Case Digest 3 - West Jet - Course taught by professor Lubitz PDF

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Karen Hung 90036013 MGMT 178 April 24, 2018 Case Digest #3 – WestJet Airline Briefly summarize the key aspects of the assessment Cheryl Smith, the new CIO, made shortly after she arrived at WestJet. What were the implications of Smith’s governance model with regard to the role of the WestJet CIO and the company’s business strategy? In your role as a consultant to Ms. Smith, please outline what you see as the impact of the proposed IT governance model on IT planning and the implications of this model for both the EVPs and the business unit CIOs in terms of fully exploiting IT capabilities. Before Smith arrives at WestJet, the CEO addressed some concerns within the company and some goals he would like to achieve with IT department’s help. First, the current WestJet system cannot integrate with any other major international reservation systems to “codeshare” with other flight companies. Second, the CEO was worried about the placement of the WestJet data center being too close to the runways. Last but not least, the CEO would like to improve their IT availability to provide a 24 hour, seven days a week customer service to differentiate themselves from other airlines. First when Smith arrived at WestJet Airline, she focused on benchmarking the IT department and its functionality and compared those numbers with other similar-sized companies in the industry. She found that there were a significant number of excellent technical people working in the department and that half of the operating systems at the time were industrystandard. One of the major IT issues for WestJet was the IT organization. Before Smith came in, the IT organization was “structured according to an IT group’s conventional internal functions of planning, building, operating, maintaining, and governing.” In other words, it was functioning in the ways that the IT department wanted, not necessarily align with the overall organizational strategies. As a result, there was no connection with other business units in the company, there was limited IT transparency, and there were no specific resources assignment to any business unit. To address these issues, Smith began to 1) restructure the IT organization, 2) align IT with corporate goals, 3) overhaul IT planning and budgeting, and 4) make IT more responsive to

business needs. In order to restructure the IT organization, Smith decided to establish much stronger connections between the business units and the IT department. To achieve this, she reassigned the IT staff to concentrate on different specific business areas, such as application developing, enterprise resource planning, and IT infrastructure and governance. In addition, she also created several business unit CIO positions to ensure the business units are aligning their work with the overall organization goals. To control IT planning and budgeting, Smith decided to have annual budgeting process for deciding which IT projects take priority for the company resources. IT staff also needs to deliver a weekly project status report to each Business Unit to make sure projects are on track. To deal with data vulnerability and data center location issue, Smith and the leadership team also proposed to establish a different data center in Toronto. Lastly, as a result to provide constant customer service, an IT operation center unit was formed to provide immediate and responsive services for WestJet customers. Smith’s governance model reflected the idea of demand shaping from Demand Shaping: the IT unit’s New Passion. Demand shaping involves sequencing the development of enterprise business capabilities and then identifying ways to leverage them throughout the company. As WestJet’s CIO, she was able first identify the problems within current IT department and later utilize IT units’ capabilities to ensure that the company’s projects create strategic values for the company. Just like any other transformation project, Smith’s IT governance faces the same major challenge: process adoption. Her IT governance impacts the current IT culture at WestJet. Many senior IT staff voiced their concerns about the ideas Smith proposed. Unwilling to adopt to the new idea, some of them even threaten to quit the company. Her implementation of the new IT system and the governance model for EVPS and the business unit CIOs heavily shifted the “IT way” in WestJet. However, by implementing these new IT rules and subdivisions, she was able to address the concerns the CEO had for her when she took the job. Smith was able to abide to some of the IT governance principles to lead to effort to clarify the operating model and to create IT transparency to communicate properly within department head....