For decades, businesses typically have been rewarded for consolidation around standard processes and stockpiling assets through people, technology and goods. Operations were assumed to be confined within organizational boundaries, with transactions viewed as short-lived events following well-defined steps. Systems were built primarily to enhance execution within their own self-contained scope of control.
Conventional wisdom about these principles is changing, and it’s changing fast. Companies are discovering they need a new kind of leverage – capability leverage – to mobilize third parties that can add value. Outside-in architecture requires an organization to think about its operations and processes as a collection of business capabilities or services. Each individual service can then be examined to determine how it can be most effectively fulfilled – either by strategically standardizing on existing package solutions or custom technology investments; or by sourcing through platform, software or business services available through the cloud.
As outside-in becomes the new normal, standards will emerge and platforms will likely evolve to decrease the cost of provisioning, managing and controlling each step in long-running processes. In the short-term, however, this architectural transition requires new skills from the CIO and the IT organization. CIOs who anticipate and understand the opportunity are likely to become much more effective business partners with other executive leaders.