"They were not innovating; they were not working as a partner for innovation," says VP of IS Taylor. But he doesn't blame IBM alone (which declined to comment on its relationship with Fluor). "We were putting the entire relationship in a place that's just commodity-based," admits Taylor. "If you want to say: 'Give me some value add', there was no way for [IBM] to get compensated for that under the contract." Once price becomes the primary focus, you're locked in. "If you approached outsourcing as a price play, but now you want innovation, it's hard to move the provider around to that way of thinking," says Ed Hansen, partner in law firm Morgan, Lewis & Bockius's global outsourcing practice.

"You can't change the business model on them in the middle of the deal." The provider didn't build in any governance dollars for innovation, and chances are the buyer didn't either.

It's no wonder that the IT leaders who are reportedly most disappointed with the level of innovation provided by their IT service providers originally engaged in outsourcing to cut costs or because of competitive or business pressure, according to CIO's survey. That was certainly true for Fluor. "We had got too big in terms of cost, and we wanted to improve efficiency and consistency globally," says Taylor. And when measured against those objectives, he says, "outsourcing was the best thing we did". But it hardly lent itself to outside-the-box thinking.

"You put the vendor in a narrow box when you say we want you to do this well and less expensively," says David Rutchik, a partner with Pace Harmon. CIOs may have more of a shot at innovation on marquee deals, Rutchik says, "but [innovation] still has to be a function of the customer's knowledge of his own business and processes, what he really wants, and his ability to articulate that."