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The Long Transition to an Outside-in IT Paradigm

Sometimes markets shift radically – consider the way the iPhone transformed the mobile phone business almost overnight. But more often, large-scale change is gradual, nearly imperceptible, yet in the end no less profound.


While this shift has been gaining momentum for many years, we feel that it is now approaching an Enterprise IT tipping point.

This latter type of steady but transformative change is what we are seeing in business IT today, as we shift from our traditional inside-out approach, where IT usage is largely defined by internal company systems, to an outside-in orientation that is much more market-centric and driven by external forces. While this shift has been gaining momentum for many years (arguably, since the growth of the web in the mid-1990s), we feel that it is now approaching an Enterprise IT tipping point.

The figure below represents our latest effort to depict this change in a single summary graphic. The key message is that more and more IT activity is taking place on the internet and other forms of public infrastructure that are often dramatically less expensive and more agile than traditional alternatives.

Of course, as shown in the red circle, critical business systems, data and applications must still be tightly protected, but the optimal way of doing this is changing. More focused firewalls can actually be much stronger and better managed than company-wide ones, which inevitably become more porous over time. The yellow DMZ (demilitarized zone) provides the necessary buffering between these private and public realms – typically through VPNs or similar forms of identity and authentication.

The shift to an outside-In IT architechture

As explained below, it’s the range of activity in the blue circle that demonstrates the power of today’s outside-in forces. We see six broad categories of change:

Information at the edge

The current explosion in the total volume of business data (and hence the recent big data movement) is driven primarily by e-commerce, web applications, social media and other, often unstructured, applications and conversations that mostly take place outside of the firm.


As PCs, tablets and smart phones become consumerized, and as BYOT and self-service computing become the norm, individual devices will increasingly be authenticated as if they are in a Starbucks cafe, regardless of whether they are physically inside the walls of the firm or not.


Software-as-a-Service offerings typically run on the web and reside outside the firewall of any given customer. As the range of these services spreads to CRM, travel, HR and many other areas, the outside-in environment inevitably spreads with them.

Business ecosystems

Firms are becoming more specialized. The use of outside partners, vendors and contractors is increasing, and even many employees now see themselves as free agents. Supporting these external groups requires levels of B2B systems interaction that traditional firewalls can’t cost-effectively provide.

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 and peak load balancing. Amazon alone is now a critical part of the world’s computing infrastructure backbone.

The internet of things

While the huge volumes of data being 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.

The big question is whether the Enterprise IT community can change its traditional inside-out mindset and skillset fast enough to keep abreast of today’s burgeoning outside-in movement.

All of these changes are well under way and seem certain to continue. The inevitable result is that systems and applications that reside behind the company firewall will shrink to a small share of the total scope of IT activity. Unlike the emergence of the iPhone, this fundamental change in IT usage won’t be marked by any defining industry event, just an accelerating pace of change and ever-more visible effects. The big question is whether the Enterprise IT community can change its traditional inside-out mindset and skillset fast enough to keep abreast of today’s burgeoning outside-in movement.


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David Moschella
Research Fellow
David Moschella, based in the United States, is a Research Fellow for Leading Edge Forum.  David's focus is on industry disruptions, machine intelligence and related business model strategies.  David was previously Global Research Director of the programme. David’s key areas of expertise include globalization, industry restructuring, disruptive technologies, and the co-evolution of business and IT.  He is the author of multiple research reports, including Disrupting the Professions through Machine Learning and Digital Trust, 2016 Study Tour Report: Applying Machine Intelligence, There is Now a Formula for Machine Intelligence Innovation,  Embracing 'the Matrix' and the Machine Intelligence Era and The Myths and Realities of Digital Disruption. An author and columnist, David’s second book, Customer-Driven IT, How Users Are Shaping Technology Industry Growth, was published in 2003 by Harvard Business School Press.  The book predicted the shift from a supplier-driven to today’s customer-led IT environment.  His 1997 book, Waves of Power, assessed global competition within the IT supplier community.  He has written some 200 columns for Computerworld, the IT Industry’s leading publication on Enterprise IT, and has presented at countless industry events all around the world. David previously spent 15 years with International Data Corporation, where he was IDC’s main spokesperson on global IT industry trends and was responsible for its worldwide technology, industry and market forecasts.    


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