"One of the overriding themes of this research is that the CIO's long-term relationship with business innovation is likely to be defined over the next few years," the research paper says. "There is now a real opportunity to get past the negative perceptions of recent years, and establish the CIO as a true business peer. But if this opportunity is missed, attitudes toward internal IT management could continue to deteriorate, making indiscriminate outsourcing and similar rearrangements increasingly likely."

And that, says von Stamm, puts CIOs at a watershed. In interviewing participants for the innovation study, von Stamm says she detected two types of CIOs in existence today: the Old CIO, and the New CIO - or what CSC has termed "the 21st century CIO". Most of those she interviewed were very much "21st century CIOs", and most - as much as 80 percent - had a non-IT background.

The report finds in this a clear indication that all too many IT organizations have lost their image as business innovators, and that in many companies, the internal IT systems and infrastructure are seen as barriers to innovation, not enablers. "The fact that so many companies have chosen CIOs whose primary background is outside IT can only be seen as a serious indictment of the IT profession and as clear evidence that too many IT professionals have failed to gain the respect of their business colleagues," von Stamm says.

So even if only to protect their jobs, CIOs should place themselves at the very heart of corporate innovation. The time is ripe, von Stamm insists, with growth firmly back on the business agenda, merger and acquisition troubles fostering increased business interest in organic growth, intensive global competition making rebuilding the old cost structures no option and with new technology remaining a major driver of innovation.

No Going Back

In the current improving economic climate, businesses can once again plan for growth, but competitive pressures mean they cannot simply rewind the clock. Many business leaders believe that innovation is now the key to future prosperity.

"Innovation is now widely seen as the most sustainable path towards growth and competitive advantage, and thus has become the mantra for both business and political leaders worldwide. This is a standard characteristic of an improving business climate. But turning innovation on and off is not easy, which is why organizations with an ongoing process of innovation will have an advantage," CSC's report says.

Only a few CIOs think of themselves as if they were Chief Innovation Officers, looking to bring all forms of significant innovation into their organizations, whether it stems from IT or not. And only a few organizations think of themselves as highly innovative. But in fact, with only the COO knowing as much about virtually all aspects of a company's business and operations, and only the CEO holding to an equivalent sense of overall innovation vision, the CIO is in an inherently strong position to lead business innovation and to deliver that advantage.

To spend on IT is not necessarily to innovate, but cycles of innovation do tend to correlate with cycles of spending. And while most industries are cyclical, the CSC report says, the IT business has always been so much more volatile than most because of the powerful "herd effects" that influence IT customers. These, the authors say, must be understood and internalized.

Von Stamm says CIOs and IT people in general are typically not seen as focused on business innovation; however, the reality may have changed in recent years, and a company's internal IT systems, applications and networks are often seen as major barriers to innovation, rather than its enablers.

One way the CIO can raise his or her profile as an innovator is to spend a lot of time with business customers listening to their problems and assessing where technology can solve them, says Telstra CIO Jeff Smith, who spends one day a week doing just that. Another is to separate product development from IT. To this end Telstra has just opened two Innovation Campuses - one in North Ryde in Sydney and one in the Docklands in Melbourne - both driven out of the Telstra Technology Office, which has responsibility both for the network and IT.

"The Innovation Centres are where customers and suppliers as partners and us can go and do joint development work and take a shot at commercially bringing something to market, and a couple of those first opportunities are actually projects that started internally in ITS," Smith says. "Our mantra is: Let's view every project as the first implementation of something we want to offer externally.

"We've done some projects internally to consolidate file and print servers - we're shutting off 1500 file and print servers and putting it on four filers connected to an IP network, and all of a sudden I start going to talk to our customers and they're asking if we can do that for them. So I think it's not only nice to have, it's absolutely a must-have and critical for the CIO to take not only an interest in the internal customers but the external customers and what they're looking for and adjust the strategy internally to innovate on some things that we naturally have to do anyhow."