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Cross-Ocean Clouds Gain Despite Millisecond Delays

Patrick Thibodeau | March 4, 2011
Concerns about latency and questions about security and regulatory issues aren't stopping CIOs from moving key systems to the cloud, even if it means using apps hosted in data centers on the other side of the globe.

FRAMINGHAM, 1 MARCH 2011 - Just over a year ago, Tohru Futami, CIO and managing director at AIG Edison Life Insurance Co. in Japan, knew that his company needed to upgrade its core applications -- the 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.

Futami said the company's main options were to rewrite all of the applications or to move to the cloud and run hosted software. Spreadsheet calculations convinced the firm to try the latter option.

The calculations estimated that an in-house rewriting of the AIG Edison's applications would take about 30 months, while the company could move to Inc.'s (CRM) cloud platform in just 10 months. The research also indicated that the cost of the cloud technology would be only about one-third of the cost of any other option .

Futami said the key consideration for AIG Edison officials from the start was to complete the project as quickly as possible. "To improve customer services, a system improvement was a must," he said.

The decision of whether to move to the cloud via's hosted CRM offering was complicated early on because the hosted software resides in a data center on the West Coast of the United States, 5,000 miles from AIG Edison's Tokyo headquarters. The distance raised concerns about network latency, and officials also wondered about the legal and regulatory issues involved in such a setup.

Nevertheless, AIG Edison did decide to turn to the cloud, and work on running the company's new core applications on computers in San Francisco began last January. Today, the system is available for use by several million AIG Edison customers, millions of prospects, some 3,000 employees and 15,000 insurance brokers and resellers. The hosted applications handle complex tasks such as generating insurance quotes and running simulations to assess coverage needs.

Futami said that early on in the process, a key concern was whether a cloud-based system could provide the same level of performance as AIG Edison's conventional system.

The company undertook the project with the help of Appirio Inc., a San Francisco-based firm that helps businesses set up cloud platforms. Appirio helped architect and tune the system to provide "almost the same level of response time" as the conventional system, said Futami.

Network latency, particularly for complex services delivered around the world, can be an issue if users feel response times are too slow. The laws of physics will always prevail, but latency concerns don't appear to be curtailing adoption of software-as-a-service (SaaS) offerings.


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