Knowledge Content in Outsourced Information Systems Development Projects. Insights from an Exploratory Study of a Developing Country

Academic Paper, 2018

19 Pages, Grade: A




1. Introduction

2. Literature Review

3. Research Methodology

4. Data Analysis and Results

5. Discussions

6. Conclusion



This paper presents an exploratory study of knowledge content in outsourced Information systems development projects within the context of a developing economy, in general, and Ethiopia, in particular. Semi-structured interviews were conducted with ten project managers to identify the relevant knowledge types in information systems outsourcing. The results indicate that six knowledge types, namely business domain knowledge, technical knowledge, information systems application knowledge, organizational knowledge, adapted information systems development methodology knowledge, and newly generated project-specific knowledge are important in information systems development outsourcing. The analysis suggests that the identified knowledge areas are not completely independent, but rather they are complementary. Both knowledge types are necessary for the development of information systems. Moreover, neither the client nor the vendor possesses the full range of the required knowledge. The paper then argues that the very generic classification of knowledge has limitation to provide a complete specification of the knowledge items needed in information systems outsourcing context. It also notes that the knowledge content in outsourcing arrangements of Ethiopia is characterized by inadequate and unrelated knowledge transfer between outsourcing partners; less attention paid by vendors to knowledge about the clients' existing systems and IT landscape; and low level of awareness about the knowledge content with regard to know-why of using a new system or technology.


knowledge Content, Knowledge Transfer, Outsourcing, Information systems, Ethiopia

1. Introduction

The centrality of knowledge for the success of information systems outsourcing (ISO) deals has gained due attention. Development and implementation of an outsourced information system is a knowledge-intensive work. Developing an information system requires the application of specialized knowledge that is dispersed among individuals, development phases and across domains of specialization(Patnayakuni et al., 2007). On the other hand, achieving effective development outcomes requires the transfer and combination of specialized knowledge. When the requisite knowledge is successfully transferred between outsourcing partners, client’s requirements can be better captured (Aundhe and Mathew, 2009), and the design, development, and implementation of information systems will be improved (Gregory et al., 2009; Chua and Pan, 2008). Moreover, the outsourcing relationships can provide the opportunity for outsourcing partners to extend their knowledgebase and develop new competences (Teo and Bhattacherjee, 2014; Valorinta, 2010). Hence, a successful transfer of knowledge between outsourcing partners is very critical to increase the chances of ISO success (Wang and Gan, 2010; Lao et al., 2009: Xu and Yao, 2006). Subsequently, increased outsourcing success can lead to mutual benefits of partners (Marchewka and Oruganti, 2013; Hamid and Salim, 2011; Blumenberg et al., 2009).

Regardless of the initially acknowledged knowledge transfer benefits for organizations involved in ISO deals , research has shown that knowledge transfer from one organization to another is challenging and complex (Bjornson and Dingsoyr 2008; Perez-Nordtvedt et al., 2008; Parent et al., 2007). Moreover, higher rate of ISO failures are reported both in Ethiopia and other developing countries (Beyene et al., 2015; Abbott, 2013; Kalema et al., 2014). Client organizations report their dissatisfactions with the newly implemented systems (Birru, 2008; Kassahun, 2012) and delivery of unused software products (Birru, 2008). On their part, vendors blame the clients for not providing clear and complete requirements (Birru, 2008). In other supporting view, many vendors failed to provide very innovative and high-value services due to the lack of knowledge about the long-term business strategy of their clients(Yun, 2009). This shows that part of the problem for the high rate of failure of ISO deals can be attributed to outsourcing partners' lack of understanding of the relevant knowledge to be transferred and integrated during the development of an outsourced ISD project.

Given the multidimensional nature of knowledge, there exist many taxonomies of knowledge in literature. Although most knowledge taxonomies to date have adopted the tacit and explicit view, these two categories are also opposite poles of a single dimension of knowledge (Ein-Dor,2011). In other words, a given knowledge item may have tacit and explicit components. According to Ein-Dor, characterizing any given knowledge object needs to be in line with these two extremes. Moreover, knowledge taxonomies are very generic and they are not providing a complete specification of a given knowledge item in a specific knowledge context(Ein-Dor,2011; Holsapple and Joshi, 2011). Rather, they show variety of attributes (such as the type or mode) of knowledge rather than the content of the knowledge. Practically, it is the content of knowledge that is more valuable for outsourcing partners. Based on traditional tacit/explicit categories of knowledge, it would be difficult for outsourcing partners to pre-establish the possible knowledge resources required in the development of information systems (Santhanam et al.,2007).

In order to better manage knowledge during information system development process, it is crucial to identify the knowledge items involved in such type of knowledge work( Holsapple and Joshi ,2011) . Kulkarni and Freeze(2011) argue that each knowledge item has its own unique characteristics so that a proper understanding of knowledge dimensions within a specific field is important to maximize its transferability and use. Hence, it is crucial to pay heed to finer types of knowledge relevant to the ISO context (Santhanam et al. ,2007). An emerging literature on the importance of ISO context-specific categorizations of knowledge puts strong emphasis. Accordingly, the main dimensions of knowledge recognized are business and technical knowledge(e.g. Gregory et al., 2009; Gopal and Gosain, 2010; Deng and Mao ,2012).

While prior studies attempted to differentiate knowledge by its content, there remains a gap in our understanding of making an explicit distinction of knowledge necessary in the outsourced information systems development practices. Previous studies are fragmented and not providing a comprehensive characterization of knowledge required in the work of outsourced information systems development projects. Thus, a detailed understanding of the knowledge content in ISO setting demands further study to effectively manage knowledge and its transfer in ISO outsourcing arrangements. In addition, many of past studies are of conceptual in nature and lack empirical investigations, a few exception, Gregory et al.(2009). Furthermore, vendors' technical knowledge and the impact it has on ISO success get more emphasis by prior studies and less attention is given to clients' knowledge. In ISO setting, client-specific knowledge is highly required by the vendor in order to come up with a technical solution for the client's problems. Therefore, it is crucial to explicate and characterize knowledge possessed by each party deemed relevant to the development and usage of a given information system.

The primary aim of this research is, therefore, to enhance our understanding of ISO context-specific knowledge content by providing a comprehensive specification of practically relevant knowledge based on the insights obtained from literature and the outsourcing practices of Ethiopian organizations engaged in ISO deals . Hence, the main research questions of this paper are as follows:

- what types of knowledge need to be transferred in outsourced information systems development project?
- who, the vendor or the client, required that knowledge?

The rest of the paper is organized as follows: the next section presents review of literature on knowledge and dimensions of knowledge in ISO. Thereafter, the research method employed as well as data collection techniques are highlighted. Then, based on the data collected, data analysis and discussion of key points are made. Finally, conclusion of the paper is made.

2. Literature Review

2.1 Knowledge

Literature offers various definitions and taxonomies of knowledge. However, the most widely used are the explicit/tacit and individual/collective dichotomies (Nidhra et al., 2013). Explicit knowledge can be codified and transferred easily in formal language (Nonaka, 1994). This dimension of knowledge is free of context (Chen, 2010). In contrast, tacit knowledge is “rooted in actions, experience, and involvement in specific context”(Alavi and Leidner, 2001, p. 113). It is hard to formalize and codify so it is difficult to transfer to others (Khamseh and Jolly, 2008; Chen, 2010). On the other hand, individual knowledge is created by and exists in individuals whereas collective knowledge is created by the collective actions of a group (De Long & Fahey, 2000; Nonaka, 1994). Taking individual and collective dimensions in combinations, Lam (2000) proposed four types of knowledge: (1) Embrained Knowledge: Individual–Explicit (e.g., theoretical knowledge), (2)Embodied Knowledge: Individual – Tacit (e.g., practical experience), (3) Encoded Knowledge: Collective – Explicit (e.g., written rules, procedures), (4) Embedded Knowledge: Collective – Tacit (e.g., routines, norms).

A well-known attempt to provide taxonomies of knowledge in the context of knowledge management systems is that of Alavi and Leidner (2001). These includes tacit, cognitive tacit, technical tacit, explicit, individual, social, declarative, procedural, causal, conditional, relational, and pragmatic. While the conditional, relational, and pragmatic categories describe certain aspects of knowledge items, they are not generally recognized as basic dimensions of knowledge (Ein-Dor, 2011). Basing the Alavi and Leidner (2001) knowledge categories, Ein-Dor (2011) categorizes knowledge as tacit/explicit, individual/social, declarative/procedural, and task/context. In addition, Heisig (2009) identified 28 other knowledge dichotomies, including: individual/organisational, internal/external, used/unused, undocumented/documented, structured/unstructured, relevant/irrelevant and objective/subjective knowledge. Other taxonomies include embrained/embodied/ encultured/embedded/encoded knowledge (Blackler, 1995), catalogue/explanatory/ process/social/experiential knowledge (Millar et al., 1997), and the simple yet comprehensive ‘know-what/know-why/know-how/know-who’ taxonomy (Lundvall, 1996).

In a nutshell, most of the above mentioned knowledge taxonomies aregeneral and higher level categories. Thus, managing knowledge efficiently and effectively within the context of ISO requires a deeper understanding of the nature of knowledge in such context and cognizance of the various knowledge items to embedded in information systems.

2.2 Dimensions of knowledge in ISO

Knowledge transfer is one of the critical success factors of ISO(Park et al., 2011 ; Liao et al., 2009; Rottman, 2008). In order to ensure effective transfer of knowledge, it is very essential to understand the requisite knowledge to be transferred during the course of an outsourced information system development project. The importance of content-based distinction of knowledge is emphasized in ISO research. Accordingly, technical knowledge and business knowledge are identified as the principal knowledge dimensions in ISO arrangements( Hamid and Salim,2011; Gopal and Gosain, 2010; Blumenberg et al., 2009, Goles et al., 2008). Technical knowledge refers to knowledge that converts business needs of a client into a software-based solution(Tiwana et al., 2003). This includes knowledge about information systems developmentprocedure(e.g., systems analysis, detailed design, and configuring , testing and debugging) and programming(e.g., programming languages and tools), operating, and testing (Xu and Ma, 2008; Pee et al., 2007). The technical knowledge is mainly owned by vendor organizations but they typically lack business domain knowledge. On the other hand, business knowledge is defined by Chang and Parikh (2006, p.3258) as “knowledge about the intended user’s business processes, business rules, and requirement for the new system". Clients have rich business domain knowledge but shallow technical knowledge.

Al Azad and Ahn (2014)categorize vendors' body of knowledge to be transferred to clients asAdvanced IT Knowledge, Domain Knowledge, Cross-cultural Knowledge, IT outsourcing project management knowledge. Gregory et al. (2009) empirically identified three categories of knowledge that need to be transferred to vendors from clients as business application domain knowledge(e.g., client’s business domain, business processes, business goals and objectives), process knowledge(e.g., client-specific working procedures and standard software development methodologies), and client-specific functional knowledge(e.g., client’s systems, IT infrastructure, and the functional requirements). Chang and Parikh (2006) further indicate that business and technical knowledgehaseach tacit and explicit knowledge componentsChu and Pan (2008) distinguished clients'knowledge to be learnt by offshore staff from the onshore staffas technological knowledge, application domain knowledge, information systems application, organizational and information systems development process knowledge. Table-1 summarizes a list of prior research on dimensions of knowledgein ISO.

Table 1. Summary of Dimensions of Knowledge in ISO

Abbildung in dieser Leseprobe nicht enthalten

Developing an outsourced information system requires the application of specialized knowledge(e.g. business and technical) of outsourcing partners. Achievinga successful development outcomes demands the transfer and integration of specialized knowledge. Besides the transfer of the existing knowledge of client and vendor, additional project-specific knowledgewill becreatedduring the development processChang and Parikh, 2006). The newly generated knowledge can be both tacit and explicit. The explicit knowledge(also referred to as artifacts)includes requirements and design specifications, data flow diagrams, source code, andtest cases Patnayakuni et al. (2007). According to Balijepally et al. (2007) mental schemas of the system and know-how of the technologies used and the business context exemplify tacit knowledge created during the task of information systems development. Therefore, these knowledge types also must be managed efficiently so as to achieve higher development outcomes.

3. Research Methodology

In order to address the research questions, a qualitative approach using semi-structured interviews was chosen. Semi-structured interviews has been demonstrated to be particularly effective data collection technique as it enables a researcher to capture respondents’ interpretations and their experience related to the problem at hand (Creswell, 2009). Besides,semi-structured interviews allows for asking both open-ended and closed-ended questions tobetter capture the views and opinions of participants.

In order to identify interview participants, first, a list of vendors were obtained from the Communications and Information Technology Standardization and Regulation Directorate of the Ministry of Communication and Information Technology (MCIT), Ethiopia. Second, two preliminary interviews were conducted with IT team leaders of MCIT's E-Government Directorate and Addis Ababa City ICT Development Agency. These two government organs are responsible for coordinating and supervising the large number of outsourced IS developmentprojects of public sectors at the federal and city levels respectively. Therefore, the two interviews allowed us to get data related to ongoing projects and recently completed projects. Moreover, data about vendors participating in the specific projects were obtained. Third, we adopted purposive sampling technique to select vendor organizations. Fourth, we snowballed to the clients of the vendors and asked their participation in the research project. Finally, ten organizations(four vendors and six clients) that have completed at least one outsourcing project were chosen. All participating organizations were located in the capital city of Ethiopia, Addis Ababa.

Data were collected through a two-step face-to-face interviews. First, project managers or individuals with an equivalent title who have experience in ISO projects were interviewed from four vendor organizations. Then, project manager of each vendor organization was asked to name his/her clients. Once getting the lists of the respective client organizations from vendors, the second interview was done with project managers or equivalent title from six client organizations. A total of ten in-depth interviews were conducted with project managers of the participating organizations. Both managers were asked to answer the question concerning the types of knowledge needed to be transferred during the course of outsourced information systems development projects. The profile of interviewees is shown in Table 2. The interview was conducted following the ethical guidelines of Terrell (2012). Each interview lasted about one hour to 1.5 hours. The collected data were analyzed using a thematic analysis technique (Boyatzis, 1998). The themes are the concepts drawn from the preliminary research model. NVivo software (Version 11) was used to analyze the data.


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Knowledge Content in Outsourced Information Systems Development Projects. Insights from an Exploratory Study of a Developing Country
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knowledge, developing, study, exploratory, insights, projects, development, systems, information, outsourced, content, country
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Solomon Abebe (Author), 2018, Knowledge Content in Outsourced Information Systems Development Projects. Insights from an Exploratory Study of a Developing Country, Munich, GRIN Verlag,


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