Improving Enterprise Governance of IT in a Major Airline: A Teaching Case

Abstract

A common and critical dilemma confronting enterprises today is how to ensure that they realize value from their large-scale investments in information technology (IT) and IT-enabled change. IT-enabled investments can bring huge rewards, but only with the right governance and management processes and full engagement from all management levels. This teaching case is about the tough but rewarding journey of the Dutch airline company KLM in improving the governance of IT, moving from managing the cost of IT towards managing the business value of IT. Although KLM still has challenges ahead, the changes in structures, processes and relational mechanisms have helped to restore trust between the business and the IT organization, and lowered business operating costs through a more rigorous selection and portfolio management process. The changes have also increased the resources allocated to IT innovation. Although KLM faced some unique challenges as it began the journey to transform its enterprise governance of IT, the realization of greater business value from today's significant and increasingly complex investments in IT is a concern for all businesses. We therefore believe that the practices and lessons learned at KLM can be applied by other organizations as they seek to more fully engage their own business unit managers in IT investment decision making and in accountability for realizing business value.

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