White Paper: A Primer on Cloud Software and its Application to Annual Statement Reporting

There is an appropriate amount of excitement around the promise that Cloud Software offers to transform business productivity, including for Statutory Financial Reporting teams. 

As might be expected, there is some confusion around what, exactly, the Cloud is (and isn’t), and precisely how it can improve the Annual Statement filing process.

Let’s fix that. 

First, some background: What is the Cloud?

Loosely defined, Cloud Computing refers to software which uses the Internet in some fashion, such as: 

  • At one end of the spectrum, to host and run the entire actual application: or
  • At the on the other end, for data storage.

There is a world of difference between these two. In reality, only the first offers the full range of benefits. The value of the second is limited at best – often signifying no more than a marketing message.

There’s an easy way to tell the difference between software that is truly Cloud-based, and that which claims this mantel only for superficial reasons. Simply ask: how is the software accessed?

This distinction has a profound impact in the value that the software can provide. Let’s break this down by a few categories.

User Experience:

Non-Cloud Software runs on an older architecture, and was often designed in a different era of software. Notably:

  • Before Cloud Software, a typical computer configuration looked like the image on the left – a single CRT monitor of limited screen size. 

Today, multi-monitor environments (as shown on the right) are the standard.

  • Similarly, Non-Cloud Software comes from an era in which functional software was the goal, and design was the domain of software engineers. Today, the understanding and expectation of the field of User Experience has matured significantly. Older software was often designed around how the data is stored and accessed (image below on the left) and is reminiscent of early Microsoft Windows interface, while cloud-based software (right image below) is predicated on how users interact with a specific task:
  • The upshot is that Cloud Software is much more intuitive and often requires no learning curve before proficient use.

Installation and Hardware requirements:

Cloud Software is accessible exclusively through the Internet; this has profound implications on how users get up and running:

  • The lone prerequisite to use Cloud Software is a web-browser; Non-Cloud Software, on the other hand, has an installed component and often has strict hardware and software requirements.
  • Non-Cloud Software must be installed locally on each user’s computer. Accordingly, each computer running the software must also be updated with revisions and new versions as released, often requiring the involvement of a company’s IT team.
  • Cloud Software has no such requirements – users access the most recent version of applications simply by logging in through any web browser.
  • Specific to Annual Statement reporting: NAIC guidance can and does change regularly; Cloud Software can integrate these changes in near real time, and, as users are always accessing the most recent version of the software, users are always accessing the most recent, up-to-date NAIC filing specifications.

Performance and Collaboration

Finally, two natural advantages of Cloud Software are enhanced performance and improved collaboration: 

  • Performance: true Cloud Software leverages the public cloud providers in an “on demand” fashion. This allows elasticity of resources: as usage or computational demands increase, the software responds by allocating more computing power.
  • By contrast, installed software is limited by the local computer hosting the application. For processor-intensive functions – such as running cross-checks and validations across all schedules as required for Annual Statement filing – performance can suffer as the volume of data increases.
  • With no installation requirement, an intuitive interface, and a natural collaboration platform, Cloud Software facilitates workflow and contributions across teams.

Putting it All Together

At the end of the day, the favorable feature-by-feature comparison is insignificant if the outcome – as measured by better compliance and efficiency – is not improved. 

Indeed, in the final analysis, Cloud Software delivers:

  • Better designed software automates the manual tasks such as document maintenance, roll-forward of data, managing disclosure detail, and electronic filing of data. This reduces error rates as detailed in this 2018 white paper.
  • Similarly, the integration of contextual guidance and resources, as well as an enhanced data model and validation framework further eliminates sources of non-compliance.
  • Finally, Cloud Software is often surprisingly low-priced to license. In conjunction with its inherently low cost of ownership (no IT involvement to install and maintain, no training required, and efficiencies gained through a broad collaboration platform), Cloud Software provides positive ROI metrics.


From the user’s perspective, Cloud Software offers distinct advantages on all dimensions over installed software. (See Appendix A – Comparison Chart: Cloud v. Non-Cloud Software.)

From a technical perspective, the architecture, design, and development of Cloud-based software is a sharp departure from legacy solutions. 

There is functionally no practical opportunity to repurpose the software code from a Non-Cloud Software application in building a parallel solution which is Cloud-based. There is no improving Non-Cloud software into Cloud software. Rather, it requires a start-from-scratch effort, and new market entrants, rather than incumbents, hold a competitive advantage. 

It’s obvious to most that Cloud Software will ultimately displace installed software for the reasons cited in this paper. The only open question left if the matter of timing: how long before Cloud solutions become the standard for a market such as Annual Statement software? 

Regardless of a company’s profile for adoption of technology, this change is inevitable, and, if history is any guide, will occur surprisingly fast. 

Appendix A: Comparison Chart:  Cloud v. Non-Cloud Software