When trying to learn about a group of users, a researcher will interpret their behaviour on her or his own background, achieving an outside understanding. Inside understanding means to know how the people themselves interpret their own behaviour. The usefulness of inside and outside understanding is argued in the following areas: 1) information systems research, 2) concepts that relate the roles of developers and users, 3) the system development process, 4) design perspectives, and 5) system development techniques. Obtaining both inside and outside knowledge in research increases the reliability as compared single-sided studies. Studies of user participation and involvement in the literature are challenged because they ignore the difference. In system development, descriptive techniques give preference to outside knowledge elicitation for the developers, while co-operating techniques favour inside understanding. A mixture of techniques should thus be employed in general, while outside knowledge is of specific importance for restructuring larger parts of organisations.