The need for innovation to drive business results is not a new phenomenon in financial services. In the 16 years that I've been covering the industry, there is abundant evidence of this, whether considering the pioneering efforts of J.P. Morgan to advance risk management by making its proprietary RiskMetrics methodology freely available to all market participants in the early 1990s, or Bank of America's "Keep the Change" debit card program developed two years ago. Banking has seen its share of remarkable innovation that contributed to significant results for institutions and their shareholders.

So what's different about the imperative to drive business results through innovation today? For starters, regulation in response to the credit crisis will have a profound impact on institutions for the foreseeable future. Add to that the interconnectedness of financial markets, which requires a keener understanding of how the performance of one counterparty can affect another.

Further, the vast amount of data gathered by institutions, which in theory should improve decision making and mitigate risks, is often still housed in silos, blocking an enterprise view of consumer, small business and corporate and institutional customers.

But the biggest reason that innovation is needed now more than ever to improve financial performance is the pace at which business moves, presenting opportunities on which to capitalize and risks that must be managed across the enterprise.

The catch: CIOs will be required to deliver more strategic initiatives with smaller budgets, and to fend off the advances of rivals whose use of disruptive technologies can rapidly alter the playing field.

The desire for IT to facilitate business strategy remains a key objective for senior business and IT executives, though current performance levels still fall short, according to McKinsey's third annual survey on information technology strategy and spending.

The McKinsey survey was conducted in October, which officials say gave respondents time to "absorb the implications of the credit crisis and deteriorating economic environment." Not surprisingly, the survey found that spending expectations are more conservative this year than last.

Respondents said the risks they face include information- and technology-based disruption and the corresponding increase in the importance of information and technology capabilities to improve business performance ahead of competitors. In a nutshell, CIOs are expected to execute on business strategy more effectively than in prior years.

To achieve this, CIOs are making trade-offs, reducing IT operating expenses so that they can redeploy capital to high-priority new investments. While 2009 is expected to be a tough year, CIOs are clear about what's at stake: business.

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