Klm Case

The evolution of KLM’s enterprise governance of IT:
An ongoing journey from cost-of-IT to business-value-of-IT
De Haes, Steven; Gemke, Dirk; Thorp, John; Van Grembergen, Wim
(corresponding author: [e-mail])
ABSTRACT
A common and critical dilemma confronting enterprises today is how to ensure that they realise value from their large-scale investments in information technology (IT) and ITenabled 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 case describes 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.

INTRODUCTION
Information technology (IT) has become crucial in the support, sustainability, and growth of most, if not all enterprises. To overcome the IT productivity paradox as described by Strassman (1990) and Brynjolfsson (1993) (i.e no clear correlation between IT spend and bottom-line impact), this pervasive use of IT calls for a specific focus on enterprise governance of IT (EGIT) (De Haes and Van
Grembergen, 2008; Thorp, 2003). Enterprise governance of IT is an integral part of enterprise governance and addresses the definition and implementation of processes, structures and relational mechanisms in the organization that enable both business and IT people to execute their responsibilities in support of business/IT alignment and the creation of business value (Van Grembergen and
De Haes, 2009).
In academic and professional literature, the term ‘IT Governance’ is more commonly used instead of ‘Enterprise Governance of IT’. However, due to the focus on ‘IT’ in the naming of the concept, most discussion around, and implementation of IT governance occurs within the IT area. Yet, it is clear that business value from IT investments cannot be realized by the IT function, but

References: Brynjolfsson, E. (1993). The productivity paradox of Information Technology, Communications of the ACM, vol De Haes S., Van Grembergen W. (2008). An exploratory study into the design of an IT governance minimum baseline through Delphi research, Strassman, P. (1990). The business value of Computers. New Canaan, Connecticut: The information Economics Press. Thorp, J. (2003). The Information Paradox, McGraw-Hill Reyerson. Van Grembergen, W. and De Haes, S. (2009). Enterprise Governance of IT: Achieving Strategic Alignment and Value Weill, P., Ross, J. (2009). IT Savvy: What Top Executives Must Know to Go from Pain to Gain Yin, K. (2003). Case study research: Design and methods. Thousand Oaks: Sage Publications.