Inter-Organizational Governance of Information Technology: Learning from a Global Multi-Business-Unit Environment

Introduction

Contemporary organizations are increasingly operating in complex networked systems to create value-adding products and service in a complex and uncertain environment (Jones et al., 1997). Such network arrangements create a number new challenges regarding the governance of information technology (IT), including questions on accountabilities, decision rights and ownership of shared and/or distributed IT resources. Where in the past decade, quite some research was published on how governance of IT can be implemented in an intra-organizational context (Van Grembergen & De Haes, 2009), there is little research available that specifically looks at how organizations define and implement their inter-organizational governance of IT (Croteau & Bergeron, 2009; Grant & Tan, 2010; Croteau & Bergon, 2011).

Looking at governance of IT implementations in large multi-business-unit environments (Weill & Ross, 2004; Van Grembergen & De Haes, 2009), it is clear that multiple business units within one organization can have their own mission, strategy, structure, processes and IT infrastructure. Such complex intra-organization environments can therefore face very comparable challenges as in a multi-organization network with distributed IT resources. According to Croteau and Bergeron (2009), the design of such intra-organizational, but inter-unit, governance of IT framework is developed in a similar way as in the context of an inter-organizational network.

This paper wants to provide both practitioners and academics with an enriched understanding of how the international airline company KLM introduced IT related governance principles and practices tailored for a multi-business-unit global organization. Insights from this single– multi-unit - case study can contribute in further theory building and practitioner guidance regarding the crafting of both intra- as inter-organisational governance frameworks.

This paper is organized as follows. First, some theoretical background is provided on the concept of governance of IT and its application in an intra- and inter- organizational context. Next, the research approach is discussed, followed by a detailed analysis of how KLM applied governance of IT in their multi-unit and global environment. Finally, we present a discussion and conclusions and future directions for research.