Today the role of information systems directly affects the goals and operations of companies and is being strategic. Most of Information System Departments (ISD), however, have been losing the credibility due to their failure to respond effectively to their counterparts in the rapidly changing environment. The purpose of this research is to propose a theoretical framework which systematically studies the innovation of ISD. It is intended to understand the critical factors which have an effect on each level of ISD innovation process. It is also intended to understand the performance of ISD innovation through the innovation process. Besides, we try to clarify the conceptual difference between IS innovation, Information Technology innovation, and ISD Innovation. As a result, we propose the structural model for ISD innovation research by analyzing the innovation theory and previous IS innovation studies.