The outside-In approach to IT

Information technology and services are undergoing an evolution. Too often, back-office IT organizations fixate on “IT-centric” outcomes, such as uptime and risk reduction, without tying the conversation back to the business. But now, more and more organizations are taking Gartner’s recommendations and changing the conversation to focus on business outcomes and capabilities.

The ultimate manifestation of this shift is an increased focus on the true source of business value: viewing an organization from the “outside-in” by taking an ecosystem approach to running a business.

In a conversation with App Developer Magazine, Dave Brunswick, VP, Solutions at Cleo, discusses how this outside-in approach helps companies not only serve their existing business ecosystem but also enables them to expand into new revenue streams.

In the IT community, there’s a tendency to focus on “IT-centric” outcomes, such as uptime and risk reduction, but increasingly organizations are realizing that those outcomes don’t always directly tie back to business outcomes. What’s driving this shift in perspective?

Brunswick: This shift in perspective is being driven by organizations realizing that in focusing on IT-centric outcomes, they are missing the bigger picture. Understandably, companies have concentrated on ensuring uptime because if systems are down, customers are impacted – which is an outcome to avoid at all costs. But system uptime and reliability is ultimately a goal under the broader umbrella of customer experience and delivering a stellar customer experience depends on much more than reliable IT systems. To that point, focusing too closely on risk reduction can cause a company to over-rotate and deprioritize innovation. In today’s fast-moving business environment, the ability to innovate products and services representing a huge part of the and react quickly to customer needs is a big part of the experience customers have come to expect.

Of course, delivering top-notch customer experience isn’t the only business outcome a company should strive towards, but it offers a prime example of why this shift in perspective is so sorely needed.   

ADM: What is the true source of business value, and how can companies take full advantage of that source?

Brunswick: Ultimately, the business value is driven by the interactions between companies and their ecosystems of suppliers, customers, partners, and other external stakeholders. We talk about the value being created (or destroyed) at the edge of an organization where it intersects with the other organizations in the ecosystem.

A business ecosystem consists of not only the parties mentioned above but also all the B2B and B2C technologies used by the company and the members of its ecosystem. By viewing this intricate web of stakeholders as a business ecosystem, an organization can gain “outside-in” visibility across its end-to-end business processes to draw insight into how critical relationships (with partners, customers, etc.) are performing – as well as how they can be improved. 

ADM: Explain the concept of finding business value from the outside-in. How does it differ from other business models, including the opposite inside-out approach? 

Brunswick: It is easy for organizations to start analyzing business processes and systems by first looking within their own four walls. Internal systems and integrations have often built up over time, and automation and interactions between those systems have become complex and can always be improved. In taking this inside-out approach, the focus tends to be on improving the existing process rather than looking to a broader vision of the emerging trends and needs around their customer, supplier and ecosystem base.

This is a problem because this approach is siloed in nature and limits a company’s ability to make timely business decisions based on what’s really happening across their business ecosystems.

The outside-in approach is superior because it enables a company to visualize everything that’s happening across their ecosystems, such as at the edges of their end-to-end business processes like order-to-cash or plan-to-produce. This allows companies to 1) determine their business value objectives by following their revenue flows, and 2) identify potential new revenue drivers by analyzing the business-impacting trends forming across their ecosystem. This can then be driven inwards towards their internal system, and leads to a very different analysis process, leading to a much tighter focus on how technology and integration can be applied to affect high-value business outcomes.

ADM: How might this “outside-in” approach differ across industries? 

Brunswick: A couple of examples of where we are seeing this outside-in approach really starting to impact thinking are in manufacturing and transportation/logistics.

For manufacturing, it has become more and more important to understand all the possible routes to market that their products might have. As traditional distribution models get disrupted by online retail, omnichannel distribution and online e-commerce and marketplaces, in order to survive manufacturers and distributors must increasingly look to the outside and understand these evolving routes to markets. Once they understand the interactions in this ecosystem, they can use this understanding to dive into the business and it's internal systems to understand how to meet demands. 

For transportation/logistics, a lot of focus is now around business agility from a different perspective: how can I react faster to the requests and demands as they come to me, and how can I differentiate on something other than price? The evolving routes to market which are disrupting manufacturing are leading to a significant increase in demand and opportunity, but with these outside drivers also comes a massive increase in speed, agility and transparency expectations. Transportation and logistics providers need to focus on these outside forces and engineer or re-engineer their internal systems to respond.

ADM: Can you share an example of an organization that recognized it had this IT-centric problem and successfully made the shift from focusing on IT outcomes to business outcomes?

Brunswick: North America’s leading steel processor recently overhauled its communication and file transfer systems to focus more closely on improving partner collaboration. This infrastructure modernization enabled the company to move away from depending on their legacy IT systems to drive business value, and instead focus on improving customer relationships and gaining better supply chain visibility. By pivoting to focus on those business outcomes, the company was well-positioned for future growth in a competitive global market.

ADM: From a business standpoint, what are companies risking by not actively participating in this perspective shift?

Brunswick: Companies that don’t embrace this perspective shift are exposing themselves to significant risk on multiple fronts:

• They will be stuck in the outdated cycle of allowing IT to drive business decisions, which is a prohibitively narrow – and misguided – approach to running a business. While IT is increasingly becoming a more strategic part of the business in some instances (with companies looking to turn IT from a cost center to a revenue driver), IT should never drive business objectives.
• Companies committed to the antiquated inside-out approach will not only be blind to key patterns and insights emanating from ecosystem data, but they’ll also miss out on invaluable insights – gleaned from data across the ecosystem – that point towards new potential revenue streams.

ADM: How are next-generation technologies contributing to this evolution? (AI, ML, Blockchain, IoT, etc.

Brunswick: The Internet of Things is contributing significantly to this evolution, considering that every IoT-connected device across an organization’s ecosystem provides invaluable data – data that can illustrate patterns in a customer’s buying behavior, or trends in partners’ transactions, for example. Since data is quickly becoming the world’s most valuable resource, IoT-connected devices are a key part of the “outside” ecosystem that can help drive business value.  

In terms of AI, ML, and blockchain, while they are still somewhat nascent and experimental technologies in the B2B sector, they are likely to become huge factors in organizations’ ecosystems of the (near) future. For example, forward-thinking companies are using blockchain for tangible purposes, as illustrated with IBM’s Food Trust, a global sustainable food system. They are another outside force to watch.

ADM: Is there a logical progression companies can anticipate as their information technology and services systems evolve? 

Brunswick: Yes, there is a logical progression most enterprises follow as their ecosystem-focused IT and services systems evolve, and the typical journey can be broken down into five stages – with each stage representing the next degree of integration technology maturity:

• Stage 1: File-based integration (MFT)
• Stage 2: Data transformation (EDI)
• Stage 3: Application integration (APIs/connectors)
• Stage 4: End-to-end integration visibility (insights)
• Stage 5: Ecosystem enablement (optimization and growth)

Organizations can consider the above progression as a self-evaluation framework, designed to help ensure they are on the path to ecosystem enablement. Put simply, ecosystem enablement is the practice of streamlining the management of integration across the entire ecosystem of applications, systems, customers, and partners. And by following the evolutionary stages above – starting with specific needs such as MFT, and expanding to a more holistic, business-centric vision of ecosystem integration – organizations can remain competitive in the face of continued disruption from digital transformation.

ADM: When envisioning a future with simpler integration solutions and greater visibility into their ecosystems, what’s your advice on where a company should get started? 

Brunswick: The best way for a company to start their journey towards a future of ecosystem enablement, underpinned by simplified integration, is by taking the following steps:

• Focus on the business value – what leads to the greatest business value now, and what emerging trends in your ecosystem are going to be essential to drive business value going forward
• Make a simple determination of value vs complexity – start from the outside business drivers and focus where the value is high and complexity low to medium. It is easy to get caught up with the technical challenges of complex integrations that ultimately do not lead to high-value outcomes
• Examine integration tooling through the same lens – maximize business value while minimizing complexity 
• Pinpoint where the company currently stands along its own integration journey
• Determine an integration strategy based on where the company is today and the business objectives the company wants to accomplish
• Develop a plan by selecting the precise integration capabilities the company needs to achieve its business goals

About Dave Brunswick

Dave is VP, Solutions leading Cleo’s worldwide pre-sales and solutions team. He brings more than 25 years of experience in technical sales, pre-sales, technology strategy, engineering, product management, and product development. In previous positions, Dave has held senior consulting and architecture roles throughout the integration software market, serving as a senior technology leader at Axway and Tumbleweed Communications. He also has led research and development teams for a range of government, manufacturing, and transportation customers. He holds an M.A. in mathematics from Oxford University.