Digital Transformation: Center of Excellence - Part 5

Center of Excellence (CoE)

Part Five: How do you set up a CoE?

Setting up a CoE, as I mentioned in the previous articles, will vary depending on the maturity of the organization. However, for the CoE to properly function, the organization must be prepared to embrace change. There will be instances where some functions will be taken over by the CoE, and there are functions before the CoE setup that can be pushed out to the business units. Regardless, setting up a CoE can become very political, while the problems and challenges addressed by CoE are purely functional. Setting up a CoE will require extensive executive sponsorship from the senior management to function properly. 

Depending on what CoE needs to be set up, there can be more than one approach. One way of setting up a CoE is to start small and gradually expand, focusing on the critical functions first, then expand in stages. However, the obvious first step is to define the strategy and principles as this is going to be your building foundation as you mature your CoE.

One common mistake is putting too much focus on technology and best practices ahead of the strategy, principles, governance, and metrics. Putting too much focus on technology and best practices will later result in issues concerning basic questions as to why you're doing what you're doing, and that's when things fall apart. Before you can even start talking about the functions of your CoE, you need to answer the basic questions surrounding your strategy and principles. What is it that you want to achieve with your CoE? What are your goals? How do you get there? What are your expectations on the timeline? What are the results you're expecting in the first three months, six months, nine months, and twelve months?

The next thing you need to define is metrics. In most cases, organizations would put up a vague goal of "reduce cost", "increase quality", "increase speed and efficiency", and all sorts of good things to hear from a senior management perspective. Achieving these goals is going to be a tremendous challenge, often lead to failure, if the most critical metrics are not defined. In essence, you will need to define "How fast is fast?", "How good is good in terms of quality?", and "How inexpensive is inexpensive?"

In the right portion of the illustration above, the axis shows that quality and speed are quite opposite. Just like the nature of physics, everything that goes up must come down. The higher you go, the faster you fall. The same analogy applies to speed and quality. The faster you go, the more you risk your quality. The more you focus on quality, the slower you go. The slower you go, will likely generate a little more cost to gain speed. There is no universal definition of this balance. It all depends on your organization's priority and tolerance. Some would think that $1M dollars can be a huge amount of money, but for some, $1M may be very reasonable. In short, there's really no fixed definition of fast, good, and cheap. It all depends on the balance that your organization will tolerate. However, what's clear is that, once you get comfortable with the level of quality you're comfortable with, this is when you will gain speed. The balance of quality and speed will eventually impact your cost positively. Once you have defined your metrics, it will be easier to define your KPI. These KPIs will guide you on how to govern your organization. These KPIs will dictate what is good and what is not good. You then build the principles of your Governance with these metrics.

Metrics are difficult and can be biased at times. The topic of metrics is deep and can be arguably difficult. I intend to touch on metrics alone in my future articles, but for now, let's focus on the CoE.

When you build the baseline functions of your CoE, by then you should be able to articulate what you want to do and where you want to be. The next question you'll need to answer is "How do you get there?" The only way you can determine how to get there is by first understanding where you are. Assessment is critical in terms of understanding your current situation. Let’s say, you already know where you want to be in the next three years. It is essential to understand where you are coming from. The majority of execution problems lie in the ability to fully understand and accept where you will be starting from. Self-assessment or third-party assessment services can help identify where you are, and understand the gap between vision and reality. Once you understand where you are, and where you want to be, then how to get there should be a lot clearer. The key to a successful CoE setup highly depends on the expertise level of the people assigned. Assigning mediocre resources to do the most difficult job is an invitation to unnecessary risks and even perhaps failure. It is going to be costly and painful at first to pull out your best people in the field and put them in the CoE team. However, this is just temporary. The qualities of your best people in the field will be replicable as you move towards maturity as a result of the centralization of these highly-regarded skills and capabilities. Staffing is a critical success factor.

Once you have clearly established the first two layers of your foundation, and you have handpicked the best resources you can possibly muster, then, initiating to build the different functions of your CoE will be in order. The order of the priority of your CoE function will highly depend on your organization's priority. For example, you may choose to start with Application Architecture as this function will play a critical role in determining reusable components. Reusability helps you not just with speed. It helps you more to reduce quality risks associated with recreating or reinventing similar things such as user roles and management, audit trail, etc., that will be necessary to all current and future applications. Combine your Architecture principles with development principles and best practices, and you have the first half of your CoE running.

As you mature, you can then augment your teams with Enablement, DevOps, UI Branding (UX/UI), Infrastructure & Operations, Security, and other functions you need for your organization to function properly.

Early on in this article, I have stressed the importance of finding the right resources for the tasks. This is a very important aspect of your success. The need to accomplish the difficult tasks ahead requires experience and knowledge. If you do not have anyone in-house to fill the important positions, it is important to explore the possibilities of hiring people outside of your organization who have experience in this field. This is like performing heart surgery where you will be needing the best set of people in order to increase the probability of success.

Finally, the last piece will be knowing where you are and how do you know you're there. It is a natural tendency to rely on subjective instincts to determine your progress. If you rely heavily on subjective instincts, you will make terrible mistakes that can be at times difficult to repair or even regain what was lost. It is always best to rely on data accuracy to determine where you are in your journey. You determine that by objective measurement. Numbers don't lie and it will tell you where to focus your efforts.

The topic of measurement is a complex topic by itself and will require a separate article to fully explain. Hopefully, I can secure some time to write an article about metrics in the near future.

From the Author

This is the fifth and the last of the series that touched on one of the most talked-about topics within the circles of Low-Code users. In this last part of the series, we touched on how to set up a CoE.