CIO — Internal IT organizations choose to outsource for any number of reasons: to cut costs, improve service, increase efficiency. Increasingly, they're seeking innovation from their IT outsourcing partners, even though many don't have a clear picture of what innovation means in the context of outsourcing. Consequently, those IT departments are not getting much innovation from their service providers.

According to a 2009 Forrester Research survey, 38 percent of IT outsourcing customers said lack of innovation or continuous improvement was their greatest challenge with existing vendors—up from 33 percent the previous year. (Also see CIO's Exclusive Outsourcing and Innovation Survey.)

"Clients expect more from their service providers than just a cost reduction and reliable service," says Forrester Senior Analyst Chris Andrews. "In many cases they want their supplier to be aligned with their own business concerns, and that implies some level of evolution in the supplier's capabilities."

Leading IT outsourcing providers recognize that innovation is integral to their survival. "None of the service providers I have ever spoken with is unwilling to engage in an innovation discussion," says Andrews, who recently interviewed ten technology service providers to figure out the disconnect between customer expectations for and outsourcer delivery of innovation.

So what's the problem? In a word—it's you. Andrews says IT outsourcing customers make the following three seemingly basic, yet critical mistakes in attempting to procure innovation from their external partners. He recommends ways they can address these mistakes to obtain the innovation they seek from their vendors.

1. You don't know what you want.Everyone wants innovation, but no one knows what it is.

In talking to IT service providers, Andrews found that most agreed that innovation should help clients achieve "a new and disruptive business impact," but the scale and scope of such initiatives fluctuated wildly. Before the recession, transformational IT outsourcing deals or "going green" were seen as innovative. In the last few years, however, the focus shifted to cost-cutting efforts, preserving cash flow or increasing efficiency. In the near future, innovation may center on cloud computing or social computing.

If an IT outsourcing customer doesn't define innovation in its own terms, an IT services vendor can't provide it. "I don't think that many [clients] really know what they are looking for," says Andrews, recalling an outsourcing RFP he recently reviewed with a "innovation" section. "It laid out that the service provider was expected to help the company innovate—without any definition or context. There is widespread confusion, and this confusion has a big effect on the alignment between service providers and their clients."