Context: A particular strength of agile systems development approaches is that they encourage a move away from 'introverted' development, involving the customer in all areas of development, leading to more innovative and hence more valuable information system. However, a move toward open innovation requires a focus that goes beyond a single customer representative, involving a broader range of stakeholders, both inside and outside the organisation in a continuous, systematic way.Objective: This paper provides an in-depth discussion of the applicability and implications of open innovation in an agile environment.Method: We draw on two illustrative cases from industry.Results: We highlight some distinct problems that arose when two project teams tried to combine agile and open innovation principles. For example, openness is often compromised by a perceived competitive element and lack of transparency between business units. In addition, minimal documentation often reduce effective knowledge transfer while the use of short iterations, stand-up meetings and presence of on-site customer reduce the amount of time for sharing ideas outside the team.Conclusion: A clear understanding of the inter- and intra-organisational applicability and implications of open innovation in agile systems development is required to address key challenges for research and practice. (C) 2010 Elsevier B.V. All rights reserved.