How to leverage a CoE to accelerate execution excellence at scale
Driving operational excellence at scale is a key challenge for any organisation aiming at process transformation and automation. Successful transformation samples show the biggest value when it’s a continuous process that touches every corner of an organization.
Operational excellence is a continuous challenge, a virtuous cycle of process improvements. It takes deliberate, diligent work to set up and maintain (let alone optimize) this continuous evolution and there are a couple of best practice learnings.
Experience and statistics indicate an increasing prevalence of Centers of Excellence (CoE) in successful enterprises. At Celonis, our State of Process Excellence report revealed in 2021 that, of the 500+ process leaders surveyed, 71% of the successful deployments have a CoE in place as a central accelerator for change.
And we are seeing huge interest in establishing CoEs, defining operating models and deploying change management to drive value across organisations. CoEs are typically at the heart of the process transformation initiative, which speaks to the growing recognition of operational excellence as a critical strategic initiative. But not all CoEs are created equal. To put it more bluntly, not all enterprises are building their process CoE the right way.
There are many best practice examples how CoEs can accelerate and propagate organizational change. I’ve done it myself at Siemens, and I’ve worked with dozens of organizations doing similar work since I joined Celonis in early 2021.
My experience has taught me that if we’re to build a CoE to unlock the full potential of operational excellence, we must first get more closely acquainted with some key success factors of the CoE itself.
Your Center of Excellence should fulfil three essential roles
As a kind of ‘command and control’ for enterprise transformation, your process execution CoE has three key purposes.
As a catalyst it has to ensure executive alignment around purpose, turning strategic targets into operational KPIs, and enabling a data-driven organization. Executive sponsorship is crucial to prioritize process transformation and the CoE needs to facilitate executive engagement.
As an evangelist, it establishes a communication platform, coordinates across business units and functions, shares best practices and innovation, promotes success stories and change champions.
And as an enabler, it provides the right technical platform, collects data and drives technical implementations, manages data access and performance, and provides onboarding and training.
The challenges you will face
So good things come in threes — your CoE should be a catalyst, an evangelist and an enabler, thus becoming an accelerator for process transformation. But unfortunately, so do the challenges.
Three of the toughest tasks you will take on when establishing your process execution CoE relate to the three Ps: purpose, people and process traces.
As a first priority, you must define a clear purpose and value proposition that’s aligned with the overall company strategy. The purpose may be generic (e.g. driving digital process transformation) or specific (e.g. reducing working capital costs by xx%).
You will need the right team of people dedicated to driving this purpose, and to ensure the organization changes as required. Not everybody is keen to drive change and move away from a comfort zone. So it is important to work with change agents first.
And you will need those all-important process traces, the event logs from business systems that enable you to have full visibility and identify the execution gaps to address. And the easier you can access these event logs from transactional systems e.g. for P2P or O2C processes, the quicker you can drive impact and value.
Which setup is right for your organization?
Organizational setup is a critical decision process leaders must make when establishing their CoE. Where will it live? The answer will trigger further consideration about the nature of the CoE and its relationships with the broader organization.
Let me offer a few examples. Some CoEs have their organisational home in the IT department, while others reside on the business side. The challenge here is bridging the gap between the two. How will you align a technical CoE with the requirements of the business, or vice versa?
More and more, we see CoEs hosted in shared services units. This is no surprise. As a function defined by its commitment to operational excellence, shared services seem the natural home for a process execution CoE. But you must make sure the technical foundation is in place, and build bridges to any non-horizontal domains your shared services might not prioritize.
There are a number of other possible organizational setups. These include a holding structure or private equity firm, where you must demonstrate the value of operational excellence to the operating companies. Or a CoE led by a chief digital officer, which can be a powerful driver of an enterprise-wide digital transformation strategy as it provides data- and fact based insights. If you’d like to understand these setups in greater depth — and learn more about ensuring your CoE can drive operational excellence — you can hear me explore the topic further in this video.
Ramping up your CoE
As you launch and grow a CoE, your focus areas will evolve, too. Broadly speaking, we can break the journey down into three stages.
First, you plan. This is when targets are defined, a strong leader is appointed, and pilot use cases are chosen. It’s a good idea to focus on quick (but still strategic) use cases that can prove early value and cultivate enthusiasm for more.
Next you establish the CoE by expanding to more process owners and use cases, and by nominating champions from the process domains who can fuel adoption and inspire others.
Finally, you scale. This is the stage when business process owners from the wider organization are brought in, the CoE’s purpose is further aligned with overall business strategy, and your automation and transformation efforts can be pushed to the next level.
Get to operational excellence faster
I don’t mean to make establishing a process COE sound like a long, gruelling task. I’ve seen CoEs ramp up and generate impact within a few weeks. It’s simply a journey with many twists and obstacles, and it’s better to know what to expect before you set out.
The transition through the stages from plan to scale doesn’t need to be a drawn-out process. In fact, quick scaling is beneficial to build and maintain momentum. My colleague Niralee Shah has some excellent insights on scaling successfully in the context of automation — which you can read in this very report.
I’m fascinated by process execution CoEs in all the different forms they take, but they’re only successful if they fulfill their purpose and become that catalyst, evangelist and enabler of operational excellence for your organization.
Vice President, Customer Transformation,
Celonis.
Lars Reinkemeyer is VP of Customer Transformation at Celonis. He joined Celonis from Siemens, where he held multiple senior executive roles and expanded the company’s implementation of process mining. At Siemens, Reinkemeyer created a Center of Excellence and nurtured a large user community of process and execution experts. Reinkemeyer is the author of Process Mining in Action: Principles, Use Cases and Outlook.