Leading economic indicators indicate not only that the IT recession has begun to lift, said a panel of IT execs and an economist at the InformationWeek Conference on Tuesday, but that now is the time to fund innovation that will fuel a company's resurgence.

Lakshman Achuthan, managing director of the Economic Cycle Research Institute, said the advice of too many influential experts overshoots the peaks and valleys of recessions and booms. This happens, in part, because many people base predictions on old data when real-time data is needed, Achuthan said. Looking at real-time information such as the amount of cash available to companies, a nascent pinch in production capacity, and confidence in the economy, show that "a new recession is not imminent."

Achuthan was joined in a panel discussion about innovating in today's economy by Jon Carrow, director of global IT sourcing and acquisition for Wyeth Pharmaceuticals, and Ameet Patel, CTO of LabMorgan, a unit of financial firm J.P. Morgan Chase & Co. Achuthan forecasts a "sub-par but sustainable recovery."

History will judge his accuracy, but the question remains, what's the best course of action for a CIO right now?

Patel's strategy is "shrink to grow." As part of one initiative, his company is aggressively innovating by identifying manual processes that can and should be automated. Sometimes that can be a basic coding job; more often, it means holistically redesigning processes.

He and Carrow emphasized the need to consider redesigns. Sometimes the slate has to be wiped clean of "bolted on" products, procedures, and services, Carrow said. Single, elegant systems created from the ground up can save time and money. Ambitious projects like this still need to be rigorously vetted, of course.

Patel said he is always "leveraging tech around a quick ROI." Two years ago, he might have been able to sell a creative project based on a business plan missing the anticipated ROI, but no more.

Carrow went a step further, recommending that CIOs factor in the cost of altering or even abandoning IT projects and strategies. The best plans--even those based on leading indicators--will have to change.