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The center of excellence evolves - why an ERP CoE matters more than ever

Joshua Greenbaum Profile picture for user Joshua Greenbaum May 10, 2023
Summary:
Traditional Centers of Excellence (CoE) are stuck in the past while enterprise software forges ahead. Joshua Greenbaum makes the case for change - your ERP modernization project may depend on it.

Targets hit in the center by arrows. Center of Excellence concept © alphaspirit.it - Shutterstock
(© alphaspirit.it - Shutterstock)

It’s hard to argue that the success of a business in the interconnected global economy of today can be based on a traditional IT-centric view of technology adoption. IT and business roles and responsibilities are converging sharply over the need to enable a traditional business cast in a 20th century mold to become a 21st century digital business.

But what that means differs widely from industry to industry, geography to geography, and company to company. Indeed, while enterprise software has tilted towards providing deeper functionality across a growing range of processes, industries and geographies, the requirement to graft a general-purpose enterprise resource planning (ERP) or other enterprise software system to specific company needs has never been more necessary.

This is why the concept of a Center of Excellence has grown in importance in recent years. A digital business by definition is built to evolve, and this means the process of synchronizing business requirements and technological capabilities has to be part of a continuous process that starts before enterprise software is implemented and continues long after go-live. This ability to blend the evolving requirements of business stakeholders and match them to the evolving capabilities of ERP and other enterprise systems, is what, ideally, a Center of Excellence (CoE) is all about.

That’s the theory, at least. The unfortunate reality is that, for too many companies, the concept of a CoE is stuck in the past. If the last three years of global business disruption has taught us anything, the time has come for those retro-visions of a CoE and its impact on business success evolve.

Living in the past, redefining the future

For some organizations, a CoE is merely the center of support for a company’s enterprise software users, whether that’s day-to-day trouble-ticket support or supporting training, maintenance, and upgrades to the system. While these functions are important and worthy of attention, they’re increasingly less central to the ultimate goal of an CoE. Just keeping the lights on is a sure way to sub-optimize what should be an increasingly valuable and strategic asset.

A recent job posting for a director-level SAP CoE position at a major pharmaceutical manufacturer tells a much different story — and it takes 1,100 words and over two pages to do so. Highlights include:

  • Design and implement business processes for SAP and “supporting systems.”
  • Ensure data consistency based on Master Data Governance policies.
  • Work with business partners to ensure business functions are prioritized and supported and process integration is “best in class.”
  • Lead business analysts and other project team members “in the delivery of critical projects, which require end-to-end process and technical expertise.” (My personal favorite.)
  • Lead career development and success management, and mentor professional and technical development.

These highlights are in addition to the usual project management and execution, business analytics and reporting, QA, training, and ITIL functions typically associated with a 'traditional' CoE.

Business success, not just software success CoE?

My read of this job description — and the hefty salary range that goes with it — is that this posting comes from a company that knows how to do a CoE the right way. That starts with an explicit acknowledgment that its SAP systems, and non-SAP systems, are truly critical to this company’s business success, not just the successful use of its SAP software.

The posting also highlights the need for continuous engagement with the lines of business about increasing the role of ERP in business success, especially in landscapes that include non-ERP applications and data formats. The job description also acknowledges that evolving the use of SAP to meet business needs requires an evolution of the company’s talent pool.

These are all crucial differences between 'classic' CoEs and the concepts behind a modern CoE. Being merely successful at using an SAP system — or any enterprise software system from any vendor — as installed is a worthy goal in and of itself. But a CoE only doing that operates counter to the concept of a modern enterprise and its relationship to technology.

Technology as force for change

That technology-business relationship has become hypercritical in a global economy in continual flux, battered by an utterly overwhelming crush of geopolitical and political crises, supply chain perturbations, personnel issues, changing business models, and the like. More and more companies are looking for creative, cost-effective ways to navigate this complexity. That requires using technology as a dynamic force for change and not just a static resource only used as initially implemented many years and global crises ago.

It's important to add that technology in general — and a company’s growing enterprise software portfolio in particular — is as dynamic and susceptible to changing micro- and macroeconomic factors as the economy as a whole. Major enterprise software vendors like Oracle and SAP typically spend upwards of 18% of their revenue on R&D, independent of their product engineering teams’ efforts to bring new software and services to market. Those two efforts combined represent a lot of change for customers to potentially understand and, hopefully, put to good use.

Modern CoE value

This is the real value of a modern CoE — help a customer leverage a continually evolving software portfolio in a global economy that itself is continually changing. As such, a CoE provides a home for the collection, curation, and distribution of a company’s tribal knowledge about how its business uses enterprise software. It also should provide a virtual — if not in-person — center for a company’s business (and ERP) experts to come together and carve out technological solutions to the never-ending challenges that companies of all sizes, industries, and geographies face.

Imagine if you had a life insurance policy that paid you a premium every month and helped you lead a more productive and healthy life along the way. That’s what a modern CoE can do. Your organization can certainly forge ahead without one. But that’s a difficult journey worth avoiding, especially as the alternative offers such a vital payback in so many ways.

The past, present, and future of CoEs was recently up for discussion at the ASUG Best Practices: Center of Excellence (CoE) and Enterprise Architect (EA) Conference. To learn more, visit https://www.asug.com/events/asug-best-practices-coe-and-ea.

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