Knowledge Transfer in Practice

A Socio-technical System for the Transition in Outsourcing

Malika Grim-Yefsah

1,2

and Jérôme Diaz

LAMSADE, Paris Dauphine University, Paris, France

INSERM, Paris, France

Former trainee at INSERM, Paris, France

Keywords: Explicit Knowledge, Tacit Knowledge, Knowledge Management, Knowledge Transfer, Outsourced

Information System Development, Social-technical System, Transition.

Abstract: This paper argues that knowledge transfer is a key of success of an outsourced Information System

Development. In this study we investigated the role of a Socio-Technical System for managing different

types of knowledge in the transition stage of an outsourced information system development (OISD). In the

transition stage the outgoing service provider transfers the project to an incoming one. Transferring the

project means transferring not only materials (documents and code) but also knowledge. The socio-technical

system permitted us to provide good practices for the transition stage and a tool built from scratch, one that

would have the required flexibility and still be user friendly. We discuss observed effects and limitations of

our Socio-Technical System.

1 INTRODUCTION

The aim of this paper is to develop a socio-technical

system for managing different types of knowledge in

the transition stage of an outsourced information

system development (ISD). During this transition

stage, the outgoing service provider transfers the

project to an incoming service provider. A

considerable number of organizations had negative

experiences with this transition stage. We focus on

this transition stage due to its significance for

outsourcing success, its complexity, and its limited

current understanding. We investigated what is the

impact of knowledge transfer processes on this

transition stage and, in turn, on outsourcing

performance? Transferring the project means

transferring not only materials (documents and code)

but also knowledge. Many scholars showed the

existence of two dimensions of knowledge which

consist of tacit and explicit knowledge. The explicit

knowledge is relatively easy to codify, share and to

transfer. But the tacit knowledge is abstract and can

be communicated only through oral exchange.

Generally speaking, managerial and business

process, expertise, routines are more tacit than

product development, production, and technology.

The literature shows that knowledge

management, specifically knowledge transfer, is a

key of success of the outsourced project. We

distinguished in the Knowledge Management

literature two main approaches: (1) a technological

approach and (2) a managerial and sociological

approach. Second approach proposed a socio-

technical system which permitted to manage explicit

and tacit knowledge. We extend the socio-technical

system to permit us to provide good practices for the

transition stage and a tool built from scratch, one

that would have the required flexibility and still be

user friendly.

Our case study concerns the CIO of a French

Public Scientific and Technological Institutions

(PSTI). Since ten-year, French Public Scientific and

Technological Institutions focus on their primary

business, that is to say research, and outsource their

support services like e.g. Human Resources,

Finances, or Information System (IS). The CIO’s

job, partly consisting in the conception and the

implementation of new applications. But, now the

information system development is outsourced. The

outsourced ISD implicates three participants: two

internal participants who are the CIO and the

business direction concerned by the IS, and an

external participant who is software and computing

Services Company also called service provider. This

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Grim-Yefsah M. and Diaz J..

Knowledge Transfer in Practice - A Socio-technical System for the Transition in Outsourcing.

DOI: 10.5220/0004170002230228

In Proceedings of the International Conference on Knowledge Management and Information Sharing (KMIS-2012), pages 223-228

ISBN: 978-989-8565-31-0

 2012 SCITEPRESS (Science and Technology Publications, Lda.)

provider is chosen at the end of an invitation to

tender. In PSTI, government contract rules

concerning outsourcing impose a (re-)call for

tenders on a contract at least each three years. Then

each invitation to tender can lead to change the

service provider during the project. This change

necessitates performing a transition stage, during

which the outgoing provider transfers

documentations, applications, codes and knowledge

necessary to the project performance to the

incoming service provider. The paper is structured

as follows. The next section (Section 2) presents the

transition phase of an outsourced ISD. In Section 3,

we put down background theory; we introduce a

technological, managerial, and socio-technical

Knowledge Management approach within

organizations, we discuss knowledge transfer

according to the literature and we sketch out the

architecture of an enterprise’s information and

knowledge system (EIKS). In section 4, we present

our experimentation and case study. We discuss our

finding in section 5 and present conclusions.

2 THE TRANSITION STAGE IN

AN OUTSOURCED ISD

(Loh and Venkatraman 1992) defined IT

outsourcing like this: “IT outsourcing refers to

contracting certain (or all) activities related to an IT

function, such as software development, testing and

maintenance etc., to an external vendor”. An IT

outsourcing relationship can be broadly divided into

six stages: Initiation, Vendor Selection, Contract

Negotiation, Transition, Service Delivery and

Termination (Contract Renewal/Change

Vendors/Internalisation) (adapted from Lacity and

Willcocks 2000). We distinguished tree types of

transition (Figure 1).

Figure 1: Transition cases and outsourced ISD.

The transition stage is defined as a stage with a

limited duration in which knowledge, experiences

and routines related to the outsourced activities are

transferred from client to vendor (case1). The

knowledge, experiences and routines transferred

serve as the foundation for delivering services

throughout the contractual duration. Sometimes, in

the termination stage client decides to change

providers. Experiences and routines are then

transferred from outgoing vendor to incoming

vendor (case 2). If the contract is over but not the IS

Development then a re-call for tenders is processed.

If the re-call for tenders leads to the choice of a

service provider different from the outgoing one

then the outsourced ISD has to be transferred from

the outgoing team provider to the incoming

provider. If this re-calls for tenders’ leads to the

choice of the same service provider then

protagonists of the project are usually unchanged;

the project goes on without transition phase; it’s

Contract Renewal. The third case of transition

(case3) is when the client decided to internalize the

outsourced information system development, in the

termination stage. The process of bringing IT

operations back in-house after they have been

outsourced as the outsourcing contract expires or is

terminated is termed ‘Back-sourcing’ or

‘Insourcing’. Although this may be a temporary

trend in some organizations, there is limited

understanding of the future effects of such a move

and the extent to which a back-sourcing strategy will

positively or negatively influence a firm’s

innovative capability (Beardsell, 2010).

We focus on the transition stage for two reasons:

First, industry sources claim that two-thirds of all

failed outsourcing relationships can be traced back

to transition (CIO, 2007), suggesting that it has a

strong influence on the success of an outsourcing

relationship. Second, despite being a critical stage in

an outsourcing relationship, the current

understanding of transition is poor due to the limited

academic attention it has received (Schott 2011);

(Al-Salti et al., 2010).

3 THEORETICAL

BACKGROUND

Knowledge Transfer during outsourcing have been

found to have a significant impact on relationship

success (Dibbern et al., 2008); (Lacity and Rottman,

2008); (Hirschheim et al., 2009). Before considering

knowledge transfer, let’s recall some classical and

fundamental notions concerning knowledge.

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Knowledge is defined as being justiﬁed true

belief (Nonaka and Takeuchi, 1995). We agree with

the vision considering that knowledge is not an

object (details in (Grundstein, 2009)). 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

no explicitable knowledge like e.g. skills, senses,

intuition, physical experiences, “job secrets”,

environmental knowledge concerning clients or

technologies. We can differentiate two kinds of tacit

knowledge: the individual and the collective one

(Nonaka, 1994). The collective knowledge is created

and possessed collectively by a group composed of

more than one individual. Note that group tacit

knowledge is more than the aggregation of each

member’s individual tacit knowledge (see (Erden,

von Krogh and Nonaka, 2008) for details).

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

leads to an increase of shared knowledge that, in

turn, may affect performance of receiver. Penrose

(1959, p. 76) formulates that “... it is likely that

increases in knowledge can always increase the

range or amount of services available from any

resource.” Moreover, tacit knowledge plays an

important role in explicit knowledge transfer

because tacit knowledge is necessary to the

understanding of explicit knowledge (Polanyi, 1975)

(Alavi and Leidner, 2001). (Davenport and Prusak,

1998) proposed this definition:

Transfer = Transmission + Absorption (and Use).

Please, note here the important distinction between

transmission and transfer. This equation indicates

that transmitting knowledge 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. Davenport and Prusak (1998) also

emphasize on the difference between “knowing” and

“doing”: knowledge is really absorbed when it can

be put into practice. This justifies the “Use” part of

the expression.

Knowledge can be acquired not only through

structured media, such as documents, but also

through informal and/or formal interpersonal

interactions

(Davenport and Prusak, 1998).

Introducing the notion of Ba, Nonaka and Konno

(1998) indicated that: Physical, face-to-face

experiences are the key to conversion and transfer of

tacit knowledge (Nonaka and Konno, 1998).

Another concept, we introduce is Knowledge

management (KM). KM is all practices of an

organization to create, store, use and share

knowledge (Probst et al., 1998). Knowledge

Management includes a managerial and

sociotechnical approach which considers knowledge

as a resource participating in companies'

performance (Grundstein, 2005). The managerial

and sociotechnical approach takes into consideration

the variety of the situations. It places the constraints

of the social system and the specificities of the

actors at the heart of its analysis. It is centred on the

processes but it does not center them on

technological solutions conceivable a priori.

Furthermore IT is an indispensable enabler of KM.

The managerial and sociotechnical approach is

articulated around two purposes:

1) Patrimony purpose aims at knowledge

conservation, for its perpetuating and its transfer. It

aims also at uncovering tacit knowledge to

perpetuate it.

2) Sustainable innovation purpose is

complementary to patrimony purpose. It is about

encouraging individual knowledge creation, without

neglecting its appropriation by the organization.

Based on this approach, (Rosenthal-Sabroux and

Grundstein, 2009) proposed the enterprise’s

information and knowledge system (EIKS) which

consists mainly in a set of individuals and digital

information systems (Figure 2) as context of KM.

EIKS rests on a socio-technical context, which

consists of individuals in interaction among them,

with machines.

Figure 2: Enterprise’s information and knowledge system

(EIKS).

Larry Prusak (O’Dell and Hubert 2011) describes

some of the main principles focused on knowledge

management at the beginning days (p. xi): 1)

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Knowledge is a fixed pool, a collection of resources

that can be measured and used by standard

management techniques; 2) Technology is the key

tool to unlock the value of this resource – more

technology, the better; and 3) Individuals are the

critical unit of analysis in working with knowledge –

the more productive the individual is the more

knowledge is being used.

4 EXPERIMENTATION AND

CASE STUDY

We recall here that the transition phase mainly

consists in transferring the outsourced project from

the outgoing provider to the incoming provider. One

has to note that in the case of an outsourced IS

development project in project management mode,

the service provider “possesses” most of the

knowledge necessary to the project. In a transition

phase, the IS department does not want to absorb the

knowledge. Its main goal is to manage the project

transfer from the outgoing service provider to the

incoming one. Thus, even if the IS department

possesses a part of the knowledge necessary to the

project and participates to -and even more manages-

the transfer.

In the PSTI we are in contact with, the transition

process has to satisfy an important constraint: it has

to be performed in twenty (or less) working days. It

respects a pre-defined business process during which

- the outgoing provider transmits documentations,

applications, codes to the incoming team, and

- the outgoing provider and the ingoing team -and

more particularly the ingoing service provider- share

knowledge.

This transition process consists in six activities: the

initialization activity which marks the official start

of the transition phase; the Third Party Maintenance

ending where an inventory of internal and external

documents and codes is performed; the edition and

validation of the transfer plan; the “knowledge

transfer” essentially consisting in transmitting

documentations, applications and codes from the

outgoing team to the incoming one; the maintenance

in cooperation during which outgoing and incoming

service providers assume together a maintenance of

the application, and the responsibilities transfer,

which marks the official departure of the outgoing

provider. The fifth Activity (the maintenance in

cooperation) is optional according to the procedure.

In practice, this activity is often skipped for cost or

time saving reasons.

We distinguished two types of knowledge in the

Information System of our case study: Tacit (human

mind, routines, experiences, organization), Explicit

(document, computer). An Information System is

defined as a set of resources used for transferring

information within a company. These resources are

composed of human beings, hardware, software and

even procedures. A “IS Department” is often created

to manage the hardware and software part. For the

IS Department it is very important to keep a

mapping of all hardware and software elements it

manage, and furthermore of all links between those

elements. It is also essential to know who the person

in charge is for such or such element of the IS.

Without this detailed mapping it would be difficult,

maybe impossible, to predict all the impacts that

would cause inserting, removing or updating a part

of the IS on the whole. We argues that only storing

the IS mapping as a data set would be quite

meaningless. Indeed, according to information

theory (Aamodt and Nygard 1995) data don’t have a

signification by themselves; they need to be

interpreted to become information. As a result we

wouldn't be able to extract anything from those data

without knowing the context in which they have

been inserted, which would require reading more

data. In a traditional software environment, the

interpretation is in the source code itself. But we had

chosen a flexible approach, one where the modelled

domain could be changed without requiring a

software update.

Based on EIKS, we decided to try to build our

own tool from scratch, one that would have the

required flexibility and still be user friendly: - The

Digital Information Systems (DIS) is conceived like

this: To conceive the database we thought about

reflexivity. We were willing to create a system

capable of managing both concepts and instances of

those concepts, so why wouldn’t the system be

capable of

describing itself? We started to create a

UML class diagram representing the concept of

concept. We continued by designing a database to

store this information. Then we thought about how

to link a model of a concept to database tables.

Finally we thought about how to link a concept

model to database tables. In the end we obtained a

database with tables in which to store information

about concepts and about the tables used to store

instances to those concepts. Unique keys called

Object ID identify each concepts and instances. As a

matter of fact we consider that a concept is an

instance of concept ant that each instance can

become a concept. This was also made to increase

the flexibility of our system. The User Interface was

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mostly done using Javascript technologies. Using

AJAX not only allow to reduce stress load on the

server, but also to create a more complex interface

where the user can navigate from a starting element

and follow relationships without needing a full

reload of the web page. DOT Language was used to

generate graphs. Finally we designed a presentation

language capable of generating a text based output,

like html starting from an instance by displaying

data from this instance and exploring related

instances;

-The knowledge System (KS), consisting of tacit

knowledge embodied by the individuals, and of

explicit knowledge formalized and codified on any

shape of supports. On (Grim-Yefsah et al., 2011) we

have verified that: 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). Inspired from Agile methods, we

proposed four good practices:

(Good Practice 1) Organize global meetings (face-

to-face) where -all- members of the outgoing and

incoming service providers participate in order to

discuss around the project and the documents,

application and code transferred by the outgoing

team; (Good Practice 2) The service provider (the

IS department) has to participate to meetings; (Good

Practice 3) Skipping the Maintenance in

cooperation activity may have a negative impact on

project knowledge transfer; (Good Practice 4) Plan

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

project during the Maintenance in cooperation

activity.

EIKS is a Socio-Technical System for managing

different types of knowledge in the transition stage

of an outsourced information system development.

The advantages of EIKS, as we conceived and

developed it in the PSTI, help projects managers of

client team for making proper condition between

providers to share their knowledge more than before.

5 DISCUSSION AND

CONCLUSIONS

This paper is an initial step towards understanding

the transition stage in the context of an outsourced

information system development (ISD). A search of

literature reveals that there is very limited work

published in this specific field. Our study

inventoried tree case of transition stage of an

outsourced ISD. Case1 concerns the first

outsourcing; Case2 concerns the changing providers;

Case3 concerns back-sourcing. We study especially

the second case. On French Public Scientific and

Technological Institutions who focus on their

primary business, that is to say research and they

outsource their support services as Information

System development. We considered the transition

phase of an outsourcing project, during which an

outgoing service provider transfers the outsourcing

project to an incoming service provider. The transfer

not only concerns materials (documents and code)

but also knowledge. Our study is grounded in the

concept of knowledge, knowledge management and

knowledge transfer process. Those concepts stream

still have their merits. In fact, an Enterprise’s

Information and Knowledge System (EIKS), which

is compounded on Digital Information System (DIS)

and Knowledge system (KS), integrates people, both

at the same time, as users and components of the

system. EIKS is a Socio-Technical System.

So we find that the proposed Socio-Technical

System (tool and good practices) have an influence

on the transition performance, thereby, further

improving our understanding of transition. We

contribute to a better understanding of the

importance of knowledge management related to

managing explicit and tacit dimensions on the

transition stage of an outsourced ISD. The system

uses its own representation in its international

functioning, then allowing a reduction in code

writing need. This has a second benefice: bug

detection is facilitated as most functions are used

twice: For the international functioning; for working

on the knowledge domain. Most programming

mistakes would lead to a big bug preventing the

system from performing any action, so it would be

easily detectable and then easier to correct.

According on our application case and our

experimentation, we considered the case of a simple

outgoing arrangement (one to one contract for the

outsourcing). A further research work should

therefore be to study outsourcing with one client and

several providers for eventually offshore

outsourcing. We recommend to other organizations

to use our proposed Socio-Technical System (tool

and good practices) for case3: IT back-sourcing.

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