When computer applications were introduced to the world of business, they were designed and run by technicians and programmers. If you wanted data processed, you just handed it over and someone returned the results to you. As the computer revolution evolved, computers became just one more appliance that a company purchased to improve productivity, and that brought a whole new range of headaches. The computers themselves could do nothing without applications software. As a result, companies had just two choices:

They could buy off-the-shelf applications and adapt their business processes to fit the software.

They could write their own applications to fit their idiosyncratic processes.

The off-the shelf applications rarely, if ever, gave a customer what was really needed. But custom-designed applications often required endless rounds of revisions and upgrades. That in turn led to costly technical fixes that were often more expensive by far than the original computer. In either case, the systems, as often as not, failed to deliver the expected business results.

Business process reengineering emerged in the early ‘90s as a way to close the loop between the end-users of the business processes and the developers of the application that enabled the processes. The idea was to find ways that technology could optimize processes and then assure that systems were built in such a way that the optimized process would work as envisioned.

Companies like SAP and Oracle introduced a new genre of applications, referred to as Enterprise Resource Planning applications, or ERP. Because of these applications’ flexibility, and the inclusion of sophisticated “best of breed” algorithms, they definitely improved the situation. However, at the same time, the pace of change and the need to compete on the basis of differentiated processes increased, leaving the application developers still unable to meet the needs of the users.

Today, every corporate IT department is familiar with this conundrum. In fact, a study by the Standish Group, a consulting firm, showed that as of 2002, 15 percent of software installations failed outright, and fully half of them suffered from cost overruns or proved not to have the functionality promised by the vendors.

Put simply, applications software has traditionally been very expensive, and a lot of it simply...