Many organizations have already figured out the benefits shared service centers — the unit within a company responsible for certain operational tasks, such as accounting, human resources, payroll, IT, legal, compliance, purchasing, etc. — can deliver to the business. To varying degrees, organizations use the shared services construct to be substantially more productive because they employ key levers such as scale, end-to-end process governance, standardization and, of course, centralization.
Through the past two decades, the idea of shared services has evolved. Trends have come and gone, but most have left their mark in one way or another. For example, robotic process automation and intelligent automation have enhanced efficiency in ways never before possible, while the use of global business services has successfully broken down traditional functional barriers to focus on end-to-end process delivery. While both of these constructs have delivered substantial value, they both have a flaw.
Read “Robotic Process and Intelligent Automation: How They Are Changing the Workplace as We Know it.”
Philosophically, shared service organizations have been trained to remove variations from processes to maximize efficiencies. Automation reinforces and even exacerbates this philosophy, given the fact that ‘bots’ have a difficult time processing non-standard processes. Organizations that have deployed global business services have, in many cases, seen organizational complexity increase. Both of these trends run, at least to some degree, counter to the objective of driving innovation, flexibility and agility leaders are trying to achieve.
However, these objectives need not derail already successful shared service centers or future plans for them. Perhaps there is a way organizations can have it both ways. How can we allow shared service centers to continue driving optimal process performance, while at the same time building and delivering innovation and agility? Centers of Excellence (or Expertise), otherwise known as COEs, could be the answer. Let’s be clear, COEs are not new to the scene, but what modern COEs are doing and the value they are delivering to the business is new and the impact can be dramatic!
What Are Centers of Excellence?
Though COEs often are part of, and/or work closely with, shared service organizations, their mission is vastly different. They exist not to deliver transactional services more efficiently to the business, but rather to develop and deliver differentiating capabilities.
In the past, COEs focused predominantly on providing specific functional expertise, such as tax, financial planning and analysis, and risk management. Today however, COEs are being tasked with helping organizations build capabilities that can provide a strategic advantage to stakeholders and the business. For example, many organizations are investing in building and deploying advanced analytics and digital automation capabilities. Those seeing the most value from their automation investments are the organizations that have:
- Taken the time to define their automation vision and strategy, and
- Established structured governance, built efficient deployment processes, or built and trained resources to design and build automation solutions.
This is where a COE can add tremendous value. COEs, built to deliver innovation and emerging technologies, can be instrumental in building the “right” capabilities, and establishing the appropriate governance and processes to deliver automation solutions. They can deliver substantial value to the organization, and even pay for themselves in terms of the value they provide.
Source: State of the Global Shared Services Market Report 2019: published by SSON
7 Guiding Principles of Centers of Excellence
So how does an organization build a successful COE? There are seven guiding principles that are important to incorporate, whether into a new or existing Center.
- Define the mission, vision and objectives. Unlike the typical business function, the objective and boundaries of a COE are not always clear. To be relevant and successful, the COE must clearly define why it exists and who it serves.
- Develop structured governance and clear leadership. The COE likely will serve a large cross-section of the organization, and, as such, will get pulled in different directions with competing priorities. Forming structured governance, including clear decision rights, accountability and leadership will be key ensuring sustainable productivity.
- Attract, develop and retain talent. The success of the COE ultimately will be predicated upon the talent and capabilities that reside within it. Knowledge sharing is a critical success factor of a COE; a team with diverse capabilities, who interact constantly, help foster that environment.
- Maintain a strong partnership with the business. A symbiotic, two-way relationship is imperative. The business needs to invest in the COE, and the COE in turn will drive the return on that investment through delivering innovation and differentiating services.
- Create an invested infrastructure. The COE in some regards can serve as a sort of research and development arm where new technology and applications can be researched, tested and, if deemed successful to the business, deployed at scale.
- Have a dedicated budget. Investment is essential; however, in time, a successful COE can and should have a well-established ROI and may even become self-funded in terms of covering the operating costs through the value delivered.
- Be performance driven. Operating and efficiency metrics typical of shared service centers don’t necessarily align to the objectives of the COE, yet it is critical to drive the intended behavior and measure success and progress. The knowledge performance indicators (KPIs) for COEs tend to be more balanced and multi-dimensional, ultimately measuring output in terms of the value delivered to the business and its stakeholders.
Every organization is a living ecosystem that should be moldable, adaptable and agile in its journey for ongoing success. Building a COE, and making excellence a habit, is also a journey — one that will entail careful thought, planning and execution to build differentiating capabilities that deliver tangible value to the business and its stakeholders; develop and cultivate forward-thinking talent who understand the business and customer service; and help ease some of the rigidness of highly standardized and structured shared service centers for the greater good. But it’s a journey certainly worth considering, particularly if there are specific areas and capabilities the enterprise wishes to cultivate and drive value from.
So, how will you drive agility, innovation and differentiating capabilities into your organization?
SIDEBAR: Automation COE Case Study
Outlined below is a case study of an organization that had plans to deploy automation, at scale, across the entire enterprise. The issue they were encountering was how to effectively put their plan in motion. There is hardly an organization today that isn’t thinking about or deploying automation, and this story is all too common.
Challenge: An organization concluded several successful pilot robotic process automation deployments and had plans to rapidly expand automation across the entire enterprise. As they surveyed the opportunity in front of them, they quickly realized the constraints and complexities involved would require dedicated and focused attention.
Solution: To deploy a successful and sustainable automation program, the organization knew it must dedicate resources with diverse skill sets. The organization created a new Center of Excellence (COE), with the primary objective of deploying automation throughout the entire enterprise.
The COE would start small, with one business analyst who had a keen understanding of processes and how to optimize those processes, as well as two technical resources who understand systems and applications and can build and configure “bots.” Together, these resources worked to create the COE, building a structured process to identify, prioritize, approve and deploy identified automation opportunities.
The new COE was not only instrumental in efficiently deploying the automation, but was able to actively track projected benefits and compare to the projected business case. As automation was deployed, the COE was able to redeploy some of the realized capacity gains back into the COE, helping the COE grow and eventually become self-funding.
Please contact a member of your service team, or contact John Cavalier at jcavalier@cohenconsulting.com for further discussion.
Cohen & Company is not rendering legal, accounting or other professional advice. Information contained in this post is considered accurate as of the date of publishing. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts, circumstances and current law.