Knowledge management is the key area of focus in the present information technology scenario. It forms a basis to derive standards and models and steers organizations through an enjoyable journey, an improved endeavor to reach the destination. Software process improvement program is a crucial venture for organizations functioning under a framework model and aspiring for higher maturity levels. While earlier works for software process improvement have been considering wider range of initiatives, we deem knowledge management to be a contemporary approach for refining software process improvement activities. This paper is committed to a rational analysis into the knowledge-based guidance for implementing a software process improvement program. The work is directed by four research questions that focus on the knowledge based SPI initiative. The role of knowledge components and a knowledge driven model (KDM) are assessed by a measurement model. The impact of KDM on the end-product and its real effect on SPI is measured by quantifying the productivity of the projects, eventually the organization. An implementation of the knowledge driven software process improvement (SPI) program is explained with a suitable case study, an organization working towards attaining CMM level. Future issues pertaining to knowledge based process improvement forms the concluding note of this work.