Patrick Schneider, Debeka: 100 Percent Cloud Will Not Exist

"Insurers need an end-to-end IT basis for modernization that encompasses both the classic system architectures and flexible cloud environments right through to public cloud services," writes the industry medium "Versicherungswirtschaft heute" in mid-September 2020. We spoke to Patrick Schneider, Head of IT at the Debeka Group, about this and other challenges of cloudification.

Detecon: Mr. Schneider, the tide is turning more and more toward the public cloud and the offerings of the U.S. hyperscalers seem to be almost a must today. Do you share this impression?

Patrick Schneider: In fact, certain reservations about the cloud are disappearing more and more. The Corona pandemic in 2020 may also have contributed to this. As a result, we are using cloud services with a different self-image, as the cloud has helped many a company to remain operational in the short term. I also see the cloud issue from a business perspective. Our core business is insurance, not IT. We also don't build cars because we need company cars. So it makes sense to rely on providers whose core business is IT. They can usually do this much more efficiently for standard services.

So you see the flexibility that cloud services offer as a major advantage of the cloud?

In my opinion, flexibility is the most important argument for the cloud. At least more than the issue of cost savings. The cloud makes us more flexible in two ways: first, because it is highly scalable, and second, because the choice of services we can use quickly is enormous. We were able to benefit from this even at the beginning of the pandemic. We mainly advise our customers personally, which was no longer possible from one day to the next. So we had to create an alternative for our field staff in the shortest possible time so that they could get back in touch with their customers as personally as possible. We then quickly decided on an off-the-shelf cloud service that we could easily integrate into existing systems. The complete switchover took just six weeks. With in-house development and an on-premises approach, we couldn't have done it in nearly that time.

Don't see a cost advantage with the cloud?

Anyone who believes that the cloud is generally cheaper is wrong. It depends very much on the initial situation and a cost advantage cannot be expected for every service and every company. Cloud services are particularly cheaper when I need a lot of flexibility. To achieve this flexibility in your own data center, you have to buy it at a high price. That's why we continue to run core services on-premises and use the cloud very selectively and when required. In our case, for example, for very computationally intensive tasks, such as solvency calculations. Here we use the cloud and then bring the results back to our data center.

What other advantages do cloud services offer?

There is a good side effect that is certainly hardly in focus at the beginning. With in-house developments, we always wanted to achieve the 120 percent solution. But if they want to use standardized cloud services, the perfect solution doesn't exist, because they have to take the service largely as it is offered. This is a good opportunity to put your processes to the test, to declutter and homogenize. This can be very helpful, as otherwise you would have always continued as before.

Insurers mostly deal with personal data. What role does data protection play in the cloud decision?

The data of our health insurance policyholders in particular is of course highly sensitive. We are very sensitive in this respect and pay the greatest possible attention to every process involving this data. This definitely means a certain stumbling block for cloud projects, as we strictly adhere to the regulatory requirements. It is therefore important to first classify the data so that we can decide which cloud services are even suitable for us. Therefore, there are still areas that remain on-premise.

Does the overturning of the Privacy Shield make the use of public cloud solutions more critical with hyperscalers?

One should be aware that there can never be 100 percent security for data in data centers. However, a special criticality is already associated with the cloud. That is why it is so important to classify the data and always know where which data is located. So you have to look very closely at what a cloud provider is doing to protect customers' data and what the contracts are for that in detail. And what you absolutely need is an exit strategy, so that if the worst comes to the worst, you can quickly withdraw your data from the cloud again.

The use of cloud services is also changing the requirements for skills in the company's own IT. How does this affect you?

Generally speaking, there are three main areas that are affected by the cloud. Firstly, our own legacy landscape; secondly, governance, risk and compliance; and last but not least, people and culture. And that is very close to my heart. We also have to communicate to our employees why the move to the cloud is right from a business perspective. But we also have to take the team with us from the perspective of the new and different tasks. We have to build up know-how and shift competencies because the vertical range of manufacture is being reduced and we are staying closer to the standard. That means less in-house development and more integration and design instead.

So you need a different type of employee?

The most important challenge is to qualify the staff. We do a lot of that with on-the-job training. Management and project methodology are more important than before. The cloud is also changing the development methodology. For example, for the change to our customer consulting software, we did a lot of analysis, recorded the requirements of our internal customers in detail, and then matched these requirements with the cloud service. What does the cloud map, where do processes have to be changed? The implementation effort itself was a manageable task afterwards. That's why today I need people who are communicative and can manage external service providers well. They also have to take the interests of our customers more into account, and they need an agile mindset.

Although they develop less themselves?

We need an agile mindset in IT because everything happens much faster than before. Whereas in the past, development sometimes took several years and there was a major patch day every two years, today we have to continuously update services in very short cycles. And in the cloud, the learning curve is even steeper because the release cycles are much shorter, which also requires completely new processes. And by the way, we don't need fewer employees in IT as a result of cloud computing. We are currently looking for almost 100 new IT employees for various areas of responsibility.

What about external service providers. Is the collaboration changing?

We are dealing with significantly more vendors than before. That is why we have further expanded our vendor management. For example, to prevent vendor lock-in, we make sure that vendors remain interchangeable for us in the cloud and that no platform dependencies arise.

And we need neutral consultants for a neutral view in preparation for strategic IT decisions.

Looking five years ahead: Will the cloud share in companies then be 100 percent?

In my opinion, there will never be 100 percent cloud; some forecasts assume 80 percent. But these forecasts usually come from the cloud providers. I rather doubt that the cloud will have such a high share. We will probably have half of our services "cloudified" and standardized. But the core will still be on-premise.

As a business informatics specialist, Patrick Schneider has been with Debeka for 18 years and has been head of the "IT Product Management - Frontend" department there since October 2019. Previously, he had taken on various tasks in Debeka IT and most recently built up the Debeka Innovation Center. With a diverse range of insurance and financial services, the Debeka Group is one of the top five insurance and home loan and savings companies in Germany. The Debeka Group currently employs over 16,000 people.

The interview was conducted by

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