Every business is a mix of internal and external facing activities. Major horizontal functions – such as finance, accounting, HR, legal, and admin – tend to have an inside-out service and stewardship mission based on the needs of the firm. In contrast, key vertical functions – such as product development, sales, marketing, and customer service – should adopt a more outside-in mindset based on the needs of the marketplace. An effective C-suite should look to balance both perspectives.
Given its roots as a cross-company business support function, it’s not surprising that enterprise IT has grown up with its own inside-out culture. Large internal IT organisations typically view their employees as their ‘customers’. Internal service provision, difficulties in measuring value and ROI, lack of direct marketplace contact, and cost-based budgeting have been the inside-out, day-to-day norms.
But as IT becomes pervasive and moves to the very front of the firm, our research shows this is changing. To succeed in today’s marketplace, businesses need ever-shifting combinations of customer-centricity, collaboration, co-creation, open innovation, ecosystem development, and real time sense and response mechanisms. Meeting these demands requires an outside-in approach to information technology strategy.
Outside-in also encompasses many of the key challenges now facing traditional IT operations. As the focus of IT innovation shifts, IT management is increasingly more about consuming outside services than building internal ones. While this shift sounds simple enough, it is often a difficult cultural disruption.
We see at least seven major sources of outside-in IT-driven change that, taken together, are now reshaping the mission and operating model of enterprise IT:
1. Connected customers. Clearly, the web, e-commerce, and modern mobile and social media require that firms become much more customer-centric. In the most advanced firms, the differences between external customer-facing systems and internal customer support systems are steadily fading away.
2. Business ecosystems. The use of partners, vendors and contractors is increasing. These external constituencies require levels of outside-in systems access that traditional IT firewalls can’t cost-effectively support. New, more public spaces, are required.
3. Information at the edge. The current explosion in the total volume of business data (and hence the recent Big Data movement) is driven mostly by unstructured customer conversations and user-generated content that take place well outside the walls of the firm.
4. BYOD. As PCs, tablets and smart phones become fully consumerised, individual devices will increasingly be authenticated as if they are in a Starbucks cafe, regardless of whether they are physically inside or outside the firm. Companies are becoming effectively deperimeterised.
5. SaaS. Software-as-a-service offerings run on the web and thus reside outside the firewall of any given customer. As the range of SaaS services spreads to CRM, travel, HR and many other horizontal and industry-specific applications, the use of outside-in infrastructure inevitably spreads with them.
6. Cloud computing. The speed, agility and economics of virtual computing and storage have proved compelling in areas as diverse as Big Data, streaming media, dev/test, peak load balancing, and, increasingly, core business applications. Amazon alone is now a critical part of the world’s computing backbone, as outside public infrastructure grows much faster than inside, private infrastructure.
7. The Internet of Things. While the huge volumes of data currently generated by the web and social media are impressive, they will pale when compared to a future world of constantly communicating devices, machines, vehicles, sensors, cameras and navigational systems.
All of these changes are all well under way and seem certain to continue. The inevitable result is that the systems and applications that reside behind the company firewall will shrink to an ever-smaller share of the total scope of IT activity.
For CIOs, the big question is whether enterprise IT can change its traditional inside-out mindset and skillset fast enough to keep pace with today’s burgeoning outside-in movement. If it can, it will have an exciting future at the front of the firm. If it can’t, businesses will find other ways to meet their outside-in needs. Our research suggests that there will plenty of examples of both scenarios.
David Moschella is Global Research Director for CSC’s Leading Edge Forum, a global research and advisory service that develops next practice roadmaps that address the major challenges at the intersection of business, IT and management.