KLM Airlines Case Study

CASE STUDY 8‐1 KLM Airlines

KLM Airlines, headquartered in the Netherlands, is one of the world’ s leading

international airlines. Following its merger with Air France in 2004, KLM employs 33,000

people worldwide (1,000 of whom work in the IT function) and operates about 200 planes. 29

Following the 9/11 terrorist attack in 2001, the challenging business environment for airlines

caused KLM’ s CEO to appoint a new CIO from the operations area, clearly outside of the IT

area, to make a structural break from the past.

Three priorities included examining outsourcing IT, creating a board of business and IT

representatives, and fashioning a process for governance of IT that is shared between the IT

function and business units. The result of the ensuing efforts over several years was to create

four levels of committee governance: An executive committee kept an eye on matching the

business strategy with IT strategies; A business/IT board, which was composed of the CEO,

CIO, and all business unit executive vice presidents, was formed to manage the portfolio and

budget; an IT management team worked on tactical planning for the business/IT board; and

finally, the CIO/information services management team planned and managed IT operations.

KLM also established a set of key principles and practices and developed a standard

business case template that had to be used whenever requesting an investment greater than

150,000 euros. KLM experienced five benefits attributed to the governance structure: reduced IT

costs per kilometer flown, increased capacity for IT innovation, better alignment of investments

to business goals, increased trust between functional units and the IT organization, and a

mind‐set of the value of IT.

Discussion Questions :

1. What is likely to have led to increased trust for the IT organization?

2. What might explain an item that is seemingly quite unrelated to IT (costs per kilometer

flown) decreased as a result of the new CIO structure?

3. What maturity level did KLM appear to exhibit (a) in 2000 and (b) in 2011? Why?

4. Why do you think that KLM requires its employees to use a standard business case

template when they want to make an investment?

Sources: Adapted from Steven De Haes, Dirk Gemke , John Thorp, and Wim Van Grembergen, “KLM’ s Enterprise

Governance of IT Journey: From Managing IT Costs to Managing Business Value ,” MIS Quarterly Executive 10,

no. 3 (2011), 109–20, and “Analyz-ing IT Value Management at KLM Through the Lens of Val IT,"

http://www.isaca.org/JOURNAL/ARCHIVES/2011/VOLUME‐5/Pages/

Analyzing‐IT‐Value‐Management‐at‐KLM‐Through‐the‐Lens‐of‐Val‐IT.aspx (accessed May 30, 2015).

Pearlson, K. E., Saunders, C. S., Galletta, D. (2015). Managing & Using Information Systems,

6th Edition. [[VitalSource Bookshelf version]]. Retrieved from vbk://9781119255215