by AJ Warner and Neil Brown

Increase the Success of Your Knowledge Transfer Effort

Aug 15, 200510 mins
IT Strategy

Never underestimate the complexity of knowledge transfer. That’s a key principle for organizations preparing to embark upon an outsourcing effort. Since knowledge transfer is usually one of the first tasks of transitioning to an outsourced model, it is sometimes overlooked or under-planned, resulting in a shaky start to the outsourcing relationship. Moreover, it can be more complex than it initially seems.

Companies need to recognize that knowledge transfer extends beyond the typical hardware and software information; it also includes in-scope business processes, organizational structures and other context/background information. Further complicating the situation is that most of the knowledge to be transferred is possessed by the legacy staff members who are usually (at this point) anxious and uncertain about their roles in the future organization. Therefore, it’s essential that companies develop an in-depth plan for the transfer of information that includes the detailed identification and documentation of this knowledge throughout the process. The following are key considerations for a successful knowledge transfer and mitigation of the risks involved in the start-up of an outsourcing arrangement:

  • Keep attention focused on knowledge transfer throughout the transition.
  • Recognize that reducing the knowledge transfer effort can affect the overall success of the outsourced support model.
  • Perform knowledge transfer planning independently of the selected provider.
  • Make sure the documentation process starts on schedule.
  • Require comprehensive and detailed documentation from the provider.
  • Retain the key legacy staff members.
  • Be aware of the effect of possible high turnover at the provider’s center.
  • Implement a knowledge management program following the transition.

Focus on Knowledge Transfer Throughout the Transition

Most companies recognize that knowledge transfer is an important part of transitioning legacy applications to an offshore provider. During the transition, however, the knowledge transfer process often ends up not receiving the attention it requires, which can be detrimental to the success for of the outsourcing engagement. Ways to keep this focus include:

  • Make knowledge transfer a key component of the transition workplan, with its own stream of work within the plan.
  • Be as detailed as possible on the tasks to be completed.
  • Consider cultural/language issues that might prevent full absorption of the knowledge by the provider.
  • Have the provider report on the status of the knowledge transfer on a regular basis; include key stakeholders from your organization in these meetings—they could help identify weaknesses in the knowledge transfer process.

Recognize That Knowledge Transfer Can Affect Success

Companies should think hard before making cost-cutting decisions that reduce the time and effort for knowledge transfer activities. Attempting to reduce the transition costs may inadvertently affect the long-term success of the outsourcing engagement. A good example of this is the offshore provider using a “train the trainer” knowledge transfer methodology that utilizes only a subsection of the support team for the knowledge transfer. This may result in reduced costs; however, it also dilutes the knowledge transfer effort, which ultimately affects the service quality. Time and productivity is lost, as those not involved in the process need to ramp up the learning curve, usually after the transition is over and support has already begun. This builds the house on a shaky foundation: In studies by both Deloitte Consulting and DiamondCluster, this was identified as a factor for companies experiencing greater dissatisfaction with the results of their outsourcing providers. Perform Knowledge Transfer Planning Independently

When preparing to outsource legacy applications, a company should consider creating its own knowledge transfer plan, even before selecting a provider (if possible). When developing the plan, the company should map out all the roles and responsibilities down to the individuals within the company and the provider. Having developed a comprehensive plan internally, the company’s management can better evaluate the provider’s plan and see discrepancies that may require immediate action. Leaving this work entirely up to the provider with the assumption that the provider has more experience and/or a better process may lead to problems. Although the provider may have a great deal of experience in knowledge transfer, the company does not know whether the previous knowledge transfer efforts were actually successful. Relying totally on the provider’s plan and hoping that things will work in the end is an ill-advised strategy.

Alternatively, within the RFP process, companies may require that the provider follow the pre-developed plan created by the company. Also, put in place a clear change control process and consider using the “RACI” methodology when mapping the organization to roles and responsibilities:

  • Responsible—individuals directly responsible for the delivery/acquisition of information
  • Accountable—usually at the lower-level to mid level leadership, accountable for making sure the information transfer tasks are being accomplished
  • Consulted—key stakeholders and leaders who can provide input or need to be informed of the issues, challenges and risks, while being able to solve problems that occur
  • Informed—leaders who must be informed of the overall progress and provide guidance
Start the Documentation Process on Schedule

Too often, the detailed documentation work does not start until near the end of the transition, leaving inadequate time to perform an effective knowledge transfer. Companies need to make sure that the documentation process starts on time and progresses according to the knowledge transfer plan. Develop quality review “gates” during the process so that transition managers and key stakeholders can be kept abreast of the process and provide insight into corrective actions if needed. Require Comprehensive Documentation from the Provider

In many cases, companies have not performed an adequate job of documenting their applications over the years, especially for older, mainframe-based legacy systems. However, organizations can use the upcoming outsourcing engagement as an opportunity to have the providers fully document the knowledge necessary to operate and maintain the applications.

During the knowledge transfer process, avoid high-level documentation and templates from your providers—be specific in your requirements. When the documentation is comprehensive and detailed enough, a new resource, with the necessary skill set background, can be educated on the system/processes/organization without a significant drop in productivity. Detailed documentation is particularly vital if the provider’s key resources leave the engagement soon after transition finishes. With that in mind, have the provider specifically spell out the document management methodologies it will utilize, including retention of information.

Retain Key Legacy Staff Members

Many companies have experienced problems a few months after transition because they did not retain key staff long enough to address problems that arose. Although knowledge transfer usually occurs within the first 60 to 90 days of the overall transition period, an effective knowledge transfer will often continue even after the transition period. If a company releases or reallocates its staff soon after the transition finishes, it may hinder the ability to address issues raised shortly thereafter. Consider the following:

  • Make an effort to find positions within the company for key staff should a need arise for their expertise in the future. Letting these resources know that they will stay with the company also makes knowledge transfer easier since they are less concerned about their job security.
  • Use key staff members to oversee the knowledge transfer effort. Using staff members who will be terminated at the end of the transition in key roles can lead to problems. Consider using retention bonuses for these staff members to increase the likelihood of their participation. Use this incentive in conjunction with specific goals to be met (e.g., knowledge transfer) before payout is completed.
Beware of Possible High Turnover at the Provider

Turnover of offshore resources is high. The market for quality IT resources in offshore countries is very fluid, with the competition for people heating up. With turnover, of course, the provider needs to add a brand new staff member. Unfortunately, this results in lost training, inherited knowledge, experience and productivity. In order to manage this, an organization should:

  • Fully understand the HR policies of the provider and how it plans to transition to replacement staff.
  • Consider whether the provider has a “bench” policy where shadow resources are part of the team. These resources are not actively involved in the engagement, but receive the same knowledge transfer from client so they understand the job they are shadowing. These are usually billed at a reduced rate compared to active resources or are included as part of the overall hourly rate of a resource. This can help mitigate the impact of turnover to the engagement.
Implement a Knowledge Management Program Following the Transition

A high-quality outsourcing provider should have a well-established process for ongoing knowledge management. The information documented by the provider needs to be stored in a location to which the company also has access. With this information available and up-to-date, the company can transfer support back in-house or to another provider more easily if such a decision becomes necessary. The company needs to perform periodic audits of the knowledge management process. Conclusion

Executing on an effective knowledge transfer plan is essential to the long-term success of an outsourcing arrangement. Companies need to focus time and effort to complete the necessary work throughout the transition. Require that both legacy staff members and the provider identify and document all the necessary information—technical, business, process, context and background information—so that resource turnover offshore will have minimal impact on the service quality. Comprehensive and detailed documentation also makes it easier for a company to take the application support back in-house or transition to another provider. This gives a company greater leverage to keep the current provider in line and dedicated to providing the level of support promised in its initial proposal.

The following points are consideration for the master services contracts with providers:

  • Negotiate with the provider to include a full-time resource to manage the knowledge transfer process. If possible, negotiate reduced fees for this resource because most of the cost should already be covered in the provider’s engagement overhead. This dedicated resource can make it easier for the company to assess the performance of the knowledge transfer effort. Companies also need dedicated staff to oversee the transfer process from the beginning to the end of the transition.
  • Suggest that the provider include technical writers as part of the transition team at minimal cost. These resources can be located in the offshore center, but need to be able to work with both the onsite and offshore teams.
  • Request the provider deliver a detailed plan for knowledge transfer before the start of the transition and set specific dates for reviews. Consider including language in the contract for the provider to assign additional resources to keep the knowledge transfer process on time.
  • Be in agreement with the provider to keep all the key resources involved in the knowledge transfer on the engagement after the transition. Ask the provider to give advanced notice when resources leave the engagement, whether leaving the provider or switching to another project internally. Have financial penalties/fee relief to reimburse the company for the cost of training and loss in productivity when these key resources leave.
  • Negotiate with the provider to notify the company if any of the resources will work on another engagement while still assigned to the company’s engagement. Avoid accepting the provider’s potential argument that the company “buys” service levels, not resources.
  • Get agreement with the provider to perform ongoing knowledge management for the in-scope applications as part of provider’s services for delivering ongoing support.
  • Consider establishing a budget for the company’s staff members to visit the provider’s center on a regular basis to monitor performance, identify any issues and provide ongoing business training to the provider.

AJ Warner, outsourcing consultant and graduate of the McCombs Business School, for the last four years has focused on helping companies develop and execute their outsourcing strategies. You can reach him at Neil Brown is an outsourcing consultant with more than 15 years of industry consulting focusing on client’s outsourcing and system integration needs. He can be reached at