The WestJet case study clearly states that WestJet executives possessed no understanding of the level of competence of the organizational structure of the IT organization (Munro and Khan, 2013, p. 5). Cheryl Smith was hired as the CIO (Chief Information Officer) figure out what WestJet possessed in terms of people, process and technology. Prior to Smith’s arrival at WestJet and engagement with IBM had been underway, the result of that engagement was for WestJet to establish a PMO (Project Management Office), Smith requested that any recommendations resulting from the IBM study be placed on hold until she had a chance to assess the organization. Smith determined that she need to benchmark the WestJet organization against comparably sized organizations in the transportation industry to understand if cost structures and skills sets relative to industry standards.
Smith’s benchmark assessment found WestJet’s cost structure to be inline with industry standards from both a headcount and cost structure perspective. WestJet’s IT team was comprised of talented people but many of these people only understood “the WestJet IT way” (Munro and Khan, 2013, p. 5) which may this could bring a small minded approach to solving complex problems, additionally there was an imbalance of skills when compared to industry standards. WestJet’s IT organization was organized as a shared services model where IT functions were consolidated into a monolithic IT organization organized by operational function, planning, building, operating, maintaining and governing. Only about 50% of WestJet’s systems for operations and procedures were “industry-standard”, there was a high sense of pride by WestJetters in having created these systems and procedures from scratch and some protectionism and potential resistance to change because of this strong sense of pride. This would likely be a cultural and organizational challenge as Smith worked to transform the IT organization. The assessment identified that the current IT organizational structure provided no direct connection to the business units they were serving, this created a situation where business units were constantly competing for IT resources while where IT had little to no accountability to the business unit and little to no visibility to their impact on the business.
It was clear that the WestJet was using the Federal decision making archetype (Weill and Ross, 2004, p. 4) where business unit VPs would meet monthly with the VP of IT to negotiate (and likely renegotiate) priorities and resourcing. Smith quickly moved to change this process to an annual process where business unit leaders and IT leadership would meet to discuss capital projects and make decisions and commitments for the the year. Smith did not remove the Federal system but increased the importance for BUs to determine was important to them for the coming year rather than providing the opportunity renegotiate direction each month, in return IT would commit resources to competing the projects.
Smith also looked at facilities, staffing and process to determine any potential risks and how to address. It was determined that WestJet’s data center was at risk given its current location and that WestJet needed to make disaster recovery / business continuance a priority.
WestJet clearly valued the role of IT and many of the industry leading programs that IT pioneered, such as electronic ticketing. IT principles, architecture and infrastructure had allowed WestJet to grow from a small regional carrier to a major codeshare airlines serving 85 destinations in 18 countries. As other competitive organizations matured WestJet needed to fuel the next cycle of innovation and Smith felt that this required focus on business application needs, strategic IT investment, project and resource prioritization. Smith was focused on transforming the IT organization to bring IT closer to the business. Smith’s plan would create BU-CIO role for each BU and realign existing IT resources with business units. The BU-CIOs would be an IT leader who also possessed intimate knowledge and experience relevant to the BU. Smith would also focus on tackling facilities, personnel and process issues such as WestJet’s data center facilities, disaster recovery and 24×7 IT operations.
The changes that Smith planned to institute represented a significant cultural shift for the IT organization and Smith recognized that communication would be a key aspect to a successful transformation. Smith felt that the IT organization would need to move from a reactive “hero” culture (Munro and Khan, 2013, p. 9) to a proactive culture where heroes were no longer required. Smith wanted to transform WestJet’s culture of individualism into an organization fueled by technical excellence, accountability and transparency from the BU to the IT organization.
I believe that Smith had considered key factors for IT decision making (Weill and Ross, 2004, p. 4):
- IT Principles
- IT Architecture
- IT Infrastructure
- Business Application Needs
- IT Investment and Prioritization
I also believe that Smith did a good job aligning her vision of the organization structure with WestJet’s strategic objectives.
- Strategic Driver
- Straddling the line between Asset Utilization and Growth
- Smith planned to align half of the IT resources (120 of 240) with the Business Units to fuel growth while the other half of the IT resources will continue to be assets focused on shared infrastructure services.
- Key Metrics
- This area of IT governance was where I saw a gap in the case study. While the transformation challenges seemed to be well understood and there was implied reasoning for the need to transform the IT organization there were no clear metrics on how success would be measured.
- Key IT Governance Mechanisms
- Smith’s hybrid approach to IT governance balances profit, asset utilization, and growth.
- IT Infrastructure
- Felt that Smith was straddling the line to manage both asset utilization and growth.
- Key IT Principles
- Felt that it was clear that the IT organization was being transformed to fuel growth.
- Smith was positioning what appeared to be a Blended organization, with a slant towards growth. Smith reduced the opportunity for federal style decision making to once per year and introduced the duopoly by adding BU-CIOs and allowing tactical decisions to be made but the BU-CIO and BU executives.
Smith outlined a solid plan for implementing a hybrid approach to IT governance, with a clear understanding of the challenges as well as the reasons for why a change was required. It was was easy to understand where Smith wanted to take the organization and why. The area that I think required some additional thought was how this transformation would impact to the business, how would the IT organization be measured post transformation. How would Smith empirically demonstrate success to C-Level executives?
With regards to the “lost sense of identity and the diminished opportunity to regularly commune with people of similar technical interests” I believe this is an organization behavior hurdle, people don’t like change, change threatens stability and I believe that Smith and her newly appointed BU-CIOs will need to over communicate and show some quick wins to settle the human spirit. Smith and other IT leadership will need to be aggressive in how they address members of the team who cannot make the transition. Even though a significant portion of IT assets are being realigned with business units it’s very important that Smith and the newly appointed BU-CIOs communicate that the IT organization is a unified organization and that the goal is to align IT initiatives with business initiatives, to improve focus and transparency but the IT organization is still a team.
Munro, M. C., & Khan, S. (2013). WestJet Airlines: Information Technology Governance and Corporate Strategy. London, Ontario: Ivey Publishing.
Weill, Peter and Ross, Jeanne W. (November 2004). IT Governance on One Page. MIT Sloan Working Paper No. 4517-04; CIS Research Working Paper No. 349.