Companies in every sector have streamlined their internal processes by integrating systems and eliminating the manual activities once needed to coordinate the flow of information across the enterprise. Streamlining processes that involve interactions between companies has been more difficult, however: the automated connections that they currently forge with one another can funnel only certain types of information and require negotiations over the value of these expensive connections.

Web services—new technologies that spring from the Internet and are used mostly to automate linkages among applications—might at last make such connections not only possible but also easy and cheap. Today, connecting systems inside a company (a procurement system and a finance system, say) can require the IT staff to write customized code that "glues" them together. Making connections between companies and their applications exponentially increases the job’s complexity and cost. But thanks to the emergence of Web services, programmers can now write a layer of software that sits on top of an application and connects it to any other Web services-friendly application quickly, cheaply, and flexibly.

In the new book Out of the Box: Strategies for Achieving Profits Today and Growth Tomorrow through Web Services, McKinsey alumnus John Hagel argues that...