What is a center of excellence (CoE)?

Why are centers of excellence important?

Centers of excellence have been rising in priority in organizations of all kinds for the strategic advantage they enable and the efficiency they can cultivate. The following are some specifics:

• The CoE can centralize thought leadership.
• It can be a repository for repeatable frameworks that can be distributed throughout the organization.
• The CoE facilitates risk management and compliance.
• It can be a gathering place for subject matter experts and institutional knowledge.
• The CoE encourages data-driven decision-making.
• As a knowledge center, it can promote cross-training and continuous learning and help employees upskill.

What are examples of centers of excellence?

There are a multitude of case studies of successful CoE implementations across industries. The following are a few examples:

• Cisco Systems created a centralized hub for data science and AI training programs in collaboration with several universities, boosting the adoption of AI throughout the organization.
• Defense contractor Northrop Grumman created a CoE to provide advanced modeling and simulation tools to facilitate the design of the B-21 bomber.
• PepsiCo implemented CoEs to evaluate potential partnerships and implement new tools to enhance marketing strategies and internal efficiency.

Depending on the organization and area of interest, a CoE might be ongoing or temporary. When a CoE is ongoing, team members often have other job responsibilities; when the CoE is temporary, team members might be relieved of regular duties for the duration of the CoE.

Ideally, CoE members are responsible for disseminating knowledge about the center's area of interest and supporting employees in implementing recommended best practices.

Benefits of a CoE

Numerous specific benefits can be realized with the implementation of a CoE, including the following:

• Improved efficiency and productivity. The CoE's most prominent contribution to efficiency and productivity is its centralization of critical resources. It also encourages collaboration, innovation and continuous improvement.
• Cost savings. Cost savings can be realized through the optimized allocation of resources and reduced error by encouraging data-driven operations.
• Standardization of best practices. A CoE ensures processes are consistent across the organization and can serve as a repository for repeatable frameworks.
• Increased quality. CoEs facilitate quality improvement by providing a hub for process optimization, research and expertise.
• Faster time to market. The efficiency gains, optimized resource utilization and enhanced collaboration a CoE imparts can significantly reduce time to market.
• Competitive advantage. Faster time to market, automation and data-driven decision-making improve an organization's competitive position in the market.
• Alignment of company's goals. A CoE serves to de-silo an organization, bringing different departments into dialogue, greater collaboration and goal alignment. It can become a platform for a shared companywide vision.

Challenges of a CoE

Despite the many advantages that a CoE can provide, implementing one can be daunting. An organization must carefully consider the following challenges:

• Top-down buy-in. Because a CoE is an enterprise central to an organization, it requires universal participation and support -- the latter at the highest levels. Otherwise, its implementation could be uneven, and its utility might be too limited.
• Failure to standardize. One of the biggest reasons to have a CoE is to facilitate companywide adoption of standards and best practices. If participating departments cannot negotiate and agree on those standards and practices, the CoE will fail to reach its potential for promoting efficiency and collaboration.
• Falling engagement. A CoE only works well if employees and managers use it enthusiastically and often. Engagement can fall off if nothing is in place to promote it.
• Lack of success metrics. The successes achieved through a CoE should be monitored, recorded and promoted to justify investment in it and stimulate continued enthusiasm. Assessments should be ongoing.
• Persistence of silos. One big advantage of a CoE is that it can help an organization break down silos. However, it should not be the only means of de-siloing; if other forces within the organization are helping to perpetuate silos, they are working against the success of the CoE.

How to establish a CoE

The steps to establish a CoE in an organization are clear-cut, and each is essential. Although they don't differ significantly from most enterprise-wide undertakings, none of the following steps should be skipped:

1. Clearly define the CoE's primary focus -- for example, digital transformation -- its scope and how it aligns with the business.
2. Assign a C-level sponsor and leadership team.
3. Secure the appropriate funding.
4. Define the CoE's governance and the roles of the implementation team participants.
5. Create a rough draft of a technology framework that supports the CoE's objectives, understanding that it will be refined during implementation.
6. Undertake a generous development phase in which institutional best practices are carefully designed and reviewed. If the CoE will be serving every department, it is important to include participants from throughout the organization in this phase.
7. Create and execute a pilot project, carefully gathering feedback, reviewing results and adapting the CoE afterward.
8. Based on the pilot project, scale the CoE throughout the organization. Plan the rollout carefully.
9. Undertake ongoing assessments of the CoE's performance with an attitude of continuous improvement.

Business processes are the foundation of modern business operations. Learn how to evaluate, optimize and improve processes to make them more efficient and to streamline operations.