Smart-sourcing Dependence on Intelligent Knowledge of a Company's Core Competency

Simply put, you cannot smart-source without an explicit and well understood definition of a company’s core competency because you will not have a solid foundation for partnering on what is non-core. It is amazing how often a senior exec at an organization will be stumped by the question of core competency. Far too many people define a core competency as a product or service. Core competencies are rooted much deeper in an organization's culture, brand, and behaviors than any product or service. Understanding your core competency is essential if you are to identify where you should focus your energy and resources. It is also key in accepting those things that detract from, dilute or otherwise compete for your resources.

Once a company understands its core competency, it should proceed in the following manner.
Knowing what you are best at is a start. But then you need to objectively understand the metrics of performance in both your core and non-core areas. In a Smart-Sourcing analysis, you will actually rate your processes on two dimensions: from core to none- core; and then from high performance to low performance. The result will be a set of four categories of process, those that you Optimize, Reengineer, Outsource and Offshore. This is a rigorous process that takes much of the guesswork out of an outsourcing and off shoring decision by making it objective and methodical. As amazing as it may seem, to date most outsourcing and off shoring decisions have involved much more seat-of-the-pants and intuitive decision making than methodology. Smart-Sourcing is about moving the decision from art form to science