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CMA Intermediate · Operations Management and Strategic Management · Digital Strategy

An Indian insurer wants to build a digital strategy that uses cloud computing to replace its own data centres. Which is the most direct strategic benefit of moving to a public cloud model?

The most direct benefit is converting heavy fixed investment in infrastructure into scalable, pay-as-you-use operating cost. The insurer can expand or reduce capacity quickly. It still shares security responsibility, does not own the provider's servers, and still needs internet connectivity to access the services.

  1. AConverting large fixed capital outlay on infrastructure into scalable, usage-based operating costCorrect
  2. BComplete elimination of all data security responsibilities for the insurer
  3. CGuaranteed permanent ownership of the provider's physical servers
  4. DRemoval of the need for any internet connectivity

Explanation

Public cloud lets a firm pay for capacity as used and scale up or down quickly, shifting spending from capital to operating cost. Security responsibility is shared and not eliminated, the servers remain the provider's, and cloud access needs connectivity.

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