Now Dallas himself tells IT workers "no" when they first propose ideas to him. "I want to see who has passion -- who won't give up," he said.

Giving workers the time and resources necessary for innovative technology work also can be difficult within companies that have been burned by high rates of IT project failures, especially on rollouts of ERP systems, Dallas said. Other potential roadblock that he cited included downsizing and outsourcing initiatives, and mergers and acquisitions that force IT departments to focus on integration work.

With most IT budgets not growing by leaps and bounds, "one of the things we have to get good at is hiding the dollars that are going to innovation," Dallas said. "We have to get good at playing three-card monte."

That's a lesson many IT executives already have learned, according to an informal electronic poll of audience members at the conference following Dallas' speech. Fifty-five percent of the 165 people who responded said they have secret budget stashes earmarked for spending on technology innovation.

Dallas said CIOs also need to spend more time with internal users and external customers, make sure that IT vendors share in project risks and get better at communicating the value of IT in terms that business managers can understand. Then they need to keep projects on their radar screens and put a stop to the ones that aren't working out.