Corporate board members can no longer afford to be IT illiterate as companies face the challenge of untangling complicated "legacy" systems, according to Electronic Data Systems (EDS) Australia Managing Director Chris Mitchell.

Speaking at an American Chamber of Commerce function in Melbourne yesterday, Mitchell said boards which do not understand IT will be left behind.

He said boards need to recognize the benefit in "renovating" unproductive IT systems.

"Boards have to have the ability to understand technology these days," Mitchell said.

"They need at least one or two technologically literate people on the board so they can understand the implication of these decisions."

One of the biggest challenges facing the business community today, he said, is to unravel what he called the "IT hairball" - the tangle of computer systems that had been tacked together as technology had progressed.

He said these unwieldy computer systems had made businesses inflexible and increased the costs of development projects.

"Most companies now are spending 80 percent of their IT budget just on keeping the lights on," he said.

As a result only about 3 percent of most IT budgets were spent on innovation and new strategies.

Mitchell said untangling the hairball would require commitment and investment from businesses and government and would take about five years to achieve.

As companies start to address the problem, he said Australia"s job market will witness an increase in demand for highly skilled IT workers.