Understanding Centers of Excellence

Digital Transformation

The CoE Framework

A center of excellence is a shared team of highly-skilled knowledge champions who provide best practices, methods, tools and recommendations around a focused area of interest.

It is a centralized and horizontal entity that works across multiple business units (BUs) and product lines within individual BUs to achieve savings.The cost of talent is secondary while the capabilities are primary to the CoE knowledge champions. The entity consists of both Internal and external SMEs, who collaborate with the culture and ecosystem. With congruence of knowledge champions, knowledge itself becomes more implicit based on the experience a person gains, while it becomes more explicit through the collaboration activities performed by individual members of the CoEs to engage with the business units.

Figure 1: The COE Framework

In an IT service context, the business units can be client or vendor organizations. External CoEs can be retro-fitted to achieve savings and improve business outcomes. Most large enterprises  today have functional CoE teams like Data Science, User Experience, Technical, Testing and Product Development.

The Value

When trying to think about the value of Centers of Excellence, I often question what does the value of a CoE mean to an organization or customers? When does it fail? What is the role of knowledge champions in an organization with distributed teams? What are we missing from a practice and its purpose? Apart from the Net Promoter Scores (NPS) and customer feedback, how do we measure value? What are the limitations for the Champions? How do the champions navigate from centralized CoE teams to decentralized business units? How can the CoE be more hybrid?  

While I may not discuss answers to those questions, the core objective of a CoE is based on Run, Grow and Transform model, it depends on the maturity of the CoEs and BUs in leveraging the full length of run, grow and transform to collaborate in business transformation journeys.

Figure 2: RGT Model

According to Charles Eames Venn Diagram 1. the design office, 2. the client and 3. societies intersecting areas of interests and concerns delineate the boundaries of knowledge champions. And these boundaries are not static. Relationships improve by increasing the number of clients. Apart from areas of interest and concerns of the design office, client and society, there could be many other variables like environment, management, culture, language, human dignity and politics that play a significant role.

A knowledge champion may play multiple roles within the overlapping areas of interest and concerns. Champions should own the solutions, recommended by staying with it over a period of time until they materialize adds value.

Figure 3: Charles Eames Venn Diagram

In an attempt to first define the purpose of Centers of Excellence, I tried to map CoE functions to an Ikigai Map. I start with 4 basic questions

  • Why do I come to a Center of Excellence? (Culture)
  • What does the customer need? (Client needs)
  • What are you paid for (Profits/ credits/ rewards)? (Societal needs)
  • What should a Center of excellence be good at? (Design office needs)
Figure 4: Purpose of Centers of Excellence

Having defined the purpose, understanding why Centers of Excellence fail is equally imperative

  1. Lack of ROI
  2. Lack of support from the leadership or unable to establish executive buy-ins
  3. Failure to measure impact of CoE within the organization, BUs, product or service lines
  4. No enough opportunities to create inspiration from bench marking solutions
  5. CoEs often utilized on localized problems rather than global strategic initiatives
  6. The problems solved (involved) by CoEs are not important to substantial portions of the organization
  7. CoEs often utilized as administrative functions rather than strategic imperatives
  8. Failure to evangelize or influence cross-functional peers/ stakeholders.