Analysts insist IT innovation is high on the CIO's agenda even as they tell us, yet again, how IT is increasingly being asked to do more with less. What's a poor CIO to do? Both, says director of product marketing, Celona Technologies Paul Hollingsworth.

It looks like the ancient problem of how to have your cake and eat it too. CIOs must ensure IT functions efficiently, complies with legislation and regulation, and is secure against an ever-wider range of threats. CIOs must also perform the usual upgrades, renewals and maintenance on legacy infrastructures, and 'manage' (as in maintain or reduce) IT budgets. But in the spare time that never seems to exist, IT must now also 'innovate' to support businesses that are being fundamentally re-engineered for the new economy. All of which has far reaching effects on IT infrastructures, budgets and goals.

"It's important to understand that while the importance of innovation and the inevitability of change has become the mantra of the elite ranks of businessmen worldwide, this is not a fad," Hollingsworth says.

"In the 90s businesses became adept at sales and marketing, branding, rebranding and growth through merger and acquisition. With the support of the Internet, businesses opened up new global markets and the barriers to setting up a business lowered. This provided a host of new opportunities, but it also introduced a range of new threats - not least that increased numbers of competitors made differentiation harder and premiums for particular products and services more difficult to maintain.

"Today, each innovation is scrutinized, copied and the advantage negated that much quicker - thanks to the power of the Internet-supported global market. GE's Jeffrey Immelt, for example, explains that now 'constant reinvention is the central necessity...we're all just a moment away from commodity hell'. The ability to respond to change, to continually innovate and to get product to market quickly and reliably are the new hallmarks of business success. Or, in Rupert Murdoch's words: 'big will not beat small anymore. It will be the fast beating the slow'."

A recent survey conducted by Capgemini Consulting found two-thirds of CIOs believe IT is critical to business innovation, but only 25 per cent feel their IT function is actually driving business innovation. Capgemini's Eric Monnoyer, BIS global leader, says the requirement to balance operation and innovation is "a constant challenge" for CIOs, although the survey indicates that 60 per cent of CIOs believe it's possible to do both.

So why aren't more IT departments supporting business innovation effectively? They are just too busy, Hollingsworth says, keeping IT running and measuring performance against vital key performance indicators. Often IT is seen as a cost centre that needs to be measured, optimized and controlled, rather than as the powerhouse of business innovation. And with the bulk of their budgets, resources and staff committed to keeping legacy infrastructure running, CIOs may have little capacity to innovate. A recent white paper by Erudine's Dr Toby Sucharov and Philip Rice point out that as much as 60 to 90 per cent of IT budget is typically dedicated to legacy system operation and maintenance.