CHANGING PROVIDER IN AN OUTSOURCED INFORMATION

SYSTEM PROJECT

Good Practices for Knowledge Transfer

Malika Grim-Yefsah

1,3

, Camille Rosenthal-Sabroux

and Virginie Thion-Goasdoué

LAMSADE, Paris Dauphine University, Paris, France

CEDRIC, CNAM, Paris, France

INSERM, Paris, France

Keywords: Outsourced project, Information System Development, Transition phase, Knowledge transfer.

Abstract: Outsourcing information system development has become a common practice in companies. Many

contributions were proposed for dealing with the management of such projects, and relationship between

client and vendor. But little is known concerning the way to manage the change of service provider in an

on-going project. Our study concerns the transition from an outgoing service provider to an incoming one

during an outsourcing development project in a public institution. This transition mainly consists in

transferring the project. The transfer involves not only materials (documents and code) but also knowledge.

Based on literature on knowledge transfer, we exhibit good practices for the transition phase of an on-going

outsourced project. We show how we applied these good practices on a –real- application case.

1 INTRODUCTION

Outsourcing Information System Development

(ISD) has become a common practice in companies.

An outsourced ISD project implicates three

participants: two internal participants which are the

IS Department and the business direction concerned

by the project, and an external participant which is a

software and computing services company also

called service provider. The service provider is

chosen at the end of an invitation to tender. In a

French public organization like a Public Scientific

and Technological Institution (PSTI), government

contract rules concerning outsourcing impose a (re-)

call for tenders on a contract at least each three

years, leading to change the service provider during

the project. This change necessitates performing a

transition phase in the project, during which the

outgoing provider transfers documentations,

applications, codes and knowledge necessary to the

project performance to the incoming service

provider. Knowledge transfer in this transition phase

is a key source of success of the outsourced project.

We studied this process and, based on literature

concerning knowledge transfer, we exhibited a

crucial activity for knowledge transfer. Again based

on literature review, we propose some good

practices for improving knowledge transfer in the

transition process and satisfying timing constraints.

Key questions guiding this study are: “How to create

favourable environment to knowledge transfer in a

transition phase?”, and “To what extent does the

face-to-face communication remain indispensable in

a transition phase?”

The paper is structured as follows. The next

section presents the transition phase of an IS

development outsourced project. In Section 3, we

discuss knowledge transfer according to the

literature and exhibit some postulates of interest for

our problem. In Section 4, we infer good practices

for knowledge transfer in the transition phase of an

outsourced ISD project. Last section is devoted to

discussion of good practices implementation and

limits. We also conclude and give perspectives.

2 PROBLEM AND RELATED

WORK

French Public Scientific and Technological

Institutions focus on their core competencies

(research) and outsource their support services like

318

Grim-Yefsah M., Rosenthal-Sabroux C. and Thion-Goasdoué V..

CHANGING PROVIDER IN AN OUTSOURCED INFORMATION SYSTEM PROJECT - Good Practices for Knowledge Transfer.

DOI: 10.5220/0003638603180321

In Proceedings of the International Conference on Knowledge Management and Information Sharing (KMIS-2011), pages 318-321

ISBN: 978-989-8425-81-2

 2011 SCITEPRESS (Science and Technology Publications, Lda.)

Information System (IS). The IS outsourcing is

deﬁned by Willcocks and Kern (1998). Different

categorizations of outsourcing were proposed in

literature (see (Dibbern, Goles, Hirschheim and

Jayatilaka, 2004) for a comprehensive survey). In

our particular –real– case study, the IS department

outsources the development of a new software

necessary to a business direction (project

management outsourcing (Lacity and Hirschheim,

1993)), to one service provider (simple outgoing

arrangement (Gallivan and Oh, 1999)). The IS

department still manages the project and keeps being

the selected interlocutor of the business direction, it

is an interface between the business direction and

the service provider. From the IS department point

of view, the outsourcing cycle involves five stages:

Decision of outsourcing, Invitation to tender,

Selection, Implementation, managing relationships

and termination. This last stage corresponds to the

end of the contract. We distinguish several classical

main cases: reversibility process, transition process

or real termination. In particular, it is now well

known that knowledge sharing between the client

(the IS department here) and the service provider

plays an important role in outsourcing performance

(Dibbern et al., 2004) (Lee, 2001). Several studies

showed that knowledge sharing and transfer are

major predictors for outsourcing success and that not

only explicit but also tacit knowledge sharing plays

an important role in outsourcing success (Lee,

2001). The dealing with a change of service provider

brings further problems (Whitten and Leidner,

2006). If a part of the outgoing provider knowledge

is not transferred during the transition process then it

is lost for the project. Few proposals focused on the

specific case of changing provider from a knowledge

management point of view. To the best of our

knowledge, Alaranta and Jarvenpaa (2010) are the

only one to explicitly address this question. Their

interesting work exhibits key facilitators (which can

be seen as good practices) for improving knowledge

transfer in the transition phase. Theses key

facilitators impact the whole outsourcing cycle. For

our part, we focus on (complementary) good

practices for knowledge transfer that can be applied

-“locally”- during the termination stage,

independently of the project history. Pragmatically,

we define “really concrete” operational actions for

improving knowledge transfer during a transition

phase, these actions being performed under timing

constraints (as it has to be done in practice). Based

on literature, we emphasize some effects of transfer

knowledge process and several postulates of

interests.

3 THEORETICAL

BACKGROUND ON

KNOWLEDGE TRANSFER

Knowledge is defined as being justiﬁed true belief

(Nonaka and Takeuchi, 1995). Knowledge is often

distinguished between tacit (or implicit) knowledge

and explicit one (Polanyi, 1967). Explicit knowledge

can be codiﬁed (e.g. writing or drawing) and

articulated since it can be expressed formally and

systematically. Tacit knowledge corresponds to non

explicitable knowledge like e.g. skills, senses,

intuition, physical experiences, “job secrets”. We

can differentiate two kinds of tacit knowledge: the

individual and the collective one (Nonaka and

Takeuchi, 1995).

Let’s now consider the notion of knowledge

transfer. Knowledge transfer is the process by which

one unit of an organization, such as a group or

department, is affected by the experience of another

(Argote and Ingram, 2000). Knowledge transfer

allows increasing shared knowledge that, in turn,

may affect performance of receiver. These works

leads us to our first postulate of interest.

(Postulate 1). Considering knowledge transfer

means considering explicit and

tacit knowledge

transfer, eventually

also individual and group tacit

knowledge.

Davenport and Prusak (1998) defined knowledge

transfer as follows: (Postulate 2) Transfer =

Transmission + Absorption (and Use).

Please, note here the important distinction

between transmission and transfer. Postulate 2

indicates that transmitting by sending or presenting

explicit knowledge is not sufficient for transferring

it. A knowledge that is not absorbed (Cohen and

Levinthal, 1990) by its receiver is not transferred.

Knowledge is really absorbed when it can be put

into practice, justifying the “Use” part of the

expression.

According to Ivari, Linger (1999), Tuomi (1999)

and Grundstein (2009) -roughly speaking- an

information receiver interpreted the information “in

his own way”. Thus, (Postulate 3) Absorbed

knowledge is often “distorted”.

Knowledge is created through discourse in “ba”

that is the physical, mental and/or virtual arena of

knowledge creation. Ba is an expression in Japanese,

meaning in English approximately “place” (Nonaka

& Konno, 1998, p. 40). Nonaka and Konno (1998)

indicated that: (Postulate 4) Physical, face-to-face

experiences are the key to conversion and transfer of

tacit knowledge.

CHANGING PROVIDER IN AN OUTSOURCED INFORMATION SYSTEM PROJECT - Good Practices for Knowledge

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319

These postulates defined above are fundamentals

hypotheses that guide our discussion in Section 4.

4 GOOD PRACTICES FOR

KNOWLEDGE TRANSFER IN

A TRANSITION PROCESS

Our study concerns the transition from an outgoing

service provider to an incoming one during an

outsourcing IS development project in a public

institution. This transition consists of six activities:

the initialization, the Third Party Maintenance

TPM), the edition and validation of the transfer plan,

the knowledge transfer, the maintenance in

cooperation and the responsibilities transfer. It has to

performed in approximately twenty working days.

Postulates of Section 3 permit us to deduce good

practices for knowledge transfer in this transition

phase. We could think that explicit knowledge is

more easily transferable as it is teachable, codiﬁable,

articulate. However, we have observed in reality,

that even explicit knowledge is hard to learn and

transfer due to limitations of explanation capacity

(documents) and codiﬁcation ability (IT). We can

see in practice that, when the outgoing provider

transfers knowledge to the incoming provider,

knowledge can be distorted (Postulate 3). The level

of absorptive capacity of the receiver can also limit

explicit knowledge transfer (Postulates 2). Thus,

transmitting explicit knowledge is not sufficient for

transferring it. Postulate 2, which applies for not

only tacit but also explicit knowledge, confirms it.

Concretely, this means that even in the case of

explicit knowledge, transmission is not sufficient:

knowledge contained in documentations,

applications, and codes has to be absorbed, and use.

According to Postulate 1, the transfer of

documentations, applications and codes (explicit

knowledge) is not sufficient for efficiently

transferring the entire project (material and

knowledge) from the outgoing team to the incoming

one. A part of tacit knowledge also has to be

transferred. This tacit knowledge can also help to

understand and interpret the explicit one.

According to Postulate 4, physical and face-to-

face experiences between outgoing and incoming

teams are necessary for tacit knowledge transfer. All

of this encourages us to the following good practice.

(Good Practice 1). Organize global meetings (face-

to-face).

During the project, the service provider and the

IS department share and transfer knowledge to each

other. In particular, the service provider, namely the

IS department, transfers business tacit knowledge to

the outgoing provider. According to Postulate 3, this

tacit knowledge is “distorted” when the outgoing

service provider absorb it. We recall here that one of

transition phase objectives is to transfer knowledge

from the outgoing service provider to the incoming

one. If the outgoing service provider alone transfers

business tacit knowledge to the incoming service

provider then a supplementary distortion occurs,

even more deviating from the IS department

business vision. If the IS department participates to

knowledge transfer, then this distortion is reduce.

(Good Practice 2). The service provider (the IS

department) has to participate to meetings. This

good practice approaches the “joint collaboration”

key facilitator mentioned by Alaranta and Jarvenpaa

(2010) who recommend that the new provider and

the client work “closely hand in hand, first in

modularization and later in implementation of

services including software solutions”.

Meetings constitute an interacting ba (Nonaka

and Konno, 1998), (Nonaka, von Krogh and Voepel,

2006) and (Erden, von Krogh and Nonaka, 2008)).

In our application case, we added a “workshop

session” holding in the same place, during three

days. In this seminar, each participant of outgoing

service provider, incoming service provider and

internal IS department presented himself, its

experiences, its profile and its role in the project.

Project documents and IT were transmitted to

incoming provider and then discussed. The outgoing

team presented anomalies encountered during the

ISD project and the associated solving solution they

adopted.

When the outgoing provider transfers knowledge to

the incoming provider, knowledge can be distorted.

The PSTI usually realizes this distort later, when the

outgoing team definitely gone. Thus, the “Use” part

of Postulate 2 is very important in our application

case: it permits to make sure of knowledge

absorption by the incoming service provider. Then

(Good Practice 3). Skipping the Maintenance in

cooperation activity may have a negative impact on

project knowledge transfer.

Furthermore, we observed that, if no unusual

event happens during the Maintenance in

cooperation activity then this activity could lead to a

simple observation period. In order to enforce the

incoming team to use a part of its transferred

knowledge, a good practice is to introduce a project

use case during the maintenance in cooperation

activity of the transition. Good Practice 4 is a

candidate solution for this: (Good Practice 4) Plan

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to solve one or several ongoing incident(s) on the

project during the Maintenance in cooperation

activity. The outgoing team chose some incidents

and the incoming service provider had to solve each

of them. Such a practice also permits to create an

exercising ba facilitating the conversion of

(individual or group) explicit knowledge to

(individual or group) tacit knowledge.

5 DISCUSSION AND FUTURE

WORK

Our study is grounded in the concept of knowledge

and knowledge transfer process during a transition

phase in an outsourcing information system

development project. We discuss knowledge transfer

according to the literature. Literature brings

fundamentals theoretical concepts on knowledge

transfer that regains value for our issue of

outsourced project. Thus, we have exhibited some

interesting postulates for our problem. They indicate

that some dimensions inﬂuence knowledge transfer

process in outsourced ISD project. Based on

postulates, we suggest some good practices for

efficient transfer knowledge in the transition phase.

Measuring concrete impact of good practices is a

difficult problem. For the moment, asking for the

project manager judgement is the only way to

evaluate the quality of the transition phase with or

without good practices. One of our future works is to

define an empirical method for this evaluation (e.g.

inspired from Lee’s work (2001)). Additional

aspects that might also be very relevant to include in

future related studies (leading to additional good

practices) are (i) improving the motivation and the

attitude of the involved participants and (ii)

improving the capacity of absorption of the

incoming service provider. These aspects are

important issues in knowledge transfer (Easterby-

Smith, Lyles and Tsang, 2008), especially for the

transition phase.

Our study concerns only one type of

organization. We also believe that guidelines can be

generalized to most of organizations faced to a

service provider transition in an outsourced IS

project.

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