All right. I see it's just past 10:00 A.M. Should we kick it off?
Let's do it. Good morning from California. I'm Alex Hughes, Vice President of Investor Relations for Guidewire Software. I'm the newbie on the team here, having just joined a little over one month ago, but I'm definitely excited to be part of this terrific company and a member of this great team. I also look forward to getting reacquainted with a number of you. I know we've worked together in previous positions I've had throughout my career, and it'll be great to reconnect as I come up to speed and hopefully become a better resource for all of you. As for today and as for this event, I think I probably speak for the entire team when I say we would've preferred to have done this event in person, but for obvious reasons, that was not in the cards.
I think we've put together a solid virtual event for you with a great lineup of speakers, and we're really excited to get it kicked off and started. Today, you're going to hear from five of Guidewire's leaders, starting with Mike Rosenbaum, CEO, who will talk about Guidewire's terrific position within P&C and the opportunity ahead with the cloud. Next, you'll hear from Diego Devalle, our Chief Product Officer, who will talk about our progress to date and our plan for continued execution as we execute into a cloud-based architecture. You'll also hear from Sandia Ren, who leads our Cloud Transition Practice and who will talk about how we're simplifying the path for customers to upgrade to the cloud. Roger Arnemann, our GM of Analytics and Data, will also talk about the tremendous opportunity ahead to unlock value across the Guidewire through data and analytics.
Then last but not least, batting cleanup and bringing it all together will be our CFO, Jeff Cooper, who will talk about our financial model and our outlook as we increasingly become a cloud-driven business. Now, before I hand it over to the speakers, just a couple administrative items. First, you should know that we did tape these presentations yesterday because we just wanted to make sure we didn't run into any live on-air glitches. Second, we will be doing Q&A at the end of the day. If you do want to ask a question, just use the Q&A tool at the bottom of the Zoom app and submit it that way.
If you want to ask it via video, just type in the phrase "live question." That'll queue up the operator on the back end to bring you over to the panel and make sure you're unmuted, both video and audio. Through a couple seconds of magic, they'll beam you up, so to speak, and you can ask your question via video. I hope you take advantage of that because that'll make the day feel much more like a dialogue, which is our intention. If you're not in a position to do that, you can just submit it normally through the Q&A app, and I will do my best to read that on air when time permits, and you'll have the whole management team here to address your questions, including Priscilla Hung, our President.
Other than that, I would just mention, in case you've managed to forget at this stage in your career, we will be making forward-looking statements today. I won't read through this entire safe harbor, but I'll let you read it at your pleasure as we leave it up. The last point I would just make is that we will be making reference to non-GAAP financial measures, and you can find a reconciliation of that at the back of the presentation, as well as the back of the deck that we will post on the IR site today after the event. We're excited. I look forward to talking to you later today. With that, I will hand it over to the speakers.
Thanks very much for joining us today on our analyst call. As I think you realize, we did a recording of this on Monday, so your yesterday, just to make sure we remove any of the risks associated with the bandwidth constraints with all of us having children at home doing homeschooling. Hopefully this goes well, and we'll be live for the Q&A, and you can ask us any questions that you want live at that time. I guess it's been about a year now, a little bit over a year since I joined the company and about a year since the last Analyst Day that we had with everybody in San Mateo at our headquarters.
Obviously, we're making the best of this situation, and hopefully we've been able to put together a good presentation that'll give you a perspective on how we're positioning Guidewire for growth in the cloud, and how we're dealing with this COVID pandemic just as effectively as we possibly can. I'm going to get going here. Guidewire's chosen domain is property and casualty insurance. The company was founded based on the principle that this industry deserved better software development and a company dedicated to serving what we consider to be a very important part of our society and a very important part of our economy. This has been a particularly interesting year as it relates to property and casualty insurance. What you see in the picture on the right, some of the damage caused by a derecho storm in the Midwest.
The picture on the left is from Oregon, actually, in the fire season out west. Really just incredible destruction that's happening right now across the country and somewhat across the world. I was reading this morning that Hurricane Delta, which is actually the 25th named storm in the North Atlantic this year, just a few shy of the record 28. For those of you who don't pay close attention to this, you run out of names in the alphabet at Z. We're up to Delta, and we'll see how much we get to. The other really interesting data point this year is that the complex fire in California this year was the first gigafire, which means that it burned more than 1 million acres of land.
Probably, I'd say the most interesting data point that I saw this year from the property and casualty insurance industry was the $14 billion in rebates that they were able to provide back to customers in the U.S., specifically, around the COVID pandemic. Just the drop in claims associated with people driving less frequently because of the pandemic created a surplus which enabled this industry to give back $14 billion to people in the United States. I know similar things have been happening all over the world. This is our chosen industry. This is our chosen path. We really think it's a privilege to have the opportunity to serve this industry. I personally think it's a privilege to have the opportunity to lead this company.
It's been a really interesting year for me, learning both the company and learning the industry, and what an incredibly interesting and important value that this industry really provides. It's our privilege, I guess, to do it any way we can. This presentation that we're doing over Zoom and is a good example of the perseverance that I think this whole industry and certainly everybody here at Guidewire has displayed. We're doing the absolute best we can. I know there's been questions for us over the past couple quarters about how we're dealing with the pandemic and how we're dealing with work-from-home environments, and I would say, we're doing the best we can. We're getting by, and we're keeping the business going just like all of the other people that we serve in the various companies in the property and casualty insurance industry.
It's an industry that works pretty effectively in a either all remote or partially remote, as safe as we possibly can be. Like I said, we're very happy to serve in any way that we can. Let me switch a little bit to talk about the industry overall. This slide hasn't changed much year to year. This is our picture of this $2.5 trillion global industry. It's an industry that I think is very interesting in how concentrated it is. With 50 carriers in the tier 1, 250 in tier 2. We think overall there's about 1,500 insurers that we have the potential to serve. This is a multinational industry. Guidewire has the opportunity to serve customers, Americas, EMEA, Asia Pacific, Japan. It's a very large and very concentrated industry that I think suits an approach like we have at Guidewire being so specifically focused.
We've been in business now for 19 years really delivered an unprecedented level of success. I think the thing that we are all most proud of is the track record of successful implementations. With over 1,000 implementations that Guidewire conducted across our 300 to 400 customers, it is really incredible the amount of sort of dedication and success that this has driven. We're now able to have over 800 individuals in our product development organization, over 10,000 consultants in a marketplace that I'm really proud of with hundreds of applications from almost 100 partners. Over 19 years, we've really demonstrated that a company focused on property and casualty industry can really generate a significant amount of success for our customers. Our approach actually is very simple. We strive every day to be the property and casualty insurers trust to engage, innovate, and grow efficiently.
This is our mission. We think about this every day. We think about this in terms of optimizing all of the decisions that we make every day around really aligning to the business initiatives that are driving our P&C customers. I wanted to dig in and explain a little bit these three characteristics, engage, innovate, and grow, and why we chose those words. Every property and casualty insurance company is trying to rethink how they connect with their customers. They're trying to make insurance more convenient through digital transformation. It's very significant what's going on in the industry. There's customer after customer after customer that I talk to that is just saying, "We can't make it convenient enough." Our customers expect a sort of digitally driven, convenient experience, and the bar is constantly moving. They're also trying to innovate. They're trying to accelerate growth through new product introduction.
This basically means building new insurance products and also taking existing insurance products to new states and new domains. This is how companies grow in the property and casualty insurance space. Often, this is one of the things that I've personally learned this year, that innovation, that new product introduction, it's directly correlated to how agile they are with the IT systems that underlie their enterprise. To the extent that we can make a cloud platform like Guidewire easier for them to use, easier for them to introduce new products with, we can enable them to grow. Last pillar in this slide is grow. They're trying to grow efficiently, right? I had a very interesting conversation with one of our customers who said, "Look, Mike, anybody can grow an insurance company. The hard part is growing it efficiently." Okay?
Underlying every business strategy at these insurance carriers is this necessity to become more and more efficient, to try to find every avenue to squeeze more efficient growth out of the system. All of that has to do with running effective IT systems, running effective enterprise systems. Underlying all of it, this is an industry that is data-based, right? It's all supported, it's all enhanced, it's all optimized through better data, more data, and better and more analytics. Okay. This is how the mission of Guidewire sort of translates into the business initiatives and business strategies of our customers. The problem is that this industry is still held back by legacy systems. It's still held back by decades-old systems that are just too slow to change.
One of the other things I learned this year is that a very significant amount of this industry operates on a batch-based cycle, where new quotes are delivered every night on a 24-hour schedule when requests are processed by the mainframe system. That's just not the world that consumers expect to live in today. They expect systems that are able to process things immediately in real time. They expect systems that are able to adapt and evolve as a business needs them to. These legacy systems that exist in this property and casualty landscape, it really just is holding back the innovation and the flexibility that's really what we think the next sort of generation of property and casualty insurance system. For us, this is the enemy, and this is what we're driving to fix with what we consider to be the most complete property and casualty platform in the world.
If you think back to one of the previous slides, I was talking about 19 years, 800 developers in our product development organization have put together something unprecedented in the history of this industry. That is a complete platform that covers the complete insurance life cycle, from policy generation, to billing, to underwriting, to claims with a digital layer, integration to CRM systems like Salesforce, analytics built in, risk insights built in. It is a very, very complete platform that's been developed over the 19 years of Guidewire's existence. It supports the strongest partner marketplace in the world and the strongest SI partner ecosystem in the world. Like I said, it truly is unprecedented.
What's exciting for me and what's exciting for everybody at Guidewire is the level of success that it's been able to deliver across 400 insurance companies, ranging from the new ventures, new startups that are launching new lines of business to innovate and compete to some of the largest and most complex business optimizations and business transformations in the world. What's incredibly exciting about my opportunity to join Guidewire is that the cloud and the transformation of Guidewire and the Guidewire services to be cloud-based is going to be another level of innovation and improvement in this industry. We're going to make these systems easier to manage, easier to upgrade, and we're going to give P&C customers an opportunity to innovate like they've never had before. It really starts with the base of InsuranceSuite 10 and our InsuranceNow offering.
That basis is what we have chosen to use for our cloud platform. We add a layer on top of that with Guidewire Cloud Platform. We add externalized services on top of that, and we add data and analytics services on top of that. We take the whole system. Starting with Aspen, which we just released a few months ago, followed by Banff, which we're releasing in a month, followed by Cortina, which will be six months after that, and on and on and on through the alphabet, until we get to Z. We are taking this market-leading system, and we're bringing it to the cloud. We are bringing our customers forward with us to this cloud platform.
Like I said, I really do think that it's an unprecedented situation that we are looking at with this ability to deliver significantly more value to our customers through this approach to cloud. Let me talk a little bit about the market opportunity that this represents. Like I said to you before, this is a $2.5 trillion industry, and when we look at it, and measure our ability to sell a Guidewire product to that industry, you can sort of break it up by tiers.
As you can see here, we've had a lot of success in tier 1, a lot of success in tier 2, but there's still a very, very significant amount of market opportunity for Guidewire, both in terms of our ability to upsell our existing customer base to our cloud offering, and then an opportunity to expand into the sort of customers that have yet to modernize. You look at this same data by region, and the story that's told here is that, yes, we've been very successful in Americas, and there is a very significant opportunity for us in EMEA and another significant opportunity in APAC. As successful as Guidewire has been in the past 19 years and over $500 million in recurring revenue, we really see a very significant opportunity ahead.
What we're trying to show you here on this slide is that if you start with our fully ramped ARR, which at this point is $600 million, we expand by selling existing customers to our cloud product, we can expand to $2.5 billion. If we expand with net new customer wins just on that core InsuranceSuite and InsuranceNow platforms, that represents a $9 billion opportunity. Add on top of that analytics and data offerings that will complement our core offerings. This is a very significant market opportunity. This is one of those things that I remember last year, there was a lot of discussion about whether or not Guidewire had enough room to grow, whether or not we had enough market opportunity based on the product set that we currently have.
I said yes a year ago, I say yes absolutely right now. We see, just given the product set that we have right now, a very, very significant market opportunity if and when we execute. Switching gears a little bit to competitive. This is a question that I get quite a lot from investors and analysts. We have not seen the competitive dynamic change. Certainly, the competitive dynamic has shifted to cloud. We think and see based on the data that you see here, that we continue to win a very sizable percentage of the competitive decisions, and especially the decisions when you weight them by the DWP that they represent.
The tier 1 and the tier 2 use cases and the complexity that we are able to manage with our platform, the complete solution that we are able to deliver gives us an outsized advantage in the top 2 tiers of this industry, and I think that's what you see when you look at the data on the right side of this slide. Another thing that I spoke about last year, and I'm incredibly proud of, is how successful our partner programs and partner ecosystems have been. In a lot of ways, I think this is the best way to sort of truly measure the momentum of an enterprise software company, which is how many partners and consultants are making a living and running really good businesses based off of implementations and integrations associated with that core system.
As you can see here on the right, we're now over 10,000 Guidewire-trained systems integrator consultants. That's a very healthy curve there from fiscal year 2009 all the way to 2020. What we're particularly proud of this year is the growth rate in cloud consultants, which is an indicator to us of the fact that the cloud value proposition and the cloud transition that we're driving in our customer base is being recognized by our Guidewire Cloud consultant partners. The other side of the partner coin is our marketplace. We now have over 600 applications from 90 partners and also many of those applications built by Guidewire. What's most exciting to me about this is that this is where you see the sort of economies of scale delivered by a common platform, where you have an open and flexible plugin-based approach to innovation.
I hear so often from customers who say, "We're really excited to have Guidewire Live, Guidewire's in production, and now we get to start innovating with all of these Insurtech Vanguards partners that are available on your marketplace and easily plugged in to our Guidewire core system in a way that was just physically impossible with the legacy system that we replaced." You can see this marketplace and the momentum here is growing, and this is one of those things that I think is just going to further accelerate once we're able to move the majority of our customers to a common cloud architecture. This is one final slide from me that I want to use to help explain my perspective on the overall Guidewire strategy.
This is something that I drew up to sort of explain myself to the company and the management team here, Guidewire encouraged me to share it with you. Here's the explanation. I think the most valuable and important asset that Guidewire has is our customer base. You heard before me talking about the formation of the company. We are a company dedicated to the success of our property and casualty customers. That is really, really important to understand. Like I said, I think it's the most valuable asset that we have at Guidewire. The strategy, very simply, is to work with those customers to upgrade them to Guidewire Cloud. In the process, that enables us to continue to invest in R&D, and that enables us to continue to add value and improve the value of that property and casualty platform.
What that's going to do, it's going to make the cloud platform more valuable, and it's going to pull in more of our customer base to that cloud platform. The other thing that cloud customers will do is they'll create the possibility for us to syndicate data and create shared analytics offerings that also improve the value of the property and casualty platform. The other thing that cloud customers will do, and I just said this a minute ago with respect to our marketplace, is it's going to create a better mechanism for marketplace solutions to be plugged into that platform. It's going to create more demand from customers. It's going to create more opportunity for partners, and that's going to create more value in the property and casualty platform.
All that taken together is going to create a cloud platform that's going to just be increasing and increasing and increasing in value. That's going to pull in the net new customers that represent the significant opportunity that I talked about before to expand our reach. This is how I see this whole system working together, fitting together, to help grow and accelerate the innovation that we deliver to our property and casualty customers. My priorities for the year line up to the rest of this presentation and the other speakers that we have invited to join this Analyst Day. Number one is we need to continue to execute on our cloud transformation. There's really no more important objective at the company. I sort of joke with my management team about this is priority one, two, three, four, five.
Is how are we executing on our cloud transformation? Diego Devalle, the head of our product development organization, is going to walk you through that. The next thing is we are working very hard to define a clear upgrade path to Guidewire Cloud, and we've made some very significant improvements in making it easier for customers to move to Guidewire Cloud. Sandia Ren, who drives our upgrade practice, is going to share with you her perspective and her vision for how we're going to be able to accelerate that in our customer base. Then we're going to talk about how to unlock more platform value through Guidewire Analytics.
Roger Arnemann, who just joined us as the GM of our Analytics group, is going to speak to this and share with you our vision for how we can add significant value to the overall platform through data and analytics. Finally, Jeff is going to talk to you about our business model and how that all relates to the financial metrics that we all know that you guys are interested in hearing our vision for the future on. I appreciate the opportunity to speak with you today and look forward to hearing your questions during the Q&A. Thanks very much.
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Hello everybody and good morning and welcome to the Analyst Day 2020. My name is Diego Devalle, I'm the Chief Product Development Officer, and I will walk you through to what is an update on our execution and a quick refresh on our strategy that we did introduce last year. Just for those of you that are new, I joined in 2018. The step of my journey here have been starting with restructuring the team. I kind of manage a team across the entire world, and I wanted to make sure that we had a team structure to deliver and to execute. Step two has been building a strategy. We just chat a little bit and introduce the strategy of Guidewire Cloud last year.
I'm going to touch upon a couple of pieces again in this presentation just to make sure that everybody's updated on what we're looking for and how we're structuring the future. Last but not least, we started our execution, and I want to give an update on where we are in execution. Let's start with strategy. The most important things is to remember is that we have decided to make our strategy based on InsuranceSuite 10. We have decided to modularize InsuranceSuite via API and basically carry all our customer over into this transition, moving our customer on top of our Guidewire Cloud and leverage all the code that they've been working in refining across many years. Once customer is ready, we will be ready.
You're going to see later in the presentation, Sandia Ren is going to talk about our program to move our customer to our Guidewire Cloud as we speak. Just as, again, I wanted to refresh that we've not decided to rebuild from scratch the platform. We have decided to kind of do something in some extent way more complex. That was, empower our customer to use everything that is being coded until today, their investment, and transition into the cloud in the most seamless way. Last year at Connections, we introduced these slides. I just wanted to have a graphical visual cue for the story, right? It's built on top of AWS. On top of that, we build it what we call our Guidewire Cloud Platform. We're going to talk extensively during my presentation. On top of that, we're running now InsuranceSuite.
Slowly but surely, we're going to kind of build and introduce cloud-native extension to beef up Cloud InsuranceSuite in such a way that our customer will gradually get the benefit of innovation, while at the same time, they could leverage the code that is being, as I said, put in place for many years. Give you a quick update on the execution. Since last year, a lot of things happened. We moved from a two-year cycle delivery into a six-month cycle delivery. By the time we talk right now, Aspen is basically already old news. We launched it in May 2020, and this was our first cloud release in which a combination of the platform and the latest InsuranceSuite version was made available to all our customer.
Since then, we shifted and working in Banff, and we're launching Banff November 18 this year, so pretty much a month from today. As we speak, probably 90%, I would say not probably, for sure, 90% of our engineering team has shifted execution, and they're already focusing on Cortina. This is a dramatic change in the way that we've been working. If you remember last year, I did mention that that was a huge opportunity for the engineering team to sort of work on a cycle that was way more fulfilling and in some extent, way more exciting for the engineer itself.
We are now in a positioning to which we deliver something to our customer, and quickly after, we can see the benefit, we can see what works, we can see what we could improve, and all that cycle is going to be on a six months cadence instead of a two years cadence. As mentioned here, the entire team is shifting on Cortina, and we are working on some very exciting new capability for the next releases. Just because in general, I really like to sort of go through a presentation and not change the sort of every year. We don't want to change the story. We want to make sure that it is a continuation. Going forward in the presentation, there are a couple of slides that for those of you that participated last year, they're going to look familiar.
This is on purpose, is to show you that we define a strategy, and we're executing upon the strategy that we have designed and set the foundation last year. Let's start with something that you maybe recall. You probably recall the R&D investment, and how it's distributed across six main location around the world. Similar to last year, I want to share a little bit how the breakdown of the investment is distributed. We have in FY 2019/2020, that is just finishing, that is pretty much the percentage that we could allocate across the major area. If you could recall, this is an increase compared to last year. What you will see is that on the Guidewire Cloud, we are continuously increasing the investment.
What I want you to pay attention here is not that we are abandoning self-managed, but I want to kind of keep in mind that when you see Guidewire Cloud, basically this should read Guidewire Cloud First. We first develop for cloud, then we bring back to our self-managed customer everywhere that there is business value and where it's possible. Don't look at this in terms of reduced investment of self-managed, but increased investment on Guidewire Cloud First. As you will see across compared to last year, we've been increasing steadily on the Guidewire Cloud First investment, we kept at the same level the investment around digital and data analytics, for which Roger, later in the presentation, will give you more insight. Going forward to next year, this path, this growth into a Guidewire Cloud First investment will continue to happen.
Now what I wanted to give you a little bit of more of insight is how are we spending that investment? What are our top three priority across engineering? Those top three priority didn't change across the last three years. We set up a strategy, as mentioned, toward 2018 while we released InsuranceSuite 10, and from there on, we've been executing those top three priority. On new product innovation, you can imagine, and probably you know, our product is the most complete into the market right now. What we really needed to sort of shift the priority, or at least for this initial period, as being on Guidewire Cloud Platform and Integration Framework . I just want to make an analogy to give you a sense of what Guidewire Cloud Platform is. Think about Apple back in the days when Steve Jobs came back.
One of the first thing that he focused on was to fix the logistic and the supply chain. They had a problem of by the time you were ordering a product and the product was showing up in U.S., that was many weeks, many months. By the time the customer were about to buy that product, probably that product was already old. For us, in a similar way, Guidewire Cloud Platform as being the infrastructure to put us in a position into which we can press a button, and by pressing that button, we release the latest and greatest functionality to ideally all our customer. That investment was the key number one investment that we started with Aspen and we're continuing that. The second part of the investment is building the Integration Framework .
We, as mentioned last year, we've been building a solid layer of API around our core to gradually improve and make more efficient all the integration that our system rely upon. As you probably know, a vast portion of our installed base rely on very large number of integration. The more efficiently we manage those integration, the more efficiently we monitor those integration, the more effective we're going to be on the long run. Again, look at Guidewire Cloud Platform as the infrastructure. Our assembly line and a complete change in our assembly line. As you probably know, we were delivering self-managed solution into which in some extent, we were basically packaging a CD. Now we are pressing a button and refreshing a core for all our customer. Those two things are fundamentally different.
We made a conscious decision of prioritizing the investment around the platform, prioritize the investment around the infrastructure, and continue to allocate investment on the innovation, but doing that as a sort of gradually. As you can see here, the percentage is very similar between the two releases, but you can start to see a little bit of the growth into the innovation. This track of innovation gradually increase the investment will continue to happen across the multiple releases. If you look at these three bucket, I think that for those of you in this presentation, the most interesting part are bucket number one and bucket number two, what we call GWCP and what we call the Integration Framework . Let me walk you through the GWCP again. Last year we introduced this slide.
We basically said that there is a layer of things that are common across multiple customer, and we package all the commonality into what we call GWCP. At the beginning, it was basically managing by scale. You can imagine that while we move the customer onto our cloud, we are going to reduce the configuration metrics to as optimized as possible. Think about a single application server. Think about a single DB. Think about everything that, by consolidating across a more repetitive approach, you start to get some advantage. What we like to call the magic number is the number 10.
Once you start to move from two, three, four, five customer and you start to get into 10 customer, you start to get into the threshold in which instead of building things ad hoc for each customer, you can start building tooling, and you can start building tooling and investing tooling in a That gives you higher efficiency. Think about building a form. You build a form for one page on a website, or you want to build a tool that auto-generate all the form possible. If you only have one customer, most likely it's more efficient to build simply one form. If you start to have a multiple number of customer, you're going to kind of take advantage of building a tool that auto-generate as many form as possible.
Once we gradually increase the number of customers on Guidewire Cloud, we start to look at things like from a dedicated to shared resources. We start looking into how do we support dynamic scaling? How do we kind of start to build what we call Infrastructure as Code and in provisioning? All those things, moving from an initial subset of customers to a larger number of customers, have been instrumental to educate and structure a roadmap across GWCP. With Aspen in May this year, we launched not only the latest version of InsuranceSuite, but also version 1 of GWCP. GWCP has multiple capabilities in multiple areas. Here, I listed them kind of top 10 area of investment of capabilities, but I'm pretty sure that it's going to be a little bit tedious and too many details for this audience. I picked two.
The first one is what we call hybrid tenancy model. We got a lot of question about single-tenant versus multi-tenant. The direction in which we've decided to go, going back to my first point about leveraging customer existing code, was to go to an hybrid model, an hybrid model in which all our or multiple insurers are managed within the same cluster. Within the same cluster, we have the right isolation and the right kind of cost efficiency that we want to have. Kubernetes is offering us capability and option that were simply not possible a few years ago. On one end, there is, as we said, all the customer that are running in the single cluster, in an efficient way.
On the left side, you start to see, if you remember my first slide, those new external service becoming enabled, and those will be built in a full multi-tenant, native infrastructure. We believe the combination of those two things is the right mix for us and for our customer to evolve into our Guidewire Cloud. We have right now some of our early adopter that are running in a configuration that is exactly as you can see here. From a customer perspective, it's completely seamless. They start InsuranceSuite, and they don't see behind the curtains what is happening. In reality, as mentioned, it's what we call a hybrid tenancy model, in which one portion is single tenant and another portion is multi-tenant. The second thing I want to kind of point your attention on is what we call Guidewire Cloud Console.
The Guidewire Cloud Console is a key ingredient for enabling our provisioning and to make sure that our provisioning is as efficient as possible. If you go back a year ago, at pre-Aspen, as you can see here, we had the time that it was taking to provision an infrastructure was a couple of people, 20 days. If you look at where we are going into Cortina, is one person, 15 minutes. This is just one element. I don't want that you think that once we execute that, everything is complete. There are multiple elements of. It's really important to understand that if you look at the number of customer that we have on GWCP, we moved from launch At launch in May, we had zero customer on GWCP. Today, we have double- digit.
You can imagine the workload into our ops team to kind of onboard double-digit customer within four to five months. Customer that needs to be onboarded in different region around the world. The availability of GWCP across multiple region, namely North America, Europe, and within Europe, making a differentiation between France and U.K., and then going to Australia and Japan. There is a gigantic need to kind of a repetitive process that is going to be, as I said, as much as possible, a couple of clicks. That is being a key aspect of investment because otherwise we will not be able to support the demand and the requirement that is continuously coming, at the speed that without those improvements, we will not be able to fulfill. Those are just a couple of things.
We could discuss more into a Q&A session if you guys have question about it. At this point, we're really excited about our capability on GWCP and what we've been able to achieve in a short time lapse of one year. I want to wrap all this up into one slide that hopefully is going to kind of visualize in a better way the entire strategy from an R&D investment perspective and what we're trying to achieve with that. As you can see here, there is a couple of releases. The first two releases, Aspen and Banff. The curve here is basically what we call sort of cost optimization based on scaling. Is what I discussed before. Is basically you're going to run more customer, and because you're running more customer, you immediately have a little bit of efficiency by consolidating few aspects.
As I mentioned before, single DB, or a single app server. There are a lot of things that you can get there, but at some point, that efficiency will plateau. You need to play with different lever. The first lever that we've been playing with is GWCP. Launched with Aspen. We're expecting that GWCP at full operational is going to give us an interesting improvement into the efficiency across. As mentioned, today we're managing six region in the same way. When we refresh the code, we press a button and all the six region at the same time get the latest version of the code. GWCP is going to kind of enable us to kind of run in the most efficient way, InsuranceSuite, the same InsuranceSuite that we've been building for many years.
We are now having the capability to run it efficiently and at the cost that is completely different than what we had at the beginning of the journey. Step number two is investment in the Integration Framework. As mentioned before, integration is a big portion of the first implementation, but it's also an interesting cost in running those integration in a solid and maintainable way across the different tier. Here as you see the curve here is slightly different. Why is it slightly different? Because from an Integration Framework perspective, we are starting delivering some key capabilities starting with Cortina. Then those capability needs to be implemented. There is sort of, as you can see here, there's a couple of cycle that we're expecting it will take for those new integration capability to become enabled and to become adopted across the customer.
This is a per customer views slide. You can imagine that some customer will be faster in adopting those, and some customer will be slower in adopting those. For those faster, we will be more efficient from the get-go. For those that will adopt that later on, it will take a longer time to get into that point. With that, I kind of covered all my different topic. I'm open to Q&A later on, and I want to pass the ball to Sandia Ren, that she's going to talk about how and in which way we are efficiency moving Guidewire customer into our cloud and what is the program that we put together to make that happen. Thank you.
Hello, everyone. My name is Sandia Ren. I'm part of the professional service team here at Guidewire. I actually joined Guidewire almost 18 years ago. I started out as an engineer on our product development team, building out the early versions of our product. A few years in, I joined our consulting team. I had the pleasure of working with a number of customers on their early Guidewire implementation. Over the course of the last 18 years, I've had the opportunity to start and grow a number of our Guidewire initiatives. One of them is the Guidewire Services Center, which is our distributed consulting team. We started that in 2011. We've grown it to, at its peak, almost 200 people located in five different offices across the globe.
I was also a founding team member of our upgrade practice when we started having a volume of customers that were doing upgrades consistently. I got to lead a team of developers to build out the first version of our digital product. I also had the opportunity to welcome and integrate a number of the products that came to us by way of acquisition. This includes our data management products, analytics, as well as underwriting management. Over the last 10 years or so, I've looked after what we call our specialized consulting competencies. These are competencies around upgrades, migration, infrastructure, and testing. Nowadays, my focus is on cloud upgrades, and that is how I'd like to spend my time with you today.
Specifically, I look after our Cloud Transition Practice, this is a team that we formed at the beginning of this year, that is focused on taking our existing customers, and their path to Guidewire Cloud. We are grateful to have over 500 instances of our products in production with our customers, we want to make sure that every one of these instances has a clear path to Guidewire Cloud. Our team comprises our Upgrade Center of Excellence. This is a team that has been doing full upgrades for customers for over eight years. We also have our Data Migration Team, which is a group of highly specialized experts that have been spending a lot of time moving data from one place to another.
We want to use our depth of skill as well as our breadth of experience to make sure that each customer has a smooth path to Guidewire Cloud. We're doing this through three lenses. The first is around the upgrade path itself. We recognize that our customers come from well, they have different combinations of our products. There are different versions. Actually, each of them are at different stages of their overall legacy transformation with Guidewire. We want to make sure that we have standard approaches to cloud that cover various situations that our customers are coming from. We believe that there is a right path for each customer, and we're ready to work with them to determine which one that is. With the approach defined, we're also looking at the upgrade itself. That means, what is involved?
What do we actually need to do to take a self-managed implementation and move it to the cloud? In this regard, we work alongside our product development and our cloud operations teams to ensure that the functionality that we need and any sort of operational capabilities that are needed are in place so we can support these custom upgrades. The second lens is around the effort for this upgrade. Within our Upgrade Center of Excellence, we've always been evolving our process and methodologies to make each upgrade better than the last. We're bringing all of these best practices, and we're bringing the same innovative out-of-the-box thinking to cloud upgrades as well. In addition to that, we also have a very strong focus on automation.
We're looking for places where we can have automation, and we're investing quite a bit in building tooling to increase our efficiency and lower the cost for these upgrades. We know this is something that will benefit all of our customers. Last, but certainly not least, is the delivery itself and the execution of these upgrades. As you heard from Mike, we have a vast partner ecosystem, and many of these partners are supporting customers that are looking to make a move to Guidewire. Our team is making sure that we at Guidewire aren't the only ones who are ready to support these upgrades, but that our whole community, which includes our customers as well as our partners, is also equally well- prepared. I hope this gives you an idea of our Cloud Transition Practice and what we're working on.
Next, I'd like to give you an update on our upgrade strategy. Previously, our plan was to have InsuranceSuite 10 be the stepping stone to Guidewire Cloud. Any customer that had an implementation that was on a version prior to 10, the plan would be for them to upgrade to InsuranceSuite 10 first and then take a subsequent step to go to Guidewire Cloud. In reviewing our customer landscape, we saw an opportunity to get the majority of our implementations to Guidewire Cloud faster. On the right here, you can see this is a breakdown by version of the InsuranceSuite implementations that we have in production. You can see that a good part of them, and it's actually over 3/4 of them, are on InsuranceSuite 8 and InsuranceSuite 9.
That meant that all of these implementations would have to upgrade to 10 and then go to the cloud. We just believed that we could do better than that. We put our focus into finding a way to simplify the upgrade for these implementations. The result is our Cloud Direct offering. Now InsuranceSuite 8, 9, and 10 implementations have a direct path to Guidewire Cloud. There's no longer a need to go through InsuranceSuite 10. This means that over 85% of those 500+ implementations that I previously spoke about now have a direct upgrade path to Guidewire Cloud. We're pretty excited about this, and we're pretty excited about Cloud Direct because it reduces the complexity of the upgrade and allows our customers to start realizing benefits just that much sooner. Once they get on Guidewire Cloud, the burden of upgrades is lessened for our customers.
Instead of having to do a major version upgrade every couple of years to leverage new features, they will get smaller, more frequent updates from Guidewire that will make available to them the latest innovations on our cloud platform. With the release of Aspen, there's been certainly an increase in customer interest about Guidewire Cloud. We're hearing, "Tell us more about it." Many of our customers are trying to figure out where it fits within their overall strategic roadmap. For our InsuranceSuite 8 customers, we think that there are some upcoming dates that we believe will drive some urgency in their decision-making process. Specifically, these are all around product support. InsuranceSuite 8 itself is now in extended support, which means that support and maintenance costs for InsuranceSuite 8 are higher.
The more pressing date that we're looking at is the one on the right here, July 2022. You can see that the versions of Oracle, SQL Server, and Java, on which InsuranceSuite 8 run, all reach end of life. Running on an unsupported platform leaves you open to security risks and other vulnerabilities, so it's usually something that customers and companies in general try to avoid. This essentially means that our customers who have InsuranceSuite 8 have about two years from now to upgrade and avoid being on this unsupported platform. We're encouraging these customers to upgrade very soon and, given our Cloud Direct offering, to upgrade directly to the cloud instead of upgrading to InsuranceSuite 10. Again, doing so accelerates value and allows them to avoid that future upgrade to the cloud when they're ready to go. All right.
To sum it up here, if you wouldn't mind humoring me with a trip down memory lane, we actually did our first customer upgrade back in 2004 with our first ClaimCenter customer. You can see the team that did it on the left here. I was actually already with the company then. I remember the excitement that the whole team had around this accomplishment because we knew back then that the best way for our customers to get continued value from our products is going to be through upgrades. Having implementations that can be upgraded has been a key value proposition for Guidewire from the beginning, and the ability to do so is innate in our product's DNA.
Over the years, we have, along with our customer and partner community, done hundreds of these upgrades, and we've reaffirmed our commitment to upgrades a couple of times, first with the creation of the upgrade practice in 2009 and then our Upgrade Center of Excellence, which was founded in 2012, where we really took innovation around upgrades to the next level. Now, with our cloud offering, I'd like to say that we're doubling down on this commitment. We're going to keep customers current, and we're going to accelerate the pace with which they can attain greater value. We formed our Cloud Transition Practice, and this team has the singular focus of taking existing self-managed customers to Guidewire Cloud. Our customers are interested. Our schedule for cloud assessments is actually full, and the requests still keep coming in.
We believe we have all the right pieces in place, but more importantly, we believe that every customer has a path to Guidewire Cloud, and we're ready, and we're excited to take them there. Thank you for your time today. We are going into a 10-minute break, and then after that, you'll hear from Roger Arnemann. Thank you.
We are the fastest-growing top player in the life business in Italy, and the innovation field has been the key element of that. On the GI side, we would like to replicate this. This is our main ambition for the coming years.
It is important to be the first mover. In Italy, all the players work with old technology, old systems, and it is very difficult for them to change. We will leverage the expertise of Guidewire to try to be the first mover of the Italian market, because this is clearly a key success factor to win in the insurance markets in the coming years.
We decided to create very strong core capabilities, and then adding to this core all the digital components, from digital signature to digital payments to digital documentation. You create a kind of platform that is fully digital, is omnichannel, a scalable platform for the future. We also see the future more like an ecosystem, and we feel that we are much better placed now than we were only a year ago.
Hello, my name is Roger Arnemann, and I'm the General Manager of Guidewire Analytics. Before starting, as this is my first time with you, I'll share my background. I spent 15 years at Risk Management Solutions quantifying catastrophic risk and ran global consulting teams, securitization teams, and our data business unit. As Chief Product Officer at Nomis, we did price optimization for retail banks, and as serving as Chief Product Officer at Arceo, we built cyber insurance solutions. I would like to share why I'm so excited about our opportunity at Guidewire. I believe that we're just scratching the surface with what analytics will do to transform insurance. Paramount to our vision is first, that analytics are a closed loop, and second, analytics must be at the edge to make insurers, as we say, brilliant in the moment.
Meaning analytics delivered at the point of underwriting and claims handling, not at the back office with stale monthly batch processes. Guidewire is uniquely positioned to achieve this. Our PolicyCenter and ClaimCenter products are that edge, where decisions happen and delivering analytics has maximum value. Now let's set the stage. The world is changing rapidly. There are a few examples. The sharing economy has disrupted the concept of ownership. We had a surge of small business growth, but now far too many are closing. Working from home has changed where we are, our hours, commutes, and the tools we use. The Internet of Things creates an explosion of data. Catastrophes and pandemics catalyze tectonic changes that are reverberating beyond our lives and the physical assets that they've destroyed. Social inflation is leading to elevated payouts. Nature, frequency, and severity of risk is shifting fast.
To meet these challenges, insurers need analytics more than ever. This is why insurance analytics is an approximately $8 billion total addressable market. In fact, Mike Rosenbaum said last year that analytics could become bigger than core. I have some ground to cover. While the world is changing, exposures are changing even more quickly. For example, COVID-19 transformed the restaurant industry overnight. Countless restaurants have closed and will not reopen. Those that are open are not the same. In January, two pizzerias in Manhattan were identical. Now, Joe's only does takeout, and Sally's has outdoor tables and bike messengers. These present very different risk profiles, neither of which was what they looked like in January. This story is not just about COVID. At Guidewire Analytics, we're helping insurers navigate accelerating change.
Insurers are expert using the past to estimate the future and are really good at looking in the rearview mirror to drive the car forward. That requires a future that is similar to the past. That is no longer sufficiently true. As they say, past performance is no guarantee of future results. We already help insurers assess risk. We cannot predict the future, but we can anticipate and respond faster. We accomplish this with the industry's first closed-loop analytics platform that makes insurers brilliant in the moment. I'm excited about our closed loop and want you to understand exactly how it works. First, we help you leverage your own data. The Guidewire Data Platform and an ecosystem of apps that can sit on top of that platform.
Together, those allow you to actually harness data you've created in the past and do contextual risk comparisons to see what you're looking at today and other risks similar to it in the past. Two, we help you enrich your insight. The Cyence data listening engine helps us gather information in real time that's pertinent to underwriting and handling a claim. We take that information and we convert it into Cyence risk factors that are specific by line of business to answer individual questions. Part of the data that we collect is behavioral and also non-obvious data. We use our compare products to share claims information that's syndicated across multiple companies. We also embed intelligence. Our predictive analytics product allows us to build, deploy, and monitor models.
You can bring your own models and use open source integrations and do all this at the edge in underwriting and claims handling. To complete the loop, we learn continuously, including continuous underwriting. We can track portfolio performance and refine models with outcomes and do hypothesis A/B testing to quantify intuition. This whole closed-loop process integrates with the core. There are two things that I want you to remember from this. The first, like a flywheel spinning faster and faster, each of these is mutually reinforcing. Second, the closed loop is a key differentiator to win core deals and spur cloud migration. Let's look at three by the numbers examples of our components in action. The top black bar is a challenge for cyber. In the worldwide threat assessment, the U.S. Director of National Intelligence cited cyber as the number one threat to U.S. security.
By 2021, the cyber global economic loss is estimated to be $6 trillion. By 2021, the global ransomware economic loss is estimated to be $20 billion. That's five ransomware attacks per minute. The lower bar is how Guidewire helps customers transform challenge to opportunity. We collect more than 1,000 data points and curate these into 47 risk factors. A risk factor is a derived analytic, often including multiple data points, and it answers a specific question. For example, a ransomware risk factor is the number of exposed Remote Desktop Protocol ports. In 2019, we assessed the risk of 1.2 million cyber policies for customers. The Cyence acquisition was about cyber and about expanding the data listening engine to more lines of business. Now let's look at how we're using Cyence for workers' compensation. The top black bar, again, is a challenge for workers' comp.
In 2019, $56 billion of premium was written in the U.S. $0.40 per dollar spent was on insurance expense. Not actual losses, just expense. It's estimated there's a $10 billion reserve deficiency in the U.S. to address the volatility of the workers' compensation line. The lower bar is how Guidewire helps customers transform challenge to opportunity. We collect 700+ data points and curate these into 101 risk factors. An example of a risk factor for workers' compensation are web searches for plaintiff attorney nearby. As you might imagine, that increases the average payouts. For one customer, we demonstrated an approximate 1% reduction in loss ratio, and that's a lot. Using a simplified economic model, a $600 million insurance book over 10 years creates 25% higher pre-tax income and almost $100 million of additional shareholder value just from a 1% reduction in loss ratio.
Third, let's look at predictive analytics for auto. The top black bar, again, is the challenge for auto. There are 6 million U.S. auto accidents per year. That's 11 accidents per minute. In 2019, $185 billion was paid in U.S. auto claims, and 5%-10% of claims payment is estimated to be avoidable leakage. The lower bar is how Guidewire customers transform challenge to opportunity. It takes five days to train a Guidewire Predictive Analytics model. It takes only one day to deploy a full- model solution into production. For one customer, we demonstrated an approximate 3% reduction in loss ratio. These are three examples that we've given, and here's some feedback from customers.
Dominic Weber, VP and Chief Actuary at Society Insurance, says, "Guidewire Predictive Analytics and Guidewire Cyence for Small Business have significantly improved our quoting process, resulting in profitable growth, increased new business, and improved customer retention." Adam Rich, Head of Underwriting Technology at Beazley, says, "After conducting a review of data analytics services available in the market, we found that Cyence's data science capabilities and engineering expertise offered us the best solutions to address the challenges of today's data-driven world." As we attack the $8 billion insurance analytics total addressable market, we strive to achieve two outcomes: drive compelling results for customers with closed-loop analytics, and making sure it's brilliant in the moment. Thank you. I will now hand over to Jeff.
Thanks, Roger. I'm excited to be here, thank you all for taking the time to be with us today. I look very much forward to doing this in person next year, hopefully back in New York City. My name is Jeff Cooper, and I'm the CFO of Guidewire. I joined Guidewire as VP Finance almost three years ago, I'm honored and excited to help lead Guidewire through this transition as we build upon our historical success and grow into a cloud-based model. Let's just jump right in. I wanted to quickly touch on some key financial highlights. First, we are the clear leader in a large and under-penetrated vertical market. As Mike mentioned in his section, there's still much work to do to modernize core systems in our chosen domain, and there's still a long way to go to execute on our mission.
The charts on the right-hand side of the slide demonstrate how we have been successful over the last 10 years in carving out our leadership position, growing direct written premiums under license at a 17% 10-year CAGR and growing ARR at a 23% 10-year CAGR. Second, we are seeing early and growing momentum for our cloud-based core systems. I will give you more detail on that as we work through the presentation. Third, when we win, we establish mission-critical, long-term customer relationships with negligible customer churn. Fourth, we continue to be cash flow positive and benefit from strong unit economics, which will become increasingly apparent as we grow into our long-term model. As most of you know, we are in the midst of a business model shift.
This shift to the cloud is a significant change in how we engage with customers, and this change offers benefits to the industry, to our customers, and to investors. Foundational is that we are changing the relationship we have with our customers by expanding beyond just being a software vendor and building a new division of labor with our customers. As a software vendor, we captured a relatively small piece of the overall pie with respect to the spend that insurers make on core systems. As a cloud vendor delivering a core system as a service, we meaningfully expand this relationship, and as a result, expand our overall TAM. As we expand the relationship with our customers, we benefit from occupying very strategic real estate within an insurer's IT framework.
We sell our service in a recurring subscription model and expect to continue to have longstanding customer relationships with attractive customer lifetime value. Finally, as we move to the cloud, we believe that scale matters more. It is a very consequential decision to entrust a vendor to not only provide mission-critical software, but to run that software on your behalf and deliver it as a service. We believe that market leadership and a track record of tackling the largest and most difficult projects will accrue to our benefit as the P&C industry starts to adopt cloud-based core systems. Additionally, with a vertical market, there is an opportunity to build meaningful market share that creates compelling avenues to further monetize our strategic high ground in the core. I thought Mike talked about that very effectively with his vision slides.
With all of this in mind, we think it's a very exciting time to be at Guidewire. Underlying these benefits is our foundational belief that the cloud enables us to best service our customers, it enables us to focus our R&D efforts, and it will over time allow us to best serve this industry as it adapts to evolving business imperatives. This shift is already underway with most of our new sales activity coming from our cloud products. This slide shows how much of our bookings comes from cloud. As you can see, we've had a pretty significant shift over the last five years. In fiscal 2020, we saw almost 70% of new sales come from cloud. In North America, almost 80% of new sales came from cloud.
We are pleased to see this shift starting already, but we also recognize that we are still in the very early stages of the demand curve for cloud in our vertical. Over the last couple of years, as we have seen cloud bookings increase and due to ASC 606, which has material impacts to term license revenue recognition patterns, we have seen increased complexity in our overall reported revenue results. Let me walk you through quickly our revenue recognition patterns. For subscription and support revenue, which includes cloud revenue and support revenue attached to self-managed customers, we recognize the total contract value ratably over the committed term. For cloud, we start the clock on revenue recognition upon provisioning of the software, which for InsuranceSuite Cloud has historically taken between 30 and 60 days. As Diego mentioned, we are getting much more efficient at this.
For license revenue, once we have delivered the software, ASC 606 requires us to recognize revenue upfront for the committed term, as opposed to recognizing revenue in line with our annual invoicing activity, as we did under ASC 605. This has resulted in lumpier term license revenue after the adoption of ASC 606. Our standard term license contracts are two-year initial terms followed by annual renewals. However, in some instances, we will see deal durations that are longer than our standard deal terms, and it is also possible, although less common, to see shorter deal durations as well. I will also note that a big opportunity in front of us currently is the opportunity to migrate existing term license customers to our cloud products. This creates additional income statement complexity because in a migration, the customer continues to use the on-premise software for a transition period.
When we sell a cloud upgrade, some of the software revenue will be allocated to subscription, and some will continue to be allocated to license revenue, which can be a bit counterintuitive. Internally, we focus on ARR as a measure that normalizes for all of these different revenue patterns and the associated complexity. Our definition of ARR largely aligns to the annual invoicing activity for our software. The chart on the right-hand side of the page shows ARR versus total software revenue in the period. Prior to ASC 606 and the shift to the cloud, our software revenue in a given period was a good approximation for ARR. As we have worked through this transition, however, we do expect to see potentially meaningful deltas between these measures. In fiscal 2019 and 2020, reported software revenue ran ahead of ARR as we saw more multi-year term license revenue.
In fiscal 2021, that multi-year activity creates a headwind to reported revenue going forward. ARR normalizes for all of this. ARR is not new for us. We have always thought about this business as a recurring revenue business. Prior to ASC 606, we relied upon a key metric called four-quarter recurring revenue, which could be calculated off our income statement and was a great proxy for our current definition of ARR. We have a long history of growing our recurring revenue base, starting initially with one product, ClaimCenter, then adding additional core modules with PolicyCenter and BillingCenter, then evolving beyond the core with data and digital, and now bringing this industry into the cloud. As Mike noted when he discussed the market opportunity, there is still a long way to go to fully modernize this industry.
This next slide drills down into recent ARR results to focus on our success in the cloud. This is a double- click into our ARR. Our ability to win and grow in the cloud is critical as we work to penetrate our TAM. While we are in the early stages of the cloud core system demand curve, we are seeing strong momentum for our cloud products. This is a view of our ARR by total Cloud ARR and InsuranceSuite Cloud ARR. The chart on the left shows the ARR of all of our cloud products, InsuranceNow, cloud-delivered data products, and InsuranceSuite, and represents a 58% three-year CAGR in terms of growth. The chart on the right isolates ARR coming from InsuranceSuite Cloud customers only. We are thrilled with this momentum as it represents an important view into how we think about future growth.
We also thought it would be helpful to provide investors with a double-click into our aggregate ARR today, and we would expect to update this view at the end of our fiscal year. Another metric we have discussed during this transition is our fully ramped ARR. Given the strategic long-term nature of our customer relationships, it is common for large cloud projects to have a multi-year ARR ramp embedded into the customer agreement. As a result, a reported ARR from a new cloud customer is often significantly larger in year five than it is in year one. As of the end of our fiscal year, we had $610 million in fully ramped ARR.
The chart on the lower right-hand side of the page is a visualization of our InsuranceSuite Cloud wins aggregated into a single cohort to give you a view into the overall average ramp schedule or the shape of the ramps that exist in our base. As we add new cloud customers and layer on new cohorts, we expect this to create a meaningful tailwind to our future ARR growth. We are seeing strong growth in subscription revenue, which is impacting gross margins. We are investing aggressively to make sure we are ready to execute on the cloud demand we see in front of us. As we move beyond the early stages of the adoption curve, we want to ensure we are well- positioned to expand our market share as large insurers make the consequential decision to transition their core system framework to cloud.
To this end, you saw us expand the headcount attached to subscription and support revenue costs. In fiscal 2020, we ended fiscal 2020 with 378 employees in our cloud operations and technical support function, up from almost 200 the year prior. We expect hiring in this function to continue to be aggressive into fiscal 2021. As we exit fiscal 2021, we do expect to get more efficient and require less headcount as we add incremental customers. I wanted to repeat this slide that Diego previously presented because I think it is critically important. We are investing in our R&D to drive long-term cloud operations efficiency. This slide is illustrative of the average cost for a typical Guidewire customer that moves from our initial approach to cloud and then transitions to the Guidewire Cloud Platform.
The release of Aspen on top of Guidewire Cloud Platform was an important step towards building a more efficient cloud-native offering. As we work through the large market opportunity to bring our install base to the cloud, we recognize that we will have customers of varying degrees of complexity. Much of the opportunity in front of us is not greenfield lines of insurance that are starting from a clean sheet of paper in a relatively simplistic use case. What we are trying to tackle is the meat and potatoes of the industry. We believe our platform is uniquely positioned to meet the needs of this segment, but there is work to be done to get customers onto Guidewire Cloud Platform.
While we have a much clearer line of sight into how we think about the path towards our long-term margin profile, we also recognize it will take time to get customers there. As we exit fiscal 2021, we expect to require less headcount adds going forward that will allow for some gross margin expansion in fiscal 2022 and beyond. As we look ahead, our top-line ARR growth drivers are clear, and we are confident in our ability to drive ARR growth acceleration. First, we have a unique opportunity to expand with existing customers by upgrading their on-premise instances to our cloud. We believe this will accelerate expansion ARR over the next three to five years. In fiscal 2020, our net renewal rate, which looks at total ARR for customer cohorts at the start of the year and at the end of the year, was just under 110%.
If you look at customer cohorts that have bought InsuranceSuite Cloud, the net renewal rate is approximately 130%. This analysis includes customers that had InsuranceSuite Cloud ARR at the end of fiscal 2019 compared to what they had at the end of fiscal 2020. This cloud opportunity is unique and exciting to Guidewire. Second, we still have ample white space to continue to modernize legacy systems at both new and existing customers. This work has been foundational to our growth since the beginning. Third, as we build success in the cloud and standardize a significant part of the industry on our cloud platform, there are opportunities to monetize this strategic high ground and complement our core offering.
We are obviously already doing this today, but we expect this opportunity to grow in the cloud domain. Looking ahead, we are confident in our ability to accelerate ARR growth and continue to drive outsized Cloud ARR growth rates for the near and long term. A lot on this slide, but with this backdrop, I thought it would be instructive to help investors understand the expected profile of Guidewire at two stops along our journey towards becoming a multi-billion dollar ARR business. This slide shows some key metrics as of the end of FY 2020 and FY 2021 per the midpoint of our outlook provided on our Q4 earnings call. We then show what the business could look like at $1 billion of ARR and $1.5 billion. At $1 billion, we expect approximately 75% of our ARR to come from cloud products.
Since cloud products sell at a higher price point, this equates to close to 60% of our customers are in the cloud. Once we get to $1.5 billion, we would expect to be much farther along in the business model transition. Over time, ARR and software revenue should converge even though we may experience some income statement complexity as we work through the early part of the shift. Embedded in this view is that we will continue to work aggressively with our partners on the implementation side of the business, and that ongoing PS work will decline in the cloud. As a result, we are not modeling much services revenue growth. With this large opportunity ahead of us, we are investing in our cloud infrastructure, which is impacting subscription and support margins.
We expect margins to decline in fiscal 2021, but we do expect some margin improvement in fiscal 2022, then more meaningful expansion thereafter as we optimize our cloud operations function to leverage the improvements to the product from a runtime perspective. Ultimately, we believe we should be able to capture mid-70% subscription and support margins, driving the total margins close to 70% over the longer term. We then believe our operating margin should return to the high 20% range and cash flow from operations into the low 30% range with minimal CapEx requirements. Finally, with respect to the top-line growth rate, which I know you all are wondering about and which drives the timeline behind this model, we do expect ARR growth to return to mid-teens or higher.
However, given the current economic uncertainty and the fact that we're still in the early adopter phase of insurers moving core systems to the cloud, we recognize that it may take a couple of years to get to those levels. Cloud ARR will be a key driver, and we expect to see sustained growth rates of our Cloud ARR at above 30%. I know there's a lot to go through on this slide, and I'm sure there'll be many questions as we move into Q&A. For my final slide, I wanted to touch on capital allocation quickly. As many of you saw, we did announce a $200 million share repurchase program. With approximately $1.4 billion on the balance sheet and a recurring revenue model that continues to be cash flow positive, we felt comfortable that we could do this without impacting any potential strategic investment initiatives.
We also recognize that we have a conservative customer base that appreciates a strong balance sheet, especially given the long-term relationships that we enter into with our customers. Overall, we continue to be well-capitalized and well-positioned to execute on the opportunity ahead. With that, I think we can turn to Q&A. I will ask folks to be a bit patient as we work through Q&A in this new virtual format. I'll look forward to answering any questions you all have. Thank you.
Great. Thanks, Jeff. We do have a question, teed up. It's from Sterling Auty at JP Morgan.
All right. Thanks. Can you hear me okay?
Yep.
Let's do this.
Hey, Sterling.
Hey. How are you guys? All right, obviously just given what just happened with the guide and the outlook, I think we have to start the Q&A there. Jeff, just looking at what you presented, the obvious question is going to be the timeframe around where you think you get to that mid-range target and that long-range target.
Yeah. Thanks, Sterling. While we consciously didn't put target years on that slide, and that was a conscious choice, we did try to provide some insights into how we think about growth. The commentary that I provided was that we do think that we would expect to see a return to 15%+ growth over the midterm, recognizing that we're at the early part of this demand curve, and so it may take us a little while to get back up to those levels as we start to see more meaningful adoption. We feel very good about the uniqueness of our ability to convert our existing customer base to our cloud. Talked a little bit about net renewal rates, which is a bit of a new metric that we are providing you all today. We said about just under 110% net renewal rate today.
We think we can accelerate that because of this big cloud migration opportunity that we have in front of us. That creates a baseline to how we think about the growth profile. As we get more of our existing customers on our cloud and continue to win new customers and build that reference ability, we think we can return what we think of as the foundational market, the core modernization market, to more normalized levels. That would accrue on top of that. We also think that just the network effects associated with having a critical mass in the cloud will create ancillary opportunities on top of our core that we will be uniquely positioned to serve.
When you put all that together, there's a lot of excitement about our ability just to get back into the high teens, and we've talked in the past about even getting back up into the 20% range. We still think that's possible, but as we think about setting kind of near-term expectations, getting back to 15% plus feels appropriate and recognizing that where we are in this adoption curve, it'll take a year or two or a couple of years to get back to those levels.
Got you. Maybe just one follow-up, Mike, for you. Just from a high level, how do you think about kind of the appetite from the carriers to do these cloud migrations? One thing we've heard from some of the consulting partners that are out there is they're comfortable doing cloud for new endeavors, new lines of insurance, digital go- to- market, et cetera. They just, in a lot of these cases, over the last five years, did a system modernization. Maybe they're not quite as eager to do a quote unquote, another lift and shift to the cloud.
Yeah. Thanks for the question. I think that question points to the degree to which we solve that points to the higher growth rates for our company. I think, a couple of things. Number one, we can make it easier. It is nowhere near the level of effort associated with that initial modernization. As one of the things Sandia said in her presentation, every single time we do one of these, we get a little bit better at it. We put a little more IP into the process, and it becomes easier and easier and easier. We learn, the systems integrators learn. I think that you're going to see that in the way this whole industry sort of moves to the cloud. It's going to increase. The battlefield, so to speak, the competition, the vector of competition has to do with IT and business agility.
I think that's going to be delivered by cloud systems. I think that you're going to see that imperative play out in the acceleration of these moves to the cloud. As we build the proof points, as we get better, as we continue to deliver more value, that's just going to improve. Just kind of translating that back into our guidance, I think there's just so many variables at play here. I think we feel comfortable about the guidance we've set for the year with the potential for that to accelerate going forward, and we'll just keep updating everybody as we evolve.
Sounds good. Thank you.
Yeah. Thank you for the question.
Thanks, Sterling. Our next question comes from Rishi Jaluria at D.A. Davidson. Might take a second to pop up.
Hey, guys. Can you hear me?
Yes.
All right, great. Thanks a lot, team. I really appreciate all the detail. This is super helpful. One for Jeff and one for Mike. Jeff, going back to the target model. I think if we look at the model that you're guiding to at about $1 billion in ARR and compared to last year's model, which was somewhere near that, I believe, what, $900 million, $950 million in ARR. Pretty close, but you're talking about much lower operating margins. Is this a function of just a lower subscription gross margin and a longer timeframe to get to kind of a more SaaS-like gross margin there? Or is there incremental areas in R&D and go- to- market that you're investing? I've got a follow-up for Mike.
Yeah. I think it's a combination of the two. One of the things as we are working on in a more meaningful way, this opportunity is a recognition of the varying complexity of the customer base that we're trying to bring over into our cloud environments and working through that. One of the things I feel very confident about is that we have a path to getting everybody on what we now call Guidewire Cloud Platform and getting everybody on a path towards achieving our target margins. Recognition that it may take a little bit longer to get there than we'd previously thought. Additionally, we are still continuing to invest very aggressively in our R&D to make sure that we deliver the best product to this industry as we expand our TAM and continue to grow and expand our market share as we attack this opportunity ahead.
Those are some of the things that you're seeing in the model. We wanted to all of you with just further out, but once we are in a most of the way through this transition, what we think the model will look like. One of the things to note on that is just the increasing confidence that we have into the gross margin profile of the subscription products and how we feel about that.
All right, great. That's helpful. Mike, thinking about maybe the framing the longer-term opportunity, not that the core P&C opportunity plus analytics and data isn't a massive opportunity. As we think going out even more than 10 years past the cloud transition and increasing the penetration, how do you think about the opportunity to get into adjacencies like life insurance, for example, especially given the amount of customers that you have that also have a big life insurance practice as well?
Yeah. Life insurance is one of the things that at least once a month, if not once a week, I have a discussion about. I think there's certainly that potential. I think we're building something pretty special in terms of the core platform, the core transaction, the base, the thing that what Diego talked to you about this hybrid tenant model of what else can we do with that? Life insurance is a possibility for us. There's probably other possibilities for us. I don't want to distract the organization and sort of cloud that objective. I really wasn't kidding when I said priority one, two, three, four, five is this cloud transformation. I think about it a lot, just because that's my job and I don't write the code.
I want to make sure that all the people at the company that are writing the code, that are focused, can sort of focus on getting us through these next few years, making sure that the customer base is successfully moved to the cloud. Then we can look at things like life insurance and other opportunities for us to expand. I really would tell you, I really do see this core P&C opportunity with data and analytics, as add-on services, as more than enough for us to grow into the potential over the next decade. Thanks for the question.
Thank you.
Okay. Our next question comes from Brad Sills at Bank of America.
Great. Thanks, guys. Can you hear me all right? Good.
Yep, we can hear you.
Excellent. Great. Another question on the margin target. When you look at that near-term target, that 15%-16%, you guys outlined some pretty bold initiatives with regard to GWCP and the investments you're making in the platform. Cloud Direct is an interesting program here. When you think about where you could get upside to that target, would it be from just better execution, getting more shared components into GWCP, quicker migration, the Cloud Direct program drives to InsuranceSuite Cloud? What are some of the variables you look to that say, gosh, maybe in a couple of years, we look back and we exceeded that target that could drive that?
Yeah. Jeff, let me touch on it quickly, then you can add to it. Certainly, execution's an important part of that, right? The more customers we get on the platform, the better that is going to look. I think we're excited about where we are, we're still early days in terms of validating that this is going to work and getting feedback from customers about where they want to prioritize. I think also with respect to margin, you got to realize that Diego and team are balancing a whole bunch of different things, right? We're trying to deliver a scalable platform that works reliably, securely, effectively. That's a priority. We're also trying to add services on top of that platform that create more of a value proposition to convince customers to move to us.
There's additional functionality that we're adding to the baseline of InsuranceSuite to just evolve the core platform. We're balancing all of those things to try to get to that sort of Guidewire and customer-based optimal balance between the innovation and the efficiency and all those things. There's definitely opportunity to see those things move more quickly. That's a possibility. I wouldn't say it's really our overriding goal. Our overriding goal is drive adoption and new sales of cloud, make sure that those customers are successful. I think that the intention of the slides and the presentation today was to make it clear to you that we absolutely see a path towards that margin improvement that we will ultimately get to. That's the way I would answer it. Jeff, go ahead. Yeah.
Not only I think Mike addressed it appropriately, but if we do see an acceleration of adoption, which would be a very exciting fact pattern for us, that could cause us to be investing a bit more to capture some of that early part of the market. That could actually have a negative impact on that nearer- term operating margin target, but pull forward that longer-term target. That's the way I think about it. At $1 billion, we feel pretty good with that range that we set, but that phenomenon could exist.
Great. Thanks so much, guys. One more, if I may, please. With the release cadence you guys are on now for InsuranceSuite Cloud, it's looking more and more like a multi-tenancy release cycle. Some of the components you talk about with shared components are looking more and more like multi-tenancy. Is there a point where we might see just a full multi-tenant suite where there's no need for any isolation on a single-tenant level? Is the industry just not moving in that direction?
It's a great question. I'm going to let Diego give you his perspective before I answer. Go ahead, Diego.
Sure. Hi, Brad. I would split the answer in two parts. One part is that we have decided conceptually that we didn't want to do a sort of replace kind of approach, but an evolution approach. I don't think that there is an answer that is, oh, this architecture is the right architecture and this is the wrong architecture. I think that there is an evolution during the story. If you ask me today, the core workflow and database are proprietary and needed to be isolated, and we foresee that we continue to remain isolated and single tenant for a longer while. At the same time, we are working and continue to slim the core and add some capability in external service.
The combination of this plus Kubernetes containerization is offering us an interesting kind of lever between what is efficient from a cost perspective. If you think about typical customer run the entire application inside a VM. Now we have this first level into which we can run into a cluster multiple applications. It's one level that goes in the direction of improving the density. As we know, the better the density, the better the cost. I would say we're going to balance this on the way to go. Also keep in mind that if I go tomorrow to my customer and say, "I have reimplemented completely everything, it's fully microservice- enabled," but you have a sort of to recode completely your implementation to take advantage of that will be again, too quick, too fast and too disruptive.
As Mike said, and we pointed out, we need to balance the two things. There are also things that if we deliver too quickly, they will not be able to consume. We need to move them along the way. I think this first step that we've been doing is being kind of showing us that we are exactly on the right path, and the combination of the two things. At Connections this year, we're going to show to some of our executive that are part of our GSAC team, we're going to show them a live example of, let's call it like that, the sort of single-tenant aspect that work in orchestration with multi-tenancy in a seamless way.
Customer is not really asking us, "I want everything microservice- enabled." They are asking us, "I want to be able to evolve, and I want to evolve seamlessly." We think that this path that we are right now is the right mix. Potentially that mix will shift the further down the road that we're going to go. If maybe you ask me the same question in five years and we're going to say, the only portion that is remaining single tenant is that little portion, or is 50% smaller than it was used to be, and it's not a problem anymore. We are not going to invest any energy in recode that because it works perfectly in the context of the new architecture.
The only thing I'd add to that, Brad, just whatever we do in terms of evolving the architecture of the system will be done in close conjunction with our customer base and what they're comfortable with and what the best practices are in the industry. I feel very, very good about our approach right now. I've said this before, just because of the existence of these sort of hyperscale cloud platforms like Amazon Web Services, it's just incredible what you can do today, and you can do it efficiently. I feel very good about the approach we have right now, and any evolution that we take will be done in conjunction with these sort of tier 1, tier 2 P&C customers. Thanks.
Sure. Makes sense. Thanks, guys.
Hey, thank you very much.
Thanks, Brad. Our next question comes from Chris Merwin at Goldman Sachs.
Okay, thank you all very much for taking my question. I appreciate those targets that you gave that showed, I guess, what cloud or I guess percentage of Cloud ARR at the midterm and the long term. I guess I was curious, like when we think about the components of that, how much should we be thinking about coming from brand new customers versus the migrations of existing customers or expansion within a customer in a new, say, line of business? Just curious, like, any update currently from a sales perspective, like where is the least friction? Where are you seeing the strongest demand, particularly in an environment we're in? Just trying to get a sense of where you're seeing really good momentum, as you head towards that target. Thank you.
Thanks, Chris. Jeff, you want to answer that first or me?
Yeah. Sure. I think there's a couple ways to think about that question. There's a very near- term way to think about it and how we think about the pipeline and the demand environment for fiscal 2021. As we inspect our pipeline for fiscal 2021, we have noted in the past that there's a fair amount of migration activity. That would be existing customers converting to our cloud. That being said, there is also the sales folks are out there actively talking to new accounts as well. We do expect some of the early part of the curve to fall a little bit more heavily with existing customers, those folks that have a lot of trust with Guidewire. As I mentioned, this is a super consequential decision to entrust a vendor to run a core system of record on your [audio distortion].
That's how we think about the early demand curve in building the referenceability. The other thing we've talked about in the past is that as the industry is grappling with this shift to the cloud, we have seen a bit of a slowdown in terms of that blocking and tackling of core modernization activity. I think the industry is assessing what this means and how this shift will take place. As we get more referenceability, we do believe that that new customer, that new modernization engine will start to ramp up. As we think about kind of the mid- and longer- term targets, it's more balanced in terms of the overall demand between existing customers and new customer wins.
Chris, in terms of your question about what we're seeing in sales cycles and with the mix, I think we're seeing a variety of scenarios. One of the things that we pay a lot of attention to that you saw in Sandia's presentation was the sort of natural upgrade cycle and the existence of compelling events driving that upgrade cycle, causing that conversation to happen. That strategy is underway regardless of our cloud strategy. The customers are thinking about what to do with these systems and how to move them forward. That creates opportunity for us to migrate existing customers. You also have the dynamic of companies launching new lines, and new innovative products. Bringing those to market as quickly as they can is obviously a priority. We're seeing existing customers and net new customers look at cloud as a vehicle for doing that quickly. Right?
Our goal is to make sure that the customers are thinking through all of the options they have. As Sandia said, we like to chart with them what we think is the most optimal, best approach, based on the business initiatives and the sort of compelling events driving those situations. We really do see a mix of sort of net new cloud upgrades and also net new lines. That's what sort of comes up through the pipeline into the bookings and into the net new ARR that we're able to produce each quarter.
Great. Thank you. I just had one more follow-up on gross margins, just was hoping to put a finer point on it. You gave the disclosure on InsuranceSuite Cloud ARR, which was very helpful. I think it's around $100 million. That's significant scale already. When we think about the gross margins on that, I don't think you said specifically what those were, but I know there's still a ramp period to come to get those up to the mid-60s or even 70% level over time. Given, I guess there's some other examples of vendors out in the industry that are slightly higher in terms of margin at lower scale. How do you think about the trajectory of that ramp? What are some of those key investments you're making today to further optimize the platform?
Again, the scale is very impressive already for the InsuranceSuite Cloud business.
Yeah. We touched a little bit on how we think at a high level, the key investments we're making, GWCP and getting customers on the Aspen release is a big part of how we drive efficiency into our current cloud customers. Most of our current cloud customers are not on GWCP, right? They went on to what we talk about internally as Guidewire Classic, and we will work over time to migrate those customers over to the latest release in terms of our infrastructure. New customers will be going directly onto GWCP. This is part of the complexity that exists within the customer base that we have that has an impact in near-term margins. We do feel confident in our path to getting everybody on that same architecture approach over the longer term.
The only other thing I would note is, I noted this a bit during the presentation, that subscription margins, we do expect at this point in time, looking at how we think about the model, to bottom out in fiscal 2021 and start to move up in the right direction in fiscal 2022, dependent on pace of hiring. This is on our current model. That's how we think about it. We do think that as we kind of exit fiscal 2021, start to see more folks go on the latest release of our infrastructure, leveraging Guidewire Cloud Platform, that we can more linearly drive margin expansion in the years to come after fiscal 2021.
Got it. Thank you very much.
Thanks, Chris.
Thanks, Chris. Our next question comes from Tyler Radke at Citi.
Hey, thanks, good afternoon, you guys. I wanted to ask you about some of the product-specific catalysts or specific catalysts that you see driving more of these InsuranceSuite Cloud migrations. It felt like in the past you talked a lot about Aspen release and one of your biggest customers, I think USAA going live. In the presentation today, it seemed like you're looking a lot further down the road. Diego talked about some of these things like Integration Framework and new product innovation that you're adding in addition to the Guidewire Cloud Platform. Just how are you thinking about product-specific catalysts or go-live specific catalysts that really have the potential to move the needle in terms of moving these big cloud customers over?
Yeah, let me give you a quick answer, and then I'll let Diego chime in, and actually anybody on the panel if they're interested. This is, I think, the real exciting part of enterprise software is what are the new capabilities that you're building that are going to cause people to get more value from your product? I want to say the most important thing, okay, is not any individual feature, but it is the concept that these new releases are easier to upgrade to. Okay. When you think about the presentation that you saw from us today, the thing that drives me maybe crazy or motivates me is that the percentage of the install base that's not on InsuranceSuite 10. Okay. That's what motivates me, is getting our customer base to the latest release every single time. That's what's going to change this whole industry.
It's going to change all of Guidewire's customer base. It's going to enable any of the things that we now list for you to be actually in people's hands. Okay? I think that's the underlying principle of what's changed sort of pre-cloud to post-cloud, right, is that the capabilities are in the customer's production environments. I'm going to turn it over to Diego and let other people talk about any of the specifics, I want you just to realize that it's the upgrades that are really the core driver of innovation in our industry and what we're able to deliver. Diego, what are you?
Yeah, absolutely. If you guys remember last year, we did mention that this cloud transformation was exciting for the development team, for the engineering team. The engineering team was used to release every two years, and the customer were taking their end every four, every six. Right? Now think about why is that? Because the upgrade was a kind of complex effort event, right? All the investment that we've been doing on the platform is an investment to make sure that that upgrade becomes as seamless as possible. That we could, within a couple of clicks, move our customer from Banff to Cortina. Now, with that infrastructure, then it will become way more important what kind of innovation do you have now. If you remember last year, we said Connections, we kind of launched portion of the innovation.
Last year, we did focus on policy, and around policy, we did two or three things. One is APD. That in general is a way to kind of describe your product model in a way that it could be leveraged with dynamic auto-generation of API and UI.B, we invested in Jutro and on a framework that we have the ambition to make that Jutro framework becoming the best P&C library for any customer that wants to build kind of a digital interface. That was the first piece.
This year, we are continuing that kind of momentum into the innovation space, and we will be launching at Connections, something around claims, that we think is going to be pretty interesting with the same kind of model that we kind of show the vision at Connections and then back it up across the next two releases with real pieces of functionality, right? Ultimately for us, the biggest problem was, as Mike said, there is no value in a feature that the customer cannot use, right? Even if I have a fantastic feature in hand and the customer is going to say, "I'm going to have that feature, maybe able to use it within years," then the entire loop is wrong, right? By then, maybe the market has made three changes, and that feature is not as important as it was.
Also, if I don't have adoption, I will not have a capability to refine that feature to the perfect needs of the customer, right? That's why the sort of investment was, let's make sure that we have the railroad from East Coast to West Coast. Once we have that one and it's very reliable, we can put on top of that better trainings. That's kind of the logic behind it.
Hey, I'd love, Roger, for you to give a quick answer here, because I think one of the things Roger talked about in his presentation was this closed loop approach to really designing core with analytics sort of as one thing, which I think has a pretty big potential in terms of what'll get customers excited about the cloud. I don't know. You want to add to that, Roger?
Sure. Yeah. I think that's a huge part of what the opportunity is, right? I see my role not as growing analytics business, but actually figuring out how to inject analytics into our core products, right? I think often we use the analogy of Netflix, right? It's so core to that offering, right? If they ever came out and said there's a version of Netflix for half the price, but everything is just listed alphabetically, and you have to just scroll your way through their entire catalog, right? It would be pretty useless offering. I think this isn't just about adding analytics to Guidewire's Quiver Quantitative. It's really about understanding what does an analytically driven underwriting or claims experience look like, because that is the future experience. Really embedding all that value in the point that you make the decision is the opportunity.
Great. Just a quick follow-up for Jeff. I think at last year's Analyst Day, you talked about the return to potentially 20%+ ARR growth beyond FY 2023, kind of in the long term. Obviously, a lot's changed in the world with COVID and some of the on-prem deals slowing down last year. Maybe just help us understand, is that 20%+ still on the table? What are kind of some of the puts and takes as we think about long-term modeling?
Yeah. I touched on this a little bit earlier, if you think about our current net renewal rate being just below 110%, combine that with the exciting opportunity that we have to bring our customer base into the cloud that could accelerate that net renewal rate, how we engage with our customers. In addition to the industry eventually getting to that point where there is confidence and comfort at the macro industry level of insurers in adopting cloud, and then you layer on these other opportunities that sit on top of the core. We very much think the path towards high teens, even getting to 20%, is in the realm of possibility. We know we're recognizing we're at the very early stages of this demand curve and are being more measured in how we think about the near-term opportunity.
Thank you.
Thanks, Tyler. Our next question comes from Ken Leung at Guggenheim.
Great. Thanks for taking my question. Maybe I'll shift this one over to Sandia since she hasn't been bothered just yet. You mentioned that customers upgrading to InsuranceSuite 10, the initial plan was to kind of get them to self-manage. Sounds like you guys are going with more of a Cloud Direct approach. I guess how receptive has the customer base been to that? If you could maybe elaborate on just kind of what keeps customers on the self-manage and are they doing anything that might suggest a shorter timeframe for when they do move to cloud after an upgrade to IS 10?
That's a great question. Customers have been very receptive to that message. They're excited to hear that they don't need to do two steps to get to the cloud. I think that's what's really driven the interest in cloud, wanting to understand what exactly does that mean for me as a customer. I can go to the cloud, but what is that cloud offering? What are the value and the benefits that we'll get as we previously discussed? I think they're interested, and I think that's reflected in just the amount of requests that are coming in for us to do assessments for the work going to cloud and helping them understand what it means. To your question around how customers are thinking about cloud and why they're staying self-managed, I think that our customers are planners, right?
They've got their roadmaps, and they put a lot of thought into it, and it's something that they're very cautious about each step that they take. They want to understand and make sure that it's the right step. We're at a stage, it's early days, right? We found this new offering around Cloud Direct. That's exactly where we are, is helping our customers understand where in the roadmap it fits and how it might change things. We also understand that our customers don't just run Guidewire. There are other systems that are at play too. Overall, we want to make our customers, help them feel comfortable about moving part of their system into the cloud. There are a lot of decisions to think through and a lot of aspects to think through.
Like I said, our customers are cautious and they do their due diligence, and I think that's the stage that we're at right now with this cloud movement.
Got it. Thanks, Sandia. Maybe a follow-up, sort of a Diego/Jeff, maybe even a Mike question. Diego, you touched on the magic number being 10 to drive efficiencies, and you guys now have two 12-ish customers. I think a lot of investors would've figured you guys would've gotten a little more leverage on the margin side. Just wondering how we should be thinking about the lag to get to better margins. I realize there's some moving pieces as you called out, but would love a sense for, is this just a matter of migrating through each iteration of the releases, or does this really require, again, kind of another 10, another 10, and at what point do we get to the leverage?
Yeah. It's a combination of things. The first part is that, as you could imagine, when we talk about now a couple of dozen customers, we have some in production and some in lower environment where project kind of started, and some where project just start or about to start, right? Now you overlay into this GWCP that became GA with Aspen. Now you need to kind of time this adoption with that aspect, right? As Jeff mentioned, we have some of the customers that are live into our first incarnation of the platform that we call internally Classic. Those customers will have to be moved on top of GWCP. That move is going to be made at a specific time when, A, the capability will kind of make that move as seamless as possible.
B, also based on customer requirement and needs and so on, right? Think about that is one piece. Since May, since we launched Aspen, any net new customer will directly go to GWCP. We had a period, in which some of the projects started already, and we were not kind of restarting them, right? As you can imagine, every deal is a deal that has a kind of go-live expectation date. In some cases, for some of our customers, when we start to line up GWCP in May, we went back and saying, "There are all those capability coming in May, but this is going to delay your project XYZ. Are you up to sort of reconsider the timeline or not?" Now think about I have a bucket of customer that are in this initial incarnation and a bucket of customer moving new.
That is where the sort of mix come. There is what I did try to sort of visualize on the graph that then Jeff picked up upon and kind of explained further, is that there are two lever, in general. One is the GWCP lever into which we can run more efficiently across multiple region of the world with, as I said, density and leveraging as much as possible the infrastructure that we're building. The second piece is the API, the integration, and everything that is around integration. As you probably know, a big portion of Guidewire implementation is to build those integration. When we move customer into our GWCP, they are not rebuilding all those integration. We carrying them over with a lot of the integration as they are, right?
As we improve our framework and we make a more efficient framework that is going to have capability for us for better monitoring, but most important, to carry upgrade more seamlessly, customers will need to adopt that, right? That is what in the graph was sort of there you will see a lag of adoption. Once our capability on the integration will become, we start to cover 80% of the use case that we had in the past, you will start to see a lag from those customers to adopt those. That is what we try to sort of show, these two levers, right? One lever that is going to kind of be more immediate, and all the net new customers will be on GWCP, we will have to carry forward a few of them that were still on Classic.
The second lever is readiness of integration and framework and customer adopting that new infrastructure. That is going to take a sort of step two.
Yeah. I think the only thing I would add, Ken, is you think back as over the years, now that we're almost three years into this journey, I think some of the early viewpoints on how we would get to margin expansion were done more at the customer level. Now how we're investing is we're thinking about it very much at the platform level that will be leveraged across all of our future customers, in a more meaningful way. I think that's been a bit of a shift. Getting GWCP instantiated, kind of recognizing where all of our customers will go to rather than kind of thinking about how we can get much more efficient at a customer level as they come into our cloud environment. That was a really important mind shift for us to go through.
It requires a little bit more investment upfront that we can then leverage across the entirety of the customer base as we move forward.
Got it. Great. Thanks a lot, guys.
Thanks, Ken.
All right, next question comes from Michael Turrin at Wells Fargo.
So-
Hey, Michael.
here we go. Very nice work on the webinar. This is pretty clean. Thanks. Good afternoon. I know it's still early, but just wondering, is there anything you can share around initial customer or even partner receptivity since the launch of Aspen in May? We're used to kind of getting those panels but can appreciate you're distilling it down here today. Just anything to add in terms of what might be providing more confidence around that overall path to cloud. Seems like the timeline could be changing. Obviously, there's a lot going on, but the Cloud Direct approach seems like it could help there. Just any more sort of anecdotes that you've picked up would be useful here.
Biggest thing I'd say, just to kick it off, I'd love for the rest of the team to chime in with what they've heard is, I would say excitement about the ease around which the customer was able to absorb that Aspen release. If you can imagine or what you should imagine is at each customer site, there's a project with project managers and people assigned and work associated with building things and testing things and managing data, and all the complexities of an IT project, of an enterprise software project. Guidewire comes along and says, "Here's Aspen." Everybody looks at that and says, "Okay, well, we need to slot that in, and how much work is that going to be, and what's going to really happen?" The data points that I've received, that we've received are 100% positive.
It did what it's supposed to do. We deployed it. It works. The test cases pass, and we're on to the back of the project. Thank you very much. It's like a non-event. That's really exciting, right? That means we're headed in the right direction in terms of this approach. That's my anecdotal feedback. The thing that I'm excited about sharing next is when we're able to tell you that a couple customers are live, that they're in production, and then it's just going to build. That's me. I don't know. Priscilla, we haven't called on you yet. Why don't you give us your perspective?
Yeah, of course. Michael, how are you? You asked about our partners. I would say that our partners have been operating in pretty much close collaboration or lockstep mode with us at the beginning of the cloud journey, way before Aspen, right? We've been collaborating for a couple of years now. I think that as some of the anecdotal information is, I will first look at the number of joint win, right? The joint win has increased many times just compared to the year before, all the Big Fours are leading projects already, including some regional partners that are relatively new to our ecosystem as well. I think one thing that I would pay attention to is the number of investment in training, because training and certification, as you know, is a huge investment on behalf of our partners.
They need to take people off the project and off billing and put them through training and certification. If you look at the numbers for this year, we reported in the Q4 earnings that we have now over 632 partners already gone through training and obtained cloud certification. That is up about 33% from just a quarter ago, and I would say over 750% compared to a year ago. That is pretty much exponential, and we see the momentum continue. I would say that gathered for all the information that I've seen of activities that are personally closely tracked on a weekly basis, then they are all super excited about the perspective of doing joint projects together.
Okay. That's helpful. I'd be remiss if I didn't go back to the target model, as many have, but maybe just in terms of what's changed there, given the midterm scale looks somewhat similar. How much should we be thinking about the ramp deal structure as part of that? Is there anything that we should be thinking about as new customers layer onto the model? You also provided cash flow from operations. I think we're used to seeing free cash flow there. Is there anything for us to be thinking about in terms of CapEx as we're layering this model into our forecasts? Thank you.
Yeah. There is a layering effect of the ramps. That is a phenomena that is, I would say, more accurately reflected as we move forward, but not a significant driver of any major shift. Some of the income statement complexity and noise that will exist in the midterm is embedded in that, which is why free cash flow margin is running ahead of operating margin in a bit more significant way. With respect to CapEx, we are doing some building build-outs in Dublin and in Toronto in the near term that causes free cash flow to be a little bit lumpier, or CapEx to be a little bit lumpier in the near term, but over the longer term, nothing to highlight and kind of back to more of our historical trends with related to CapEx.
Okay. Super helpful. Thank you.
Thanks, Michael.
Thanks, Michael.
Yep.
Okay. Our next question comes from Tom Roderick at Stifel.
Hey, Tom.
There you go.
Yep. I think we're good to go here. Okay. Jeff, I'm going to start this question for you since it's a gross margin question. Priscilla, it might be helpful for you to jump in as well because it kind of deals with some of the resources sort of inherent in the question. Jeff, you hit at a pretty interesting sort of structure between now and the midterm, and then midterm and the long term with how the gross margin ramps for subscription and support. I think what I'd be interested in understanding a little bit better is how much of that ramp in gross margin has to do with sort of shared infrastructure as you move to the cloud, just scale of the overall solution as opposed to some of the things that Diego laid out in terms of fewer resources required for implementation.
What I'd love to understand, in other words, is how linear should that ramp be? Or is that something that sort of takes a few years, and then you start to get the scale?
Yeah
Then I'll layer on another one.
I do think that in the shared infrastructure and getting everybody on that same path is a big driver in how I feel comfortable about thinking about these longer-term targets. Prior to the release of Aspen, that visibility was difficult for me personally. Now that we have that path and that endpoint for customers is very helpful. There's a variety of levers as we think about how to move the needle. The infrastructure level is a big one. Just automation and tooling and how we manage things internally and build up our efficiency and maturity around running a cloud operations function is another one. The integration layer that Diego referenced is also a really big one.
You've probably heard us talk in the past that so much of the implementation work and ongoing runtime costs to support these core systems is all the unique integration points that exist within an insurer's IT landscape. Anything we can do to simplify the complexity associated with running that will have a big impact in how we think about it. With respect to the linearity, foundational is how we get customers onto Guidewire Cloud Platform. As we move forward in fiscal 2021, it is our expectation that most, if not all the customers should start their journey on Guidewire Cloud Platform. It's possible that there is a very unique upgrade that has some unique requirements that may take a little bit longer to get them to Guidewire Cloud Platform. That is a critical step for us, and that's something that we'll be tracking internally.
How many of our customers and how many of our new wins are going directly onto this conversion infrastructure that is much more efficient?
Yeah. Good. Mike, let me just ask sort of a follow-on question with respect to the go-to-market aspect of it. I think the way you laid out some of the end-of-lifing of some of the features in InsuranceSuite 8. I don't know if that's the first time customers have seen some of these end-of-life features or if it's trying to be more pronounced. Knowing that the tier 1s can be like pushing on a string a little bit in terms of getting their attention on the cloud and their willingness to go to the cloud, how do you get that installed base moving? If the go-to-market strategy shifting at all with respect to "Hey guys, lay off the term deals. Let's focus on Cloud First, Cloud Only," that type of thing?
Let me answer the question in a little bit in reverse. Certainly, in every deal we are talking about cloud and Guidewire's strategy around cloud. There's just no question about it. Our approach technically enables us to be able to offer our customer both options. They can take an on-prem approach and go to cloud later. We still are doing bookings that way, and that possibility still exists. We're talking about our cloud strategy with every prospect and every customer, and that's crystal clear to every insurance company that we work with. I wouldn't describe them as features that are going away. I would just describe it as compelling events that are driving conversations around upgrade. The version of SQL Server that they're on or the version of Java that they're running on their application server.
There's just a complex environment that is required to be managed and updated alongside of a Guidewire on-prem instance. That's one of the benefits of moving this system to the cloud is that the customer no longer has to worry about all that we manage that. Anytime that happens, it creates an opportunity for us to describe the benefits of the cloud and why, if they're going to go through a project, it doesn't make sense for them to go directly to the cloud. That's the way I would think about it, right? We are making sure across our entire customer base that we are having that conversation and we are giving our best recommendation that as much as possible, hopefully aligns with the strategic objectives of our customers, and gets to the right path. I don't know.
Sandia, you may have something to offer on top of that because you're sort of at the tip of the spear with respect to these conversations. What's your perspective?
I think you touched on it. Every opportunity we get, and the interest has definitely been there. We've been talking to customers about, "Hey, this is the time to upgrade." Actually, I think we mentioned that the typical upgrade cycle before was five to six years for a customer. This is about the time that InsuranceSuite 8 customers would start thinking about that next upgrade. Kind of the timing along with these compelling events, it just all sort of worked together for us to have this conversation at this time to say, "Hey. Oh, by the way, you know you can go directly to cloud and look at all of these benefits. Once you get to cloud, you don't have to worry about these major version upgrades.
You're going to be that much closer to our release cycles. What I really like about it is that they can choose which features are of benefit to them and implement them when they want it. This is also something different from before where you go to the next release, there's some features that are there, you have to implement it before you can go- live. Instead, we deliver this plethora of features in the future, customers can choose when they want to implement on their timeline. I think all of that is the timing was right. There were compelling events. It was also sort of time that InsuranceSuite 8 customers were thinking about the next upgrade anyway.
We're just trying to leverage that and make sure that every customer understands the offerings that we have and the benefits of going directly to cloud.
Great. Thank you.
Hey, thanks, Tom.
Thanks, Tom. We'll take a break from the live question for a second, and I'll read one from an investor. What signposts are you using to ensure you are on track as you execute on a cloud transformation? How does Diego's efficiency curve translate to the P&L?
Yeah. Let me touch on this, and Jeff, Diego, Priscilla, you guys can all jump in and answer this. I think one of the major things that we did this year, and there was a whole lot of work that sort of sat behind that slide that Jeff and Diego showed everybody. One of the major things we did this year was map out a development roadmap that maps to tangible deliverables, each of which was going to drive a certain amount of efficiency in our ability to deliver a cloud platform, in our ability to automate the operations that either our operations team was taking on or even that a customer was taking on.
Behind that slide, there's literally hundreds of items that we have scoped and sequenced and planned, and it gives us the confidence to be able to project the P&L efficiencies that you are seeing or that we're projecting. Right? That's a big amount of work. I would say it somewhat is only possible based on the hard-earned sort of experience we have in operating these systems with our early cloud customers. That's just something that we did this year and gives us our ability to sort of make those projections. Feel free to jump in, guys, whoever wants to add to that answer.
I will add just one thing. Ultimately, everything from an engineer perspective is metrics, right? What do you measure and how do you measure? We looked at pretty much the entire cost and where that cost was allocated, and we divided it in big buckets, right? You start to think about the bucket of ops. How many folks in ops we need to do XYZ? Then when you go a level down and you say, okay, within ops, what are the number one activity that they normally spend time with it? Then within that activity, you break it down furthermore, right? This is how we kind of instruct the GWCP roadmap. When I was talking about 10 customer is the magic number, it's a magic number because once you start to have 10, you start to have pattern, right?
You have pattern that you can start to recognize and say, Oh, we spend X amount of ops dollars on the following thing that is common across these 10 customer. You use that to kind of say, Okay, now this is the number one thing we're going to put on the roadmap. You go to the next level, right? For example, our AWS spend. How can we improve our AWS spend based on some kind of technical advancement that is going to make us more efficient in using the resource and control that spend, right?
I would say the entire GWCP kind of roadmap is now linked to a sort of efficiency model, and we would be able to kind of measure this across the year and come back next year, we kind of be able to say, "Okay, this is exactly how the curve look like." As I said, we have six months of history of customer on Aspen. We don't want to share exactly when, but very closely, we're going to have a couple of customer coming live, and that is going to be a kind of key element for us to kind of validate those metrics.
Great. Any other comments? All right. Okay. I'll move on to Matt VanVliet at BTIG.
All right. Yeah. Thanks for taking my question. I guess, going back to some of the TAM discussion early on, you really highlighted the analytics and data portion of the platform as being something that could grow very, very substantially, and I think it was touched on a couple different spots there. Curious how you're thinking on maybe a couple different levels. One, how you sort of price or kind of go- to- market with that. I know the majority of deals over the last several years have had a lot of those components attached. Just curious if you're rethinking on any kind of modular-based pricing or how you think about those.
Secondarily, are you getting to the point where Mach or any of those products can be sold as sort of a standalone, almost kind of a Trojan horse, if you will, of getting into customers that might have made some sort of upgrades over the past couple decades over their systems, but could still use InsuranceSuite down the road but maybe aren't willing to make that big investment right now?
Yeah, definitely.
I think on the pricing side, right? Obviously, we try and drive for value-based pricing. It's a big opportunity, I think, for us to bring together the solution, right? You have PolicyCenter, ClaimCenter, BillingCenter. Putting the analytics into that actual environment drives a lot more value than if it's off on the side and siloed. I think we've got strong pricing in our analytics products already. When you bring the two together, right, it's one plus one equals more than two. I think that's a pretty strong opportunity that we're already seeing play out. Also, as we bundle a lot of this capability together, we're finding for some of the deals now that analytics is actually, at times, even the bigger driver for the opportunity to move on to a Guidewire Platform. Your comment about Trojan horse, I think, is a great one.
The overlap between our analytics business and the core business isn't 100%, right? It's probably somewhere in the realm of maybe 50/50. We have a lot of clients who already work with us on analytics that are not yet core customers. It's a great opportunity, right, to experience what it's like to work with Guidewire. Ultimately, not even just Trojan horse, but very bluntly say, "This is a great experience with us in analytics. Imagine how much better it is if you actually do that natively all in one place.
Jeff, I guess as you think about what the gross margin looks like as you talk about putting more analytics on the edge, obviously there's some upfront hard cost of using, especially someone like an AWS. Obviously, to Roger's point there, the value should far outstrip that, at least in the long term. Are there other additional sort of capabilities or scale that you need to get to within the infrastructure portion, much like some of the other discussion on InsuranceSuite? Is it all kind of bucketed into one?
As we think about the core cost of supporting the infrastructure, that's really on the InsuranceSuite side. Once we occupy that valuable real estate, that's why we are excited about some of these ancillary opportunities to further monetize that instantiation of the core system. We should be able to do that in a very margin-efficient way.
All right, great. Thank you.
Thank you. I'll take another question written in here. Could you guys comment on the win rate you're seeing for Cloud RFP and how you think about that going forward?
I would say, you got the competitive information that we provide in the presentation. I think to some extent is you should think about that as predominantly cloud, right? We're not breaking out specifically non-cloud or cloud in terms of win rates. I've said it a couple of times, we don't have any conversations around Guidewire and sales that don't include our vision for the cloud transformation that we're driving. Customers are going to make a decision about the vendor that they choose, and we're winning, I'd say historically, at historically consistent levels, cloud or non-cloud.
I can think of really only one conversation that I've had in the last year or so, where the customer has just said, "We don't ever see the potential for moving to cloud." Every single other conversation I've had, hundreds have said, "Well, we get it. We think we'll be there eventually," and it's just we have to slot it into our overall enterprise plans. That's my take is I think you ought to think about cloud win rates as just overall win rates, because I think more and more it's just one and the same. Thanks for the question.
Great. Another one for Jeff. In your capital allocation framework, how do you think about repurchasing stock versus investing in growth to hit that long-term ARR target you've outlined?
Our first priority is to have enough capital on the balance sheet to make sure that we can invest appropriately in organic growth initiatives and inorganic growth initiatives. Doing this repurchase would not jeopardize any of those strategic investments and that would include both inorganic and organic. We felt it was a good time to do it and part of our thinking is we think that, and Mike said this in his quote in the press release, that this is a great time to be a shareholder of Guidewire, and we believe in the long term and how we will execute against this transition.
Great. We have another live question from Dylan Becker at William Blair.
We got to get him promoted.
That's right. There you go. Dylan, I think you're muted.
All right. There we are. Sorry about that, guys. Thanks for taking our questions. Just two kind of real brief ones. First, I guess with the InsuranceNow offering, we kind of had the re-platforming and realigning the go-to-market initiatives kind of over the last year. Are there any stepping stones, takeaways? Obviously, that's a less complex kind of transition. Any key takeaways from that shift that maybe could be more broadly applied as we look to InsuranceSuite Cloud?
Yeah. I love the question. I was really pleased, proud of our execution last year on InsuranceNow. The team came together, made a plan, went out, got some really important wins, helped get us reestablished with that offering, and I'm confident in our ability to execute going forward with InsuranceNow. That approach, actually, just to give you a little visibility into the internal operations of Guidewire, Priscilla and I sat down and said, "What did we learn from InsuranceNow?" We learned, hey, we have a great GM, we have a great leader in sales, we have a great leader in marketing, we have a great leader in engineering. Let's take that model and use that approach to start to drive the individual businesses that represent Guidewire. How are we driving ClaimCenter? How are we driving PolicyCenter and BillingCenter? How are we driving Analytics?
Just that mindset of how are we operating these businesses internally, we've taken that approach to sort of evolve the way we're managing the organization. I feel really, really good about that. I expect it will be one of the reasons, I hope, in a year that we're saying that we had a super year. I think one of the things that I'm just getting back to InsuranceNow and our execution there, we've learned a lot from that organization in terms of how to run an effective cloud operation. We're very often talking to that team about what do they do and how do they approach things, and how do we apply that appropriately to InsuranceSuite. It's different segments of the market, for sure.
There's a lot for us to learn just in terms of how they operate their approach to digital, their approach to professional services, their approach to upgrades. All of that sort of informs our ability to execute with InsuranceSuite. Thanks for the question. I'm happy for Priscilla or anybody else to jump in if you guys want to add anything to that question.
I just want to add one thing on the technical part. Echoing what Mike said, from a learning perspective, a lot of the needs that we have identified in InsuranceNow to run it more efficiently on our cloud, we're packaging to the GWCP, and we're working right now in making InsuranceNow running on GWCP. We're expecting substantial benefit from an operation perspective to also move InsuranceNow on top of GWCP. That economy of scale that we were talking about before, 10 customer, 12, 13, and moving down, is kind of start to show to pay off across the different portion of engineering.
Got it. No, thank you. That's very helpful. Then one other quick one, too. I think now as we were talking about the Cloud Direct initiative, maybe shifting sides from what was originally upgrading to IS 10 and then taking customers to the cloud. I think that's kind of been a big deterrent is in the past, maybe around these burdensome, very costly implementations. This seems like taking a piece out of the puzzle to make it more beneficial, faster, cheaper for the customers to migrate to the cloud. If we kind of line that up with the two-year kind of timeframe to sunset, and you have, I think it was maybe like 40% of customers on kind of IS 8 to date.
Should we be thinking of that kind of as a potential inflection point as we are starting to achieve more mass scale and transitioning, migrating the existing customer base? I guess, how else should we be thinking about that? Thanks.
Absolutely. Like I keep saying, the compelling events associated with these upgrade cycles are opportunities for us to talk to customers about Guidewire Cloud. I think that underlying business opportunity is reflected in our projection for the year. As Jeff says, sort of the degree to which we're able to execute, we're able to get these proof points out there and build confidence, and convince customers that now's the time to go. There's a potential for that to accelerate. Right now, given the data points we have, we're confident in the projections we've made for the year. When I look at the overall business opportunity, you're exactly right. All of those decisions, all of that energy in the customer base, all those projects, like I said, if and when we execute, they create the opportunity for Guidewire to grow faster.
Great. Thanks, guys, for taking our questions.
Thanks, Dylan. All right. I'm going to read a question on behalf of Pat Walravens at JMP. He says, "Mike, look, I realize you weren't here for this, but can you help us understand why so many customers are on version 7, 8, and 9? Why wasn't more able to be done to keep them from being so far back?
Oh, yeah, who asked that question?
Pat Walravens.
Okay, Pat. Thank you very much. Okay. It's very simple. It has nothing to do with me being here or not. It's simply this. When a software company takes responsibility for the upgrades, the software company changes its approach to writing the next version of the code. Okay. It's as simple as that. The mindset shift at a software company like Guidewire, when we say, "Wait a minute, we're responsible for that upgrade?" we say, "Okay, we have to make sure that the next version of the product makes the upgrade easier." Okay. That's what's happening. Right. That's what gives us the ability to keep more of the customers current on the next version of the product. It's not to say that it was done poorly in the past, it's just the difference in the approach of a cloud company or a non-cloud company. Okay.
There's hundreds of little tiny things that Diego and his engineering organization are driving to make sure that that's true. It is what it is. We have an opportunity, we have an architecture, we have an approach that I think is going to deliver a significant amount of value to our customer base through these upgrades. It's just the matter of us taking a different approach to how we build the incremental releases of Guidewire. I'm excited to help chart that course with the rest of this team and the rest of the people at Guidewire.
I kind of love the question because it kind of gets to the heart of what the difference is and how we're approaching this going forward, and why choosing to partner with us right now and in the future just changes the dynamic of the relationship that we have with our customer base. You really kind of touched on it, and I think that it's really significantly going to improve the value that we're able to deliver to our customer base. I don't know. I'm happy for anybody else to chime in, but kind of love the question. I think it's really exciting to have the opportunity to sort of push on that with our customer base and our engineering organization.
I would like to add and maybe invite Sandia to chime in, because she said something the other day, and as someone who's a veteran at Guidewire, that one of the innovations that Guidewire delivered to the industry was proving that core systems were even upgradable, which was a big innovation that Guidewire brought to this industry. I don't know if Sandia has something to add.
I think that's a big part of it is our customers came from legacy systems where you saw the screenshot of the green screens. Those were not upgradable. It was a really big deal and a big part of our value proposition that you could upgrade. I think that's part of it, just that mindset shift. Also that our, like I said, our customers are planners. They have a strategic roadmap, and these transformations take multiple projects over multiple years. It's not really in their nature to be upgrading constantly, which is why, again, this Cloud Platform and our Cloud offering is so great because it takes the burden away from customers, and they can really focus on what will drive business value and allow them to engage, innovate, and grow.
Great. Thank you. We have Sterling Auty back from JPMorgan.
Yeah, thanks. I actually want to go right back to Sandia. I wasn't clear. We've had a lot of discussion around moving to the cloud, et cetera. If we really boil it down, is there a sense of a timeframe that you can give us? How long does it take to get up and running for an existing customer that's on IS 8, 9, 10 to get them up and running on the cloud? The follow-on to that is, I want to make sure I understand this. When you say you push the upgrade and every customer in a cluster is upgraded, so you're saying just like in a multi-tenant fashion, all of them get that push to them. Is there any option that the customer says to say, "Wait a minute. Hold on. Time out. We've got a particular application that's relying on this.
We want to maybe delay 60 days for a particular update?
Okay. Thanks for the question. I think I'll take the first part, and then Diego probably chime in a bit on the second. With the first part, when it boils down to it, these are cloud upgrades. These will take about the same amount of time that our major version upgrades took. That's anywhere from nine months to a year or so. That's really what we're working with. The next thing there is that our customers are accustomed to that. Those who have done an upgrade recognize that is what it takes, the effort. That's really what it is with these cloud upgrades. There's more work to do in terms of the infrastructure side and moving things up. Generally, it's similar because when it boils down to it is a major version upgrade to our latest release.
When it comes to cloud updates, I think that is something that we're learning about and working through. Our customer success organization actually works very closely with customers to help them understand what's coming next and again, plan into their longer-term strategic roadmap. As I keep saying, our customers are planners, so they look ahead, and they see, and they want to know what's coming, where should I slot that in, and understand what is coming up. I'll turn it over to Diego in terms of the other parts about the update.
Yeah. Sterling, we have a combo of both, right? Ideally what we want to do, we want to go to adding multiple, as I said, multiple customer within a cluster and manage them more efficiently. At the same time, some of the customer, they're asking us to be in a dedicated cluster. We have an option for that, and we can price that differently for the customer that are asking for that aspect. That's for when it comes to, let's put it like that, for the single-tenant portion of this hybrid model. For the multi-tenant portion of this hybrid model, we manage that differently. That portion is going to kind of be within the upgrade. All the service will be upgraded.
There we have version control, and we have a lot of different way to sort of give the sort of same kind of output from a customer expectation to control some of those things into their environment.
Got it. Then Mike, going back to you, every year that we hear the pitch around analytics, it sounds fantastic. It sounds like it's a no-brainer for every carrier to be all-in on analytics and drive their business. What are the big bottlenecks to getting better adoption of the analytics solutions?
I think we've got, and this is one of the things that's embedded in Aspen, is we have to make it easier for customers to try a little bit of that analytics offering. That has to do with changing the way we package it, changing the way we engineer it. It's that instead of thinking about analytics as something you sell, first you sell InsuranceSuite, and then you sell analytics, we need to think about it as an add-on to InsuranceSuite. That's going to create, A, a differentiation of InsuranceSuite, but it's also going to make it easier for us to sell a little bit of that analytics offering. That's exactly the strategy, is looking at this thing as one complete system that we expect customers to use a little bit of.
It's also something, and I think that we're changing, we don't expect to replace everything that one of our customers is doing with data and analytics. We just want to augment the existing approach that they already have and make it better. Those are the things that we're doing. I think it will help to accelerate what I think is already some really good products and IP, and I look forward to seeing that happen. Hopefully that makes sense.
It does. Thank you so much.
Hey, thanks.
Sure. Well, I think we've exhausted the questions, and that wraps up the day for Q&A. Jeff, did you want to make any closing comments?
Yeah, no. Really appreciate everybody taking the time to join us today. I do have one final housekeeping item to do, so I will share my screen and tick through the appendix so that as part of the record, and this will be part of the presentation that is uploaded onto the website. We have just a little bit of an update on the customer definition that people can consume at their leisure, and we have a reconciliation of non-GAAP to GAAP in the appendix. Having done that, I will turn it over to Mike to make final comments, and then we will end the call.
All right. Thanks, Jeff. Just wanted to say thank you all for joining us today. I hope we did a good job dealing with the circumstances of all of us kind of working from home and managing this on Zoom. We really appreciate your attention and especially your questions. We look forward to talking to you or hearing from you or discussing all of this again at our next quarterly call. I hope very much that a year from now, like we've said a couple times, maybe we'll see you all in person in New York or maybe San Mateo. That's it. Thanks very much, and have a great day.
Thanks, everyone.