Air Canada Case Study Analysis on the Evolution of IT Strategy

Air Canada Case Study Analysis on the Evolution of IT Strategy

The case study of Air Canada provides rich information about the company’s change in IT strategy and organizational structure. The organization’s history is significant for the period between 1994 and 2011. This review examines the interaction between technology and business through changes in Air Canada’s strategic and IT department structures, efforts to solve customer problems, and low-cost competition factors within the aviation industry. Based on Karimi-Alaghehband and Rivard’s (2014) case study, as well as Luftman and Kempaiah’s (2008) article on IT-business relationships, a detailed analysis of the emergence of an “IT superhighway” at Air Canada and its implications for corporate governance is conducted.

Changes in Outsourcing Approach and IT Department Structure

Air Canada’s outsourcing approach and IT department structure underwent significant changes between 1994 and 2011, reflecting how the airline had evolved over time vis-à-vis business dynamics. The first contract with IBM in 1994 was a turning point for Air Canada that seemed to have been necessitated by the poor performance of its information systems, the high costs associated with them, and the inability to support increased capacity requirements efficiently. With a hybrid IT model that combines services with other specialists, Air Canada diversified its outsourcing partnership in the next year. This approach helps increase efficiency and innovation in order for airlines to adapt themselves to new markets or changing customer preferences (Luftman & Kempaiah, 2008). Nonetheless, good governance, risk management, and coordination are critical when dealing with multiple stakeholders so that they can be aligned with a company’s strategic objectives while minimizing interdependence risks.

This way, Air Canada’s outsourcing practices and changes in its IT department’s structure would mean that this operator could leverage other resources for business support. Additionally, Air Canada’s decision supports implementing the hybrid model to not only cut operating costs but also maintain critical processes on main projects. Hence, this approach helps make companies more balanced, efficient, and flexible in IT management of business processes, thus removing vendor lock-ins and risks arising from vendor dependency. Alongside its strategic partners with technology providers, startups, and other industry stakeholders, it supports innovation creation, knowledge exchange, and ecosystem integration, fosters continuous improvement, and creates value throughout the organization.

Addressing Challenges in 2011

Air Canada faced significant challenges in customer engagement and competition from low-cost carriers. To solve this problem, Air Canada formulated a good strategy to solve cooperation problems with customers and compete with financial companies. Besides investing in digital channels and customer relationship management (CRM), the airline enhances operational excellence, creates a customer-centric culture, and strengthens its competitive position within the market (Karimi-Alaghehband & Rivard, 2019). Some initiatives implemented include reengineering, organizational development, or talent development aimed at transforming the whole organization into a deliverer of exceptional customer experiences. On top of that, Air Canada has entered into strategic alliances with other aviation players to innovate together, valuing co-creation and product differentiation across competitive markets. Accordingly, these efforts are intended to increase customer loyalty and market share and improve profitability rates operating within a high-momentum environment.

The obstacles faced by Air Canada in 2011 illustrate the significance of speed, creativity, and consumer focus in driving business development and growth (Furukawa et al., 2014). It shows the competitive nature of the aviation industry. Air Canada has strategically positioned itself as a leading customer service provider, focusing on businesses catering to customer needs. The company’s investment in digital transformation, process optimization, and technical enhancement indicates its commitment to stay ahead of others and add value to customers or suppliers. Air Canada’s partnerships and alliances have also promoted innovation, cooperation, connectivity, and competition growth.

IT-Business Alignment Maturity Level

Air Canada’s IT-Business Alignment Maturity Level appraisal section discusses specific barriers to aligning IT capabilities with corporate strategy. Luftman and Kempaiah’s model of five-stage development suggests that Air Canada’s IT and marketing relationships are at the third stage of development. At this level, IT teams collaborate highly with business organizations in order to define as well as execute business strategies jointly. Thus, Air Canada understands how important information technology is when it comes to achieving better results since it has invested a lot in improving digital transformation and customer engagement. The carrier must also overcome organizational silos and create a shared vision for IT’s leading role. Again, resource constraints, competing priorities, and change aversion inhibit collaboration. Only effective leadership, communication, and management practices that achieve harmony across such domains can overcome these difficulties (Khaiata & Zualkernan, 2009). Air Canada must adapt its IT strategy and capabilities to business changes, innovation, and customer preferences to be competitive and flourish in the digital era.

Air Canada’s journey towards IT-business alignment maturity highlights the complexity of managing IT resources in a dynamic and competitive industry landscape. The company encourages collaboration by addressing organizational flaws and embracing an innovative culture to achieve ultimate cooperation, new growth, and virtue. Given the changing business landscape and customer expectations, Air Canada must prioritize digital transformation investments and create talent pools and spheres to support innovation agility resilience into the future. Companies face challenging times like these more than ever before. Putra (2022) states that these issues can only be solved with strong leadership and effective management styles like decentralization, empowerment, openness, honesty, integrity, accountability, and trustworthiness, which are ingrained in the organization.

Conclusion

The decision by Air Canada to modernize its IT strategy and organizational structure represents a challenge for the airline industry as it encounters a new generation of technology. By examining how approaches to outsourcing have changed in terms of customer engagement and challenges and assessing the relationship between businesses and their IT systems, some enlightening facts about the changes within the airline industry were discovered that give hope for the future. In an era of business transformation, however, Air Canada can continue to be competitive and adaptable if it continues to innovate and align closely with core business objectives.

References

Furukawa, M., Hirobayashi, S., & Misawa, T. (2014). A study on the” flexibility” of information systems (Part 3): MIS flexibility planning scheme for IT/Business strategy alignment. International Journal of Business and Management, 9(6), 88. http://dx.doi.org/10.5539/ijbm.v9n6p88

Karimi-Alaghehband, F., & Rivard, S. (2014). Air Canada: Flying high with information technology. International Journal of Case Studies in Management, 12(2).

Karimi-Alaghehband, F., & Rivard, S. (2019). Information technology outsourcing and architecture dynamic capabilities as enablers of organizational agility. Journal of Information Technology, 34(2), 129–159. https://doi.org/10.1177/0268396218816271

Khaiata, M., & Zualkernan, I. A. (2009). A simple instrument to measure IT-business alignment maturity. Information Systems Management, 26(2), 138–152. https://doi.org/10.1080/10580530902797524

Luftman, J., & Kempaiah, R. (2008). An update on business-IT alignment: “A line” has been drawn. MIS Quarterly Executive, 6(3). https://aisel.aisnet.org/misqe/vol6/iss3/5

Putra, I. K. M. (2022). Digital Transformation and Agile Leadership: Bibliometrics Analysis and Future Avenue. Journal of International Conference Proceedings, 5(4), 96–110. https://doi.org/10.32535/

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For this assignment, use Karimi-Alaghehband and Rivard’s 2014 case study about Air Canada, and Luftman and Kempaiah’s 2007 article, “An Update on Business-IT Alignment: ‘A Line’ Has Been Drawn.”

Air Canada Case Study Analysis on the Evolution of IT Strategy

The other readings for the week will also be useful as you evaluate Air Canada’s strategies. 2 more articles are attached for resource and references