and scalability. Virtualizing Tier-1 applications decouples the software stack from the hardware, thereby easing operations like planned maintenance; as a result there is tighter alignment between IT and business needs. IT would then be able to develop applications to keep up with market needs and serve their end customers better.

VMware’s Accelerate Benchmark Database shows that in Insurance and Financial Services industries, currently only 14 percent of the companies have 75 percent or more of their Tier-1 applications virtualized; the industry-wide company average is around 25 percent.

The data also shows that only 34 percent of the companies have executive or line-of-business support for cloud as a strategy. IT can contribute significantly to reduce computing cost, but without management support, cloud efforts will be difficult and challenged, as the true benefit potential cannot be effectively communicated to business units and end users.

By 2018, insurers anticipate nearly one-fifth (19.7 percent) of their business will be generated through Internet-connected PCs, up from 12.7 percent in 2013. Another 10.9 percent is expected to come via mobile channels, up from a mere 1.5 percent in 2013.2 Application virtualization is key to help businesses cater to such exponential growth that will come from the  Internet and mobile devices, as it will help reduce time to market for new features or products across all customer segments.

2.      Use New Business Models

For organizations in this industry, making quick, informed decisions and acting swiftly defines mediocrity from success. Being able to deploy infrastructure at the earliest point in time helps organizations achieve their goals in the shortest time possible. To achieve higher levels of cost performance, agility, scalability and compute, virtualization must be nearly ubiquitous.

Monitoring of the deployed infrastructure is vital for an organization that enables it to run in an optimal state by:

  • Keeping a check on capacity and provisioning issues by giving out an early warning
  • Providing transparency and control over cost, services and quality
  • Benchmarking the IT systems performance

VMware’s Accelerate Benchmark Database shows that 92 percent of the companies are at least 40 percent compute virtualized. Also, 50 percent of the companies do not have storage virtualized, and 56 percent are not network virtualized. Virtualizing storage and network infrastructure can reduce day-to-day operational tasks and costs associated with important—but non-strategic—processes.

The data also shows that 78 percent of the companies have either no ability to meter IT usage, or they do it manually. Also shown is that 86 percent of the companies intend to partially or fully automate IT service metering. With metering of IT service usage completely automated, there is predictive capability to understand when usage will trigger an elastic event within the environment, thereby aiding in achieving a flexible and scalable IT infrastructure.

The insurance sector is witnessing new business models from new entrants. German company Friendsurance has implemented the concept of online peer-to-peer insurance. Friendsurance uses social media to link friends together to buy collective non-life policies from established insurers. A small amount of cash is set aside to cover small claims, and if the pool is untouched at year-end, it is shared among the group.3 In order to be agile, the companies need to focus mainly on infrastructure virtualization and analytics.


1 PWC white paper, “Insurance 2020: The digital prize – Taking customer connection to a new level
2 Capgemini: World Insurance Report 2014[JP1]
3 EY Global Insurance Digital Survey 2013

Gowrish Mallya brings around 8 years of experience in value engineering and benchmarking. He works closely with account teams and strategists across AMER & EMEA to address VMware customer’s IT challenges and demonstrate our solution value. Gowrish is currently a Value Engineering consultant within Field Sales Services team in India