The government in the United Kingdom spent £7.1bn ($9.9bn) on information systems in 1998-9, of which £1bn was in health care. Yet information systems are difficult to commission, purchase, and evaluate, and the results not always good.1

As computer hardware becomes an ever cheaper commodity with ever increasing power, it is clear that software is the rate limiting step in system development. Software is slippery stuff: its possibilities seem almost limitless, but implementing a system competently is a difficult activity that commands premium rates of pay. A lot of its cost lies in planning, implementing, and monitoring and enforcing exchanges between the parties involved, who might be, for example, a hospital wanting to buy an information system and a system supplier. Such exchanges have high transaction costs.2 …