The paper extends Swansonís three core model of IT innovation in order to account for observed radical changes in systems development and IS service due to Internet induced innovations. A new supra-core called the base IT innovation core is suggested that accounts for IS innovations in the new world of development which cannot be categorized in the existing tri-core model. The impact and role of this core is supported by findings from a field study, which examined eight leading edge software firms and changes in their development practices. Concurrently, the study confirms the 20 propositions put forward in Lyytinen et al. (1998) that predicted the Internet and its associated tools would represent a new technological frame that would radically change systems development and services.