Whatever happened to the innovative IT sector? Long gone are the crazy days of dot com mania, when open plan offices were stuffed with smart cookies, cold beers and fruit machines.

Long gone, too, are the times when technology firm values would hit million of pounds in weeks, not years.

In fact, the complete opposite is now true. Technology stock values have slipped to the point where backers are leaving the market altogether.

Finance house Close Brothers says falling share prices and the lack of major technology initial public offerings during the past 12 months mean a startling amount of funding is leaving the sector. More than £2.6bn of equity has been delisted through takeovers since March 2007, says Close Brothers.

Money from delisted stocks is normally recycled into new listings, but this is no longer the case. Private-equity specialist 3i has been gradually pulling out of the IT sector, and recently announced it will no longer invest in startups. Apax Partners left the sector last year.

So much for innovative new businesses; there must be hope in blue-chip companies. Unfortunately, the disparity between idea creation and commercialisation is not confined to the stock market, and internal research is also stalling.

Just six per cent of UK executives are satisfied that their company will be able to convert innovative ideas into services, according to consultant Accenture. Less IT innovation means fewer new products, so IT directors have less choice and increasing cost pressures.

Still, who cares? No one wants to splash out on new systems and services anyway. Take banks and securities firms, which are cutting back on IT investment because of the downturn, says the Confederation of British Industry (CBI) and PricewaterhouseCoopers (PwC).

With 47 per cent of institutions reporting a decrease in business volumes during the first quarter, the CBI and PwC expect finance firms to slash 10,000 jobs ­ with the IT department likely to be among the worst hit.

For a sector supposedly driven by innovation, times are tougher than a dried goat sandwich. Excuse me for being gruff, but an appropriate conclusion is that UK IT is not very tasty.

Further reading

• Social web is about improvement, not innovation
• Motion sensing: Wii must replace the mouse
• The future of technology, according to Gartner
• China is the home of R&D, not outsourcing
• Forget the downturn and fight for innovation
• Don’t be afraid to be an IT innovator

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Want to contact the writer? Email Mark Samuels