While the term Center of Excellence (CoE) can mean different things, it is typically a sign of a forward-thinking company that recognizes the value of not static tech management. In ERP world, it is a sign that an organization it is taking its digital transformation or service-oriented architecture seriously. It can be a crucial part of any S/4HANA, Oracle ERP Cloud, Microsoft D365, or other ERP implementation.
Why have an ERP Center of Excellence (CoE)?
More than anything, a CoE is a cross-functional team that helps steer a company’s ongoing dedication in all areas that touch technology. It is not your IT department, but certainly includes representatives that understand tech as well as numerous other diverse and knowledgeable individuals.
Commonly a CoE is formed before or following a major ERP project or digital transformation. The goal being to continue the process of making sure new tech is adopted, implemented, and working as intended (well after implementation). During software implementation 60 percent or less of the purchased modules are implemented at go-live, which is among many findings from our 2020 ERP and HCM Report. This is not a bad plan and usually means some prioritization has taken place. However, it becomes problematic when there is no accountability (or plan) to utilize or evaluate more modules down the road.
Some other attributes of a CoE can include:
- An ongoing focus and dedication to continuous improvement in technology and processes that benefit a company’s vision (supporting business growth and changes). In every digital transformation we observe project team burnout, and it’s smart that the baton can be passed to a CoE with the original team then becoming SMEs.
- Becoming a resource to your C-level executives (think of a bank of knowledgeable individuals that can do research and make recommendations). In a recent example, Third Stage Consulting worked as an independent guide/partner with a CoE that had been asked to explore expanding their e-commerce business globally. This type of evaluation can be complex – ranging from how to handle different currencies to understanding how technology can be used to lower barriers.
- Providing continuous feedback and measurement of ROI related to tech initiatives and training. How successful were those dollars spent on your digital transformation, and is your ROI increasing or decreasing? This should be an effective part of your ERP organizational change management strategy.
An effective CoE also pays for itself as a repository of knowledge and people that can shepherd projects that help grow the business. It should be their only job and they are accountable and in touch with all levels of the organization. With productivity up in most sectors, and employees stretched to the limit, it may make sense to dedicate resources to this.
Your Vision, Your Center of Excellence
New technology is a big investment of time and money. And as alluded to above, the true payback may not be at go-live but as your company learns, lives and becomes comfortable with new technology and revamped processes. Whether your CoE is researching technology, modifying training or exploring new product enhancements their services will be in high demand. This means you’ll need to define the scope, purpose and design of the center as part of your digital strategy.
When you think about building internal competencies, a CoE attracts talent – whether it be from inside your organization or from the outside. Some of the considerations for a CoE to “thrive” could include:
- Choosing your champions of change with care. You want a network of ambitious talent that brings diversity of experience, and don’t rule out integrating external talent. Above all they must be relationship oriented and comfortable managing/promoting innovation. Demonstrated analytical ability to see the big picture and to work well with others (both internal and external) is also important. They should be good leaders as well as good followers
- Understanding that a CoE will need unique and dedicated leadership. While it’s not cut and dry what might work best in your company, putting a focus on a transformational leadership style is usually a step in the right direction. The CoE is all about improvement and vision. Be sure to get this right, because the team needs someone who can promote synergy during ongoing transformational change. This leader will also be also help prioritize the goals of the CoE and become the focal point for the team to get direction from
- Not allowing individuals to do double duty. If they are part of your CoE that should be their primary responsibly. That doesn’t mean you can’t solicit input or participation from existing employees, but your CoE team will have a “future state” mindset. If you split their duties (say they are a transactional contributor in their daily job) there will be priority challenges as well as unintended biases
- Willingness to keep apprised and educated about changing technology. The technology ecosystem is broadening at an amazing pace. A leading-edge CoE best practice is educating C-level execs on what the competition is doing and what technologies are available. While the team doesn’t need to be “experts” they should be informed about enabling technologies and how they could positively impact the customer experience or sales
Hopefully this blog gives you some food for thought about your CoE, or perhaps incentive to fund one. A CoE can also be very specific. For example, we know of testing centers of excellence or business intelligence. With the number or ERP failures still on the rise, we thought it timely to share our knowledge about the positive impact a CoE can have on a digital transformation initiative (before, during and after implementation).
As independent ERP consultants, our services have expanded to support CoE initiatives while helping build internal competencies at the companies we partner with. Every successful initiative must begin with an overarching strategy, and yes, we can help you define that too. We are Third Stage Consulting and our value proposition is independent and unique.