Outsourcing Knowledge

With changing business environments, the locus of value creation is no longer within the boundaries of a single firm, but occurs instead at the nexus of relationships between parties. With the growing importance of pooling knowledge resources, knowledge management will have to transcend organizational boundaries. Based on current research literature, this chapter develops research propositions to study causal aspects of knowledge management systems supporting IT outsourcing relationships. Perspectives from the research literature applied in this chapter include knowledge transfer, strategic intent, knowledge management technology stages, intangible assets, resource-based theory, vendor value proposition, value shop, and knowledge strategy (Gottschalk & Solli-Sæther, 2006). Research propositions in this chapter suggest that knowledge transfer is the most important knowledge process in an IT outsourcing relationship, increase in knowledge transfer between vendor and client will improve partnership quality in IT outsourcing relationships, a higher level of strategic intent for IT outsourcing requires a higher stage of knowledge management systems, and vendor and client need to be at the same technology stage of growth to be able to successfully communicate with each other through knowledge management systems.

Knowledge Technologies Stages

Knowledge management systems refer to a class of information systems applied to manage organizational knowledge. These systems are IT applications to support and enhance the organizational processes of knowledge creation, storage and retrieval, transfer, and application (Alavi & Leidner, 2001). The knowledge management technology stage model presented in this chapter is a multistage model proposed for organizational evolution over time. Stages of knowledge management technology is a relative concept concerned with IT’s ability to process information for knowledge work. The knowledge management technology stage model consists of four stages (Gottschalk, 2005). When applied to law enforcement in the following chapters, the stages are labeled officer-to-technology, officer-to-officer, officer-to-information, and officer-to-application.

Governance Knowledge

In many organizations, information technology has become crucial in the support, the sustainability and the growth of the business. This pervasive use of technology has created a critical dependency on IT that calls for a specific focus on IT governance. IT governance consists of the leadership and organizational structures and processes that ensure that the organization’s IT sustains and extends the organization’s strategy and objectives (Grembergen et al., 2004). IT governance matters because it influences the benefits received from IT investments. Through a combination of practices (such as redesigning business processes and well-designed governance mechanisms) and appropriately matched IT investments, top-performing enterprises generate superior returns on their IT investments (Weill, 2004). IT governance can be defined as specifying decision rights and accountability framework to encourage desirable behavior in the use of IT (Weill & Ross, 2004). This is the definition we will use here. Other definitions are for example: (i) IT governance is the structures and processes that ensure that IT supports the organization’s mission. The purpose is to align IT with the enterprise, maximize the benefits of IT, use IT resources responsibly and manage IT risks, (ii) A structure of relationships and processes to direct and control the enterprise in order to achieve the enterprise’s goals by adding value while balancing risk versus return over IT and its processes, (iii) IT governance is the responsibility of the board of directors and executive management. It is an integral part of enterprise governance and consists of the leadership and organizational structures and processes that ensure that the organization’s IT sustains and extends the organization’s strategies and objectives, and (iv) IT governance is the system by which an organization’s IT portfolio is directed and controlled. IT Governance describes (a) the distribution of decision-making rights and responsibilities among different stakeholders in the organization, and (b) the rules and procedures for making and monitoring decisions on strategic IT concerns (Peterson, 2004a). IT governance has attracted substantial attention in recent years (e.g., Chin et al., 2004; Grembergen & Haes, 2004a, 2004b; McManus, 2004; Meyer, 2004; O’Donnell, 2004; Peterson, 2004a, 2004b; Rau, 2004; Read, 2004, Robbins, 2004; Trites, 2004; Weill & Ross, 2004, 2005). Here we will discuss IT governance in terms of resource mobilization, allocation of decision rights as well as strategic alignment.

Knowledge Management Systems

As we trace the evolution of computing technologies in business, we can observe their changing level of organizational impact. The first level of impact was at the point work got done and transactions (e.g., orders, deposits, reservations) took place. The inflexible, centralized mainframe allowed for little more than massive number crunching, commonly known as electronic data processing. Organizations became data heavy at the bottom and data management systems were used to keep the data in check. Later, the management information systems were used to aggregate data into useful information reports, often prescheduled, for the control level of the organization – people who were making sure that organizational resources like personnel, money, and physical goods were being deployed efficiently. As information technology (IT) and information systems (IS) started to facilitate data and information overflow, and corporate attention became a scarce resource, the concept of knowledge emerged as a particularly high-value form of information (Grover & Davenport, 2001). Information technology can play an important role in successful knowledge management initiatives. However, the concept of coding and transmitting knowledge in organizations is not new: training and employee development programs, organizational policies, routines, procedures, reports, and manuals have served this function for many years. What is new and exciting in the knowledge management area is the potential for using modern information technology (e.g., the Internet, intranets, extranets, browsers, data warehouses, data filters, software agents, expert systems) to support knowledge creation, sharing and exchange in an organization and between organizations. Modern information technology can collect, systematize, structure, store, combine, distribute and present information of value to knowledge workers (Nahapiet & Ghoshal, 1998).

Value Shop Configuration

To comprehend the value that information technology provides to organizations, we must first understand the way a particular organization conducts business and how information systems affect the performance of various component activities within the organization. Understanding how firms differ is a central challenge for both theory and practice of management. For a long time, Porter’s (1985) value chain was the only value configuration known to managers. Stabell and Fjeldstad (1998) have identified two alternative value configurations. A value shop schedules activities and applies resources in a fashion that is dimensioned and appropriate to the need’s of the client’s problem, while a value chain performs a fixed set of activities that enables it to produce a standard product in large numbers. Examples of value shops are professional service firms, as found in medicine, law, architecture and engineering. A value network links clients or customers who are or wish to be interdependent. Examples of value networks are telephone companies, retail banks and insurance companies. A value configuration describes how value is created in a company for its customers. A value configuration shows how the most important business processes function to create value for customers. A value configuration represents the way a particular organization conducts business.

E-Business Knowledge

This chapter documents some of the links between e-business and knowledge management systems that might be explored in future empirical research. The research propositions in this chapter illustrate the need for a contingent approach to knowledge management systems that are to support e-business. Knowledge management systems successfully supporting and improving e-business performance have to satisfy several requirements. First, they have to support the chosen e-business model(s). Second, they have to cause improvements through redesign of e-business processes. Furthermore, more advanced stage of knowledge management technology in terms of codification strategy will be more powerful and successful. These are some of the research propositions presented in this chapter, which represents a rich knowledge base for future empirical studies. The main objective of a knowledge management system (KMS) is to support the creation, transfer, and application of knowledge in organizations (Feng et al., 2005). Electronic business (e-business) is marketing, buying, selling, delivering, servicing, and paying for products, services, and information across networks linking an enterprise and its prospects, customers, agents, suppliers, competitors, allies, and complementors (Weill & Vitale, 2002). Several researchers emphasize the important role of knowledge management systems in e-business (e.g., El Sawy, 2001; Fahey et al., 2001; Holsapple & Singh, 2000; Malhotra, 2000, 2002; Plessis & Boon, 2004; Singh et al., 2004; Tsai et al., 2005). Garud and Kumaraswany (2005) argue that knowledge has emerged as a strategically significant resource for the firm. Accordingly, knowledge creation and transfer becomes a key factor to gain and sustain a competitive advantage (Sambamurthy & Subramani, 2005). E-business processes can create additional customer value through knowledge creation with customers (Kodama, 2005).

Knowledge Management

Knowledge is an important organizational resource. Unlike other inert organizational resources, the application of existing knowledge has the potential to generate new knowledge. Not only can knowledge be replenished in use, it can also be combined and recombined to generate new knowledge. Once created, knowledge can be articulated, shared, stored and re-contextualized to yield options for the future. For all of these reasons, knowledge has the potential to be applied across time and space to yield increasing returns (Garud & Kumaraswamy, 2005). The strategic management of organizational knowledge is a key factor that can help organizations to sustain competitive advantage in volatile environments. Organizations are turning to knowledge management initiatives and technologies to leverage their knowledge resources. Knowledge management can be defined as a systemic and organizationally specified process for acquiring, organizing, and communicating knowledge of employees so that other employees may make use of it to be more effective and productive in their work (Kankanhalli et al., 2005). Knowledge management is also important in inter-organizational relationships. Inter-organizational relationships have been recognized to provide two distinct potential benefits: short-term operational efficiency and longer-term new knowledge creation. For example, the need for continual value innovation is driving supply chains to evolve from a pure transactional focus to leveraging inter-organizational partnerships for sharing information and, ultimately, market knowledge creation. Supply chain partners are engaging in interlinked processes that enable rich (broad-ranging, high quality, and privileged) information sharing, and building information technology infrastructures that allow them to process information obtained from their partners to create new knowledge (Malhotra et al., 2005).

Law Firm Knowledge

A law firm can be understood as a social community specializing in the speed and efficiency in the creation and transfer of legal knowledge (Nahapiet & Ghoshal, 1998). Many law firms represent large corporate enterprises, organizations, or entrepreneurs with a need for continuous and specialized legal services that can only be supplied by a team of lawyers. The client is a customer of the firm, rather than a particular lawyer. According to Galanter and Palay (1991, p. 5), relationships with clients tend to be enduring: Firms represent large corporate enterprises, organizations, or entrepreneurs with a need for continuous (or recurrent) and specialized legal services that could be supplied only by a team of lawyers. The client ’belongs to’ the firm, not to a particular lawyer. Relations with clients tend to be enduring. Such repeat clients are able to reap benefits from the continuity and economies of scale and scope enjoyed by the firm.

Insourcing Knowledge

The term outsourcing can be studied further by using the opposite term of insourcing. Hirschheim and Lacity (2000) define insourcing as the practice of evaluating the outsourcing option, but confirming the continued use of internal IT resources to achieve the same objectives of outsourcing. They studied six decision factors: decision scope, decision sponsor, evaluation process, year of decision, size of the organization, and decision outcome. Lacity et al. (1996) define total insourcing as the management and provision of at least 80 percent of the IT budget internally after evaluating the IT service market. The common element of the two definitions seems to be that customers evaluate the external IT services market before a sourcing decision takes place.

Police Investigation Knowledge

Governments have become increasingly focused upon the setting of targets in efforts to improve the efficacy of police performance. However, performance assessments for police work are lacking clarity. In this chapter, we suggest the value shop for performance assessment. Based on a literature review, we suggest potential determinants of police performance in the value shop. Based on identified value configuration and determinants, this chapter develops research propositions linking police performance to team climate, knowledge sharing, leadership roles, and stages of information technology. Future research should both consider revisions of propositions and also conduct an empirical study based on hypotheses derived from propositions. The police investigation leader will find guidance in leadership roles, knowledge-sharing initiatives, IT possibilities as well as team climate actions. Professional management thinking is introduced to police leadership by applying concepts from the business management research literature. Police investigation units represent a knowledge-intensive and time-critical environment (Chen et al., 2002). The primary mission of any police force in the world is to protect life and property, preserve law and order and prevent and detect crime (Luen & Al-Hawamdeh, 2001). In response to the September 11 terrorist attacks, major government efforts to modernize federal law enforcement authorities’ intelligence collection and processing capabilities have been initiated. At the state and local levels in many countries all over the world, crime and police report data is rapidly migrating from paper records to automated records management systems in recent years, making them increasingly accessible (Chen et al., 2003). Police investigations are often dependent upon information from abroad. For example, the intelligence communities of different countries cooperate and share their information and knowledge, such as the Mossad with the CIA (Kahana, 2001). According to Lahneman (2004), knowledge sharing in the intelligence communities after 9/11 has increased rapidly. According to Ashby and Longley (2005), there is a lack of clarity and clear methodology in assessing the performance of policing. We argue that police investigation units have the value configuration of a value shop. Furthermore, we argue that police investigation success can be defined as the extent to which each primary activity in the value shop is successfully conducted in police investigations.