Innovation has become one of the most over-used words in technology, but it remains perhaps the most important one in IT leaders’ vocabulary.

It is one of those words that suffers for being too open to interpretation.

When it emerges from the mouth of a politician, you can usually assume it means little more than some vague

commitment to a policy to support skills development or encourage research investment and will no doubt be superceded by another new policy when it fails.

From business leaders, the word is often part of a warning that without it the UK economy will lose out to emerging innovation hothouses such as India and China.

So it is all the more important that IT managers know what they mean when they put innovation at the top of their priority list – which is exactly where it should be.

For one thing, it is not to be confused with invention. Instead, innovation is about smart people doing things more smartly than the competition. It is about ways to use emerging technologies that work for your business. And it means taking measured risks on new ideas and building a culture to support innovators.

There are two great examples in these pages. Lastminute.com two years ago set up an innovation group, who found the key to success is quick development, using agile methodologies to bring ideas to fruition.

At Visa Europe, the company faces a never-ending task of being smarter than the credit-card crooks. A constant process of innovation in product development is essential. Proof-of-concept testing helps to identify ideas that will work for consumers. There are valuable lessons that can be learned from both organisations.

Chief executives will always expect strict return on investment plans for any IT spending and especially so in a recession. But to make a real difference, it is return on innovation that needs to be part of the IT leader’s pitch.

And here is the good news… Apple and IBM are doing very well, thank you. Record financial results all round.

That’s that bit over. Now for the bad news.

Five thousand layoffs at Microsoft and another 5,000 at Ericsson. IT job cuts at Axa and Unisys. Let’s stop there before it gets worse.

Are you getting as fed up as we are by the constant stream of depressing stories emanating from the business world, and in particular the IT sector?

Computing is the first to admit that we are not slow in reporting such bad news, but sadly it is a fact of life at the moment. We’ll be the first to bring you the good news too, it’s just a little harder to find right now.

Nonetheless, it is heartening to see that IT managers are approaching the difficult times ahead with a mood of realism rather than being disheartened.

The first of what will be a regular quarterly survey of readers’ attitudes, the Computing Technology Barometer, shows that IT leaders are being cautious but not downbeat.

They expect little by way of budget increases, and are wary of the latest products and services being pushed at them by vendors, but where there are opportunities to deliver real benefits from the right technologies, they are forging ahead.

It is important to remember that driving change through IT does not necessarily mean buying lots of new products. There are often plenty of ways to make better, faster or smarter use of what you already have –­ and when you see well-established trends such as virtualisation, mobile computing and data security highlighted as priorities in our research, the implication is clear –­ IT leaders have become very good at making the most of a tough time.

So to borrow a phrase that someone else borrowed in a rather more important speech last week, let’s pick ourselves up, dust ourselves off, and keep IT at the heart of successful business.

Rarely has an impending ministerial report generated so much anticipation in the IT and telecoms industries.

Communications minister Lord Stephen Carter’s Digital Britain review is due to be revealed next week, and speculation surrounding its contents has reached what –­ by the sedate standards of telecoms –­ can only be described as a fever pitch.

The review aims to create an “action plan to secure the UK’s place at the forefront of innovation, investment and quality in the digital and communications industries,” according to the government.

It will cover everything from the future of broadband to illegal file sharing and digital content. The report presents a unique opportunity – certainly the first of its kind in the UK – ­ to take a joined-up policy approach to the knowledge economy.

Early indications are that Carter will be in favour of universal broadband –­ mandating industry to provide a connection to anyone in the UK who wants one, wherever they are, using whatever wireless or wired technology is most appropriate and cost effective. Such a scheme has been discussed and rapidly dismissed in the past, so this would be a major step forward.

The costliest question will be who pays for next-generation broadband and the rollout of fibre optics that is needed to take connections up as far as 100Mbit/s. There is a realisation at the highest level of government that this is every bit as important a recession-busting infrastructure development as roads, railways and new runways.

There is an unprecedented coming together of trends that puts the timing of the review at a perfect and pivotal point –­ the need to stimulate investment and create jobs; the rapid acceleration of consumer technology use; the globalisation of business through IT; and a government desperate to be seen to be doing something popular.

It could be a groundbreaking moment for UK IT – ­ let us hope we are not disappointed.

With the economic crisis showing no signs of ending soon, the only certainty in the next 12 months will be uncertainty.

Clearly, financial services firms will be hardest hit, but the knock-on effects will be widespread.

However, past experience suggests that innovative users of IT will be best positioned to emerge the strongest from troubled times.

The constraints within which IT leaders will have to operate will test many. Capital expenditure will be tightly controlled, and considering that most major hardware purchases ­ and often large software licence deals too ­ are financed through leasing, with the cost of debt so high the options will be limited.

For small or medium-sized businesses, there will inevitably be a lot of interest in software-as-a-service, hosting, cloud computing and other online pay-as-you-go offerings that minimise or even avoid an up-front payment.

For bigger businesses, the spectre of outsourcing will loom large. There aren’t many major firms that have not outsourced at least some aspect of their IT operations already, and the potential for budget cuts and the conversion of direct costs to operational expenses gives a financial imperative that may be hard to argue against.

But there are plenty of technology options too. There is no silver bullet, no next big thing that IT leaders can turn to. But there are still plenty of current big things that offer significant potential savings ­ virtualisation, voice over IP and mobile working, to name but three of many.

Whatever route you prefer to choose, there is one action that all IT leaders need to take.

In previous downturns, there was much talk of bridging the IT-business divide to survive unscathed. Yet here we are again, and still the gap often seems as wide as ever.

There will rarely be a better opportunity for IT to work with its business counterparts to plot a route through all the current uncertainty. Let’s not waste this chance to cross that divide and close it once and for all.

Watching the government grappling with the concept of social media is the online equivalent of dads dancing at a wedding reception: an embarrassment to all. And Whitehall mandarins do not even have the excuse of alcohol consumption.

That is not to decry the efforts of those such as MP Tom Watson, who is championing a Web 2.0 agenda. Nor is it to dismiss the government’s aim, which is to engage with the significant proportion of the UK who feel disenfranchised by the political system.

But current efforts look doomed to fail.

In future, the way citizens interact with the state will change and the internet will be an integral part of that. So it is absolutely right that government starts planning for those changes.

But the root of the problem is this: bureaucracies, particularly this government, have an uncontainable desire to centralise control. This is the antithesis of the social media movement, which engages people through empowering them to make their own decisions.

The success of Facebook, Bebo, MySpace - or Netmums and NHS Choices - has been predicated on building active communities around shared interests. This should be fertile ground for public services.

But social networking lets users decide how they wish to use the platforms. If they want to know the hottest widget, their peers advise them.

Similarly, if a parent wants to find a decent school in their neighbourhood, the state can provide guidance on facilities and even transport links. That could be extremely valuable. Allowing others to add their views would increase the value, but would bureaucrats allow it?

For an administration that has made a specialism out of funnelling money to consultants, it beggars belief that there is a shortage of advice. But therein lies a dilemma ­- if the government genuinely wants to engage with citizens, it is not consultants that can tell them how to do it, but the people themselves.

The chances of that happening are more remote than UK fathers suddenly discovering they really do know how to “bust a few moves”.

Are the arteries of the internet really in danger of becoming clogged up?

There has been much debate recently over the capacity of the internet to cope with the growing popularity of high-bandwidth services such as online video.

Some ISPs have been moaning in particular about the impact of the hugely successful BBC iPlayer -­ a complaint that has been received with derision from web users, not least those writing to Computing’s letters page (letters.computing.co.uk).

The irony is not lost on those who recall the early days of broadband, when ISPs accused content providers of doing too little to provide sites that would encourage users to upgrade from dial-up connections.

But now the father of web gurus, Sir Tim Berners-Lee, has raised another arterial issue -­ that the problem is not too much content, but too much useless content.

Berners-Lee fears that the internet will lose credibility as a business and consumer tool because of the spread of false, misleading or simply annoying information ­ the web equivalent of spam for email. Would you really trust Wikipedia as a 100 per cent reliable source, for example?

All these debates are inevitable for what is, after all, a very young technology in terms of mainstream use. Barely 10 years ago the internet was unheard of outside of tech-savvy circles. Ten years after the car was invented, people still thought it necessary to walk in front of them waving a red flag to warn passers-by.

The reality is that the internet shows no signs of slowing down in either popularity or connectivity. The government and the telecoms industry are slowly waking up to the need to invest in next-generation broadband infrastructure. And the iPlayer demonstrates the benefit of providing quality content to the right audience.

There is no need for a healthcheck yet. IT leaders need to be aware of the issues under debate, but should not be deterred from investing in a future where information and connectivity are the lifeblood of business and government.

What does your long-term internet strategy look like? Do you even have one? If you don’t, it is hardly surprising, when the online world remains in such a state of constant and unpredictable change.

The one thing you can say with any confidence about the web and its future impact on business is that nobody really knows what is going to happen ­ and there are few reliable sources that you can count on for predictions worthy enough to build your company strategy around.

Just look at the debates and battles that are going on at the moment.

In one corner, Microsoft is slugging it out with Yahoo. The search firm is trying to play tag, looking for partners to prevent it falling into the clutches of the software giant. But so far, few are willing to take as big a financial bet as Redmond.

In another corner, the online advertising firms are trying to carve out a way to use our personal surfing habits to make more money without infringing our privacy ­ and often making a complete hash of it.

Elsewhere in the ring are ISPs and content providers arguing about who pays for the rise in bandwidth-hungry services such as video ­- the success of the BBC iPlayer leading to the latest round of finger-pointing.

And then there is the software industry, agonising over the growing popularity of hosted business applications such as Salesforce.com or Google Apps, and how the rise of these low-cost ­ or even free ­ online services will affect their lucrative licensing models.

Then you run out of corners, and stuck in the middle find the poor internet user ­ - both individual and corporate -­ not sure which way to turn.

For IT leaders, the only certainty is that the internet will, of course, be central to your plans. But the companies that want to make the most of the oppo rtunities online need to stay innovative, agile, and ready to respond rapidly ­as the often-conflicting forces determining the future play out their costly games.

The rise of consumer technology and its impact on business has become a growing theme for IT managers.

The increasingly tech-savvy population has different expectations of the way it relates to companies and government, as employees, customers and citizens.

This represents a historic turnaround.

In the past, new technologies have confounded consumers, and adoption of the latest innovations has slowed or sometimes died as potential users retreat from perceived complexity or just simple techno-fear.

But now, consumer demand is starting to push ahead of the ability of the IT community to deliver the technology people want.

Smartcards are such an obvious way to improve the passenger experience on public transport. London’s Oyster card has already shown how it can make travel cheaper and more convenient, and offer the potential for new services, such as the combined travel and payment card launched by Barclaycard last year.

But for once, an important technology is being rolled out before the companies that support it are ready.

The first national smartcard-based transport scheme, to allow senior citizens free bus travel anywhere in the country, will be unable to exploit its advanced features because hardly any bus operators support it.

Is this a sign of things to come? As we all turn to new technology in our everyday lives ­ for communication, entertainment, education and more ­ the national appetite for IT seems only to be expanding. Through products such as mobile phones, iPods and Nintendo’s Wii, technology has become a fashion item for all ages.

This presents huge challenges ­ and opportunities ­ for everyone working in IT.

Imagine if user resistance to new projects turned into an enthusiastic demand for more. How soon before companies will steal a march on their rivals by beating them to the use of a new technology to create greater customer loyalty and profit?

 IT managers in every organisation need to respond to the changing reality of a consumer-led technology revolution.