Though information has become one of the most valuable assets of modern corporations, development of information systems (IS) faces many problems. Among the most important are low productivity, a large number of failures, and an inadequate alignment of ISs with business needs. The first problem, low productivity, has been recognized in the term “software crisis”, as indicated by the development backlog and maintenance problems (cf. Brooks 1975, Boehm and Papaccio 1988, Jeffrey 1987). Simply, demands for building new or improved ISs have increased faster than our ability to develop them. Some reasons are: the increasing cost of software development (especially when compared to the decreasing cost of hardware), the limited supply of personnel and funding, and only moderate productivity improvements.

Second, IS development (ISD) efforts have resulted in a large number of outright failures (cf. Lyytinen and Hirschheim 1987, Charette 1989). These failures are sometimes due to economical mismatches, such as budget and schedule overruns, but surprisingly often due to poor product quality and insufficient user satisfaction. For example, one survey (Gladden 1982) estimates that 75% of IS developments undertaken are never completed, or the resulting system is never used. According to the Standish Group (1995) only 16% of all projects are delivered on time and within their budget. This study, conducted as a survey among 365 information technology managers, also reveals that 31% of ISD projects were canceled prior to completion and the majority, 53%, are completed but over budget and offer less functionality than originally specified. Unfortunately this area has not been studied in enough detail to find general reasons for failures. As a result, we must mostly rely on cases and reports on ISD failures (e.g. Oz 1994).

Third, from the business point of view, there has been growing criticism of the poor alignment of ISs and business needs (cf. Earl 1989). While an increasing part of organizations’ resources are spent on recording, searching, refining and analyzing information, the link between ISs and organizational performance and strategies has been shown to be dubious (Smith and McKeen 1993). For example, most managers and users are still facing situations where they cannot get information they need to run their units (Davenport et al. 1992, Rockart and Hofman 1992). Hence, ISD is continually challenged by the dynamic nature of business together with the ways that business activities are organized and supported by ISs.

All the above problems are further aggravated by the increasing complexity and size of software products. Each generation has brought new application areas as well as extended functionality leading to larger systems, which are harder to design, construct and maintain. Moreover, because of a large number of new technical options and innovations available - like client/server architectures, object-oriented approaches, and electronic commerce - novel technical aspects are transforming the practice of ISD. All in all, it seems to be commonly recognized that ISD is not satisfying organizations’ needs, whether they are technical, economical, or behavioral. Consequently, companies world-wide are facing challenges in developing new strategies for ISD as well as in finding supporting tools and ways of working (Rockart and Hofman 1992, Benjamin and Blunt 1992).