Outsourcing activities and internal organizational changes have an inherent impact that should be considered within a decision making process. Furthermore, outsourcing is integral and inseparable from the knowledge transfer between the operating organization and external service provider. From one side, to insure successful outsourcing, the operating organization should provide a contractor with all the information requirements needed to fulfil a contract.
From the other side, the contractor should share knowledge and skills with the operating organization and also with possible third parties such as subcontractors. This is why implementation of knowledge management approaches and principles is a crucial success factor of the overall outsourcing process.
As stated in previous sections, outsourcing processes present certain challenges and opportunities for operating organizations from the knowledge management point of view. A properly implemented KM strategy by the NPP operating organization should be able to mitigate the negative consequences of outsourcing and use the opportunities provided by outsourcing. From this point of view, the KM strategy needs to be focused on identification of potential risks and opportunities that could result from the outsourcing and provide effective solutions. Key elements for the KM strategy are listed below:
KM governance through the overall outsourcing process;
KM oversight and monitoring arrangements;
alignment of KM activities related to outsourcing with main targets and objectives of the operating organization;
motivation mechanisms for knowledge transfer and retention;
feedback on knowledge transfer within outsourced activities.
4.1.1. KM governance and oversight arrangements
As part of KM considerations regarding outsourcing, the NPP organization should ensure that adequate KM oversight and governance arrangements are in place. These arrangements should cover the duration of an outsourcing contract, i.e., from the outset during the tendering process through to the termination of a contract. It is likely that these arrangements would
augment existing contract and/or project management processes and procedures, and should, for example, encompass:
sponsorship and/or ownership of KM within the outsourcing contract;
responsibility for ensuring an adequate assessment of knowledge risks and development of an appropriate KM strategy for outsourcing contracts;
establishing KM related criteria in the overall contractor selection process; and the subsequent assessment of tenders against such criteria;
the definition of roles and responsibilities for overseeing KM with respect to service delivery and performance;
document management system and provision for IT infrastructure, information services and KM solutions;
ensuring adequate resources in terms of competency of staff, budget, and other relevant resources;
ensuring availability and quality of relevant information and knowledge to support the contractor in execution of its tasks (i.e., inputs, processes and outputs);
ensuring lessons learned with respect to KM performance; before, during and after an outsourcing contract.
4.1.2. Alignment of KM activities with goals and objectives of the operating organization
In generally, a strategy could be considered as a set of goals and practical actions needed to achieve those goals. Taking into account the outsourcing issues and knowledge management aspects, the proper KM strategy should be in place in an organization that will define the goals and objectives of KM towards the outsourcing and describe the policies (means) facilitating those goals. KM strategic goals address the followings:
expansion of sources of information on contractors, suppliers and outsourcing organizations;
improve the degree of KM implementation at the corporate level across processes due to the necessity of cooperation with the independent entity on a long-term basis with a measurable economic impact;
succession planning and key expert stabilization not only in house but in the area of the open market for external company;
possibility of applying NPP employee and professional skills in outsourced activities;
improvement of change management via interfaces channels between the NPP and the contractor or supplier;
improvement of capacity planning and scheduling because of necessity of clear formal definition of interfaces between company activities;
reinforcement of owner responsibility for processes;
unification of all interface settings among the client company and the contractors and suppliers;
regular training of the contractors and suppliers;
improvement of the evaluation of labour productivity;
improvement of coordination skills;
access to information from operational experience feedback and problem solving.
15
4.1.3. Developing a KM strategy for outsourcing
The KM strategy should describe how the goals can be achieved using available means.
To design the KM strategy, an organization needs to analyse the environment related to outsourcing. This phase should include an impact and risk analysis of outsourcing. Practical guidelines for this analysis are described in Section 5. Based on the results of the foregoing analyses, the goals could deal with enhancing operational excellence or focus on innovations such as creating and acquiring new knowledge.
Once the goals of the KM strategy have been set, the organization should define the policies and resources that will be support the KM strategy. Those policies and resources should enable the NPP to implement suitable knowledge management tools and approaches to mitigate negative consequences and use the opportunities available through outsourcing:
KM processes should be incorporated into the integrated management system. This will ensure that KM tools (such as knowledge loss risk analysis) will be used systematically during preparations for outsourcing;
Impact analysis should be applied during the outsourcing planning phase. By transferring activities to contractors, a risk exists that the NPP operating organization will lose control of certain competences. Risk analysis will identify the knowledge at risk;
KM processes should include suitable tools to capture the knowledge of contractors and transfer it to NPP staff.
4.1.4. Motivation and feedback mechanisms to sustain the KM strategy
To provide successful and sustainable implementation of KM within existing outsourcing activities it is important to pay attention to motivation and feedback mechanisms for knowledge transfer and retention. These two components play a significant role in forming an organizational culture that ensures knowledge sharing between the NPP and contractor organizations. Contract conditions related to information and knowledge exchange are not enough of themselves to ensure desired outcomes. Strategic focus to build trust, motivation and positive feedback from working with each other in collaborative manner can complement these contract conditions. The following are key points:
The contractor should be aligned with the NPP’s knowledge sharing culture supporting knowledge transfer between the contractor and the NPP;
The operating organization should consider the use of motivational tools (such as special awards for contractors for knowledge sharing) to support knowledge sharing;
Leaders should support knowledge transfer in both directions (from the NPP to the contractor and vice versa);
Feedback from knowledge sharing activities should be used to encourage, motivate, and improve knowledge and information exchange between the contractor and the NPP.
5. KNOWLEDGE MANAGEMENT IMPACT AND RISK ANALYSIS OF FOR