How to build a center of excellence: A Comprehensive Step-by-Step Guide

In a recent survey, many top-level executives shared their opinion that centralized activities do not create value because reduced flexibility and added interface costs eliminate the benefits of economies of scale. In this context, corporate leaders are redefining and reinventing their corporate centers by establishing Centers of Excellence (CoEs). These are capability centers that a group of experts run within a focus area. 

They are typically established around crucial processes, technologies, or applications. Their primary goal is to facilitate the adoption of these elements, ultimately enhancing the company’s efficiency.

Planning Your Center of Excellence

A CoE is more than just a team or a department – it is a strategic initiative designed to elevate an organization’s capabilities in a specific domain. Whether it’s data science, cybersecurity, or digital marketing, a well-planned center can significantly impact your business.

• Defining CoE Objectives

A successful capability center is built on a strong foundation: a well-defined vision that aligns with the parent company’s long-term goals. Whether the aim is to streamline operations, foster innovation, or expand your global footprint, your CoE should be an extension of your company’s core mission.

• Selecting Focus Areas

After defining the objective of CoE, it is also crucial to identify specific areas which will become the center’s focus. The focus area needs to align with the specific strategic goals of the parent company. In this context, the key things to consider include business priorities, tech and innovation goals, resource constraints, and market trends.

• Resource Requirements

A successful Center of Excellence necessitates a robust foundation of resources. This includes hiring or assigning skilled professionals to lead and contribute to the CoE, investing in essential tools and infrastructure, allocating sufficient funds for operations, training, and projects, and committing to a long-term vision with ongoing support.

• Timeline Development

A well-structured timeline is essential for the successful implementation of these centers. This involves carefully considering key factors such as resource allocation, team formation, infrastructure setup, and project prioritization. By setting realistic deadlines and milestones, organizations can ensure the timely implementation of the CoE and maximize its potential impact.

Key Components for Implementation

Centers of Excellence thrive with strong executive support, requiring top-down commitment for widespread organizational adoption. Cross-functional teamwork and the ability to leverage external expertise, such as consultants or subject matter experts, are essential for CoE success. 

• Core Functions

After defining its objectives, a parent organization can identify CoE’s core functions. These may include knowledge management for centralizing and implementing best practices, training and development, process and methodology standardization, and innovation.

• Operating Model

An essential phase of the implementation strategy is to opt for the right center of excellence model to ensure streamlined engagement with the rest of the organization. CoEs work with multiple business units simultaneously, making it critical to have a standard governance structure. 

• Technology Infrastructure

At the core of the functions carried out by CoE remains the development, innovation, testing, and modification of technology. Hence, a key requirement for these teams is cutting-edge, secure, and comprehensive technology, made available either through ownership or partnering with managed service providers. 

• Documentation Standards

One of the CoE’s major goals is to define and implement standardized best practices for the entire organization. This involves creating and documenting templates, blueprints, and repeatable processes for critical tasks like effort estimation, documentation, and quality assurance. These best practices should combine industry standards to ensure optimal outcomes.

Building Your CoE Team

A Center of Excellence is only as strong as its team, making the creation of a high-performing team a building block of the implementation strategy. 

• Required Roles and Skills

Centers of Excellence (CoEs) need dedicated staff to ensure specialized focus, deep expertise, and consistent delivery of best practices, which requires specialized skills, autonomy and clear team and reporting structures.To function independently, CoEs need to have all the required positions, skills, and autonomy. These roles include architects, product managers, technology researchers, people managers, etc.

• Team Structure

A successful CoE requires a balanced team of experts and generalists. While expertise is crucial, effective teamwork and collaboration are equally important. A mix of both ensures efficient knowledge sharing, problem-solving, and project execution. 

Headquarters can utilize a differentiating hiring strategy to acquire a mix of experts and new talent with high potential. It may also involve building partnerships with industry leaders, universities, etc., to incubate projects. 

• Training Requirements

Parent organizations need a deep focus on acquiring the right competencies and skills, which are generally niche for building COEs. They can design structured training programs to expedite the learning process. Programs should focus on continuous learning, cross-functional collaboration, and leadership development. Tailored training ensures CoE teams stay agile and deliver innovative, high-impact solutions.

• Communication Protocols

Implementing clear and consistent communication protocols is essential to ensure smooth collaboration, knowledge sharing, and decision-making. Parent companies need to develop strategies for resolving conflicts promptly and professionally and implement regular feedback mechanisms to improve collaboration. Including regular updates, structured feedback loops, and collaborative platforms ensures alignment with organizational goals while facilitating transparency and knowledge sharing. 

Real-world Example

A top-tier US commercial bank with over $200 Billion in Assets was facing issues due to the dearth of highly skilled technical talent in the country. The bank partnered with ANSR to establish a state-of-the-art Technical Center of Excellence (TCoE) in Bengaluru, India. This has helped the bank tackle the problem head-on, so much so that its talent pool in Bengaluru now constitutes around 10% of its entire global workforce. 

Interested in boosting operational efficiencies? Get in touch with the ANSR team to leverage our vast Global Talent Network of 1.6 million tech professionals across 200+ platforms to establish a Centre of Excellence par excellence in India.

For further information, here are some center of excellence insights.