Incentives and their Effects on Information Systems Projects

Information systems (IS) projects are often delivered late, over budget, and not always to required specifications. This is an ongoing problem that has eluded researchers and practitioners for decades, but to overcome these problems better ways to manage the success of project development and implementation are needed. We investigate the use of incentives in IS projects during development and implementation and draw upon an agency-based compensation model and suggests that incentives positively impact IS development and implementation. Practitioners were surveyed about the use of incentives. Incentives seem to improve the rate of IS development and implementation and better control IS expenditure and resources. Incentive-based contracts improve alignment with management objectives by managing factors that influence the behaviour of IS personnel. Thus incentive-based contracts specifying productivity and performance criteria can reduce IS project duration and cost.