Knowledge Management as a Framework for Understanding Public Sector Outsourcing Gayle Beyah Georgia State University gbeyah@gsu.edu Michael Gallivan Georgia State University mgallivan@gsu.edu Abstract This paper provides a conceptual argument for examining the challenge of IT outsourcing in the public sector through the lens of knowledge management. While IS researchers have recently begun to focus attention on the particular challenges of outsourcing in the public sector [19, 28], we believe that the shift to more market based solutions is occurring without much consideration for the knowledge resources that exist in the public sector’s IT organizations. Hence, we believe that knowledge man- agement, an emerging area that has generated significant enthusiasm in the management literature, has particular relevance for understanding this challenge. In this paper, we identify differences between public and private sector IT outsourcing [9], then define and employ key knowl- edge management constructs to identify potential difficul- ties that public sector organizations may experience in leveraging their knowledge assets when relying on third party IT service providers. 1. Introduction This paper presents a conceptual argument for evaluat- ing IT outsourcing arrangements in the public sector using knowledge management constructs. While IS researchers have recently begun to focus attention on the particular challenges of IT management in the public sector [19, 28], there has been insufficient attention to theoretical frame- works that may guide our understanding of these chal- lenges in general, and IT outsourcing in particular. Many theoretical lenses have been applied to IT outsourcing in the private sector, and several attributes have been identi- fied as relevant to successful IT outsourcing arrangements [33, 38]. Our review of relevant literature on public sector IT outsourcing, however, did not provide evidence that the same characteristics have yielded similar benefits. In fact, researchers have provided little theoretical justifica- tion for why IT public sector outsourcing will lead to greater efficiency. Moreover, the IT literature has ne- glected to consider the unique characteristics of public sector organizations that may render such results more difficult to achieve compared to similar private sector initiatives. We believe that knowledge management, an emerging area that has generated significant enthusiasm in the management literature, has particular relevance for understanding this challenge. The 1990’s proved to be a decade of intense examina- tion of the functions of the U.S. federal government. As stated by President Clinton, “the model that we have used to deliver government services and fill public needs is simply no longer relevant to the present, let alone the fu- ture” [27, p. 5]. Hence, the Clinton-Gore administration launched the National Performance Review (NPR), a ma- jor government reform initiative intended to identify ways to streamline government, while generating greater effec- tiveness. The NPR report contained 384 major recommenda- tions covering 27 federal agencies and 14 federal govern- ment systems [20]. Many recommendations were based on the premise that government should model itself after the private sector – that it should operate with an entrepreneu- rial, competitive spirit, and seek to function as efficiently as the best-run businesses. Encompassed in this adoption of market-based concepts in the public sector was an in- creased emphasis on cost-cutting, privatization, downsiz- ing, entrepreneurship, reinvention, quality management, and customer service [8]. While the prescriptions for change were far reaching, two underlying postulates were prevalent throughout: (1) that government should seek market solutions to facilitate delivery of services; and (2) that government should employ advanced IT to expedite or enable the changes recommended by the NPR [11]. Additionally, one of the accompanying reports to the NPR, “Reengineering Through IT,” [41], outlined a three- 0-7695-0981-9/01 $10.00 (c) 2001 IEEE 1 Proceedings of the 34th Hawaii International Conference on System Sciences - 2001