IT Services, Thought Leaders

What IT Companies Need to Know About Setting Up a Center of Excellence

November 1, 2019

by Maksym Palamarenko

Director of Software Development Office, N-iX LLC

Having an impactful center of excellence (CoE) can be a huge benefit to growing software companies. Not only do they serve as specialized expertise hubs, but they also offer opportunities for internal growth and can support product development.

As more companies invest in IT, some of them choose to invest in centers of excellence (CoEs) to stay ahead of the game. They use these centers to win the battle for IT talent, capturing emerging tech trends and growing their own capacity to partner with big companies.

Let’s take a closer look at what a CoE is, whether you need it or not, and how to set it up in your software development company.

What IT Companies Need to Know About Setting Up a CoE

  • CoEs are centers of expert knowledge
  • IT companies should organize CoEs according to business and research needs
  • Growing mid-sized IT companies can benefit a lot from setting up a CoE
  • There are many benefits to having a CoE
  • Effective COEs operate on clear goals

CoEs Are Centers of Expert Knowledge

A CoE is a team of specialists that provides thought leadership, researches trends, and supports training for a certain focus area. In simple terms, these are people hired inside or outside of an organization with expertise in a specific area. 

They collaborate to capture new knowledge and practices from inside and outside of the organization and enhance expertise in a specific focus area/areas to help the business grow.

In terms of IT companies, a CoE is a cross-company team that adopts and shares industry best practices to attract qualified professionals. They also nurture internal talent and deliver software solutions that people like. 

IT Companies Should Organize CoEs Along Business and Research Needs

The focus area of a CoE within a software development company might be a technology (Cloud, Scala), a skill (negotiations, providing feedback), a business concept (RPA, digital transformation), or a broad area of study (DevOps, Software quality management). 

Keep in mind that the focus area(s) should be defined and organized as a way to reach a specific, measurable goal.

An IT company may target its CoEs by meeting two critical needs: 

  1. Delivering high-end solutions and partnering with big companies
  2. Attracting more specialists, increasing their motivation, and growing a sustainable internal talent pool

If you choose these as your core goals, you should consider two paramount things:

  1. A focus area can’t be just research-oriented technological expertise. It should be business-oriented. On top of that, the CoE’s research should be aligned with business needs and have specific key performance indicators (KPIs).
  2. The CoEs should provide software engineers opportunities to work with new technologies while also being involved in R&D and having ample room for growth. That includes both vertical (from Senior to Architect) and horizontal (from Manual QA to Automation QA) progression.

For example, this visual shows how N-iX organizes their CoEs’ work and structured their focus areas.

N-iX centers of excellence have a structured hierarchy of people responsible for supporting the product delivery process and fostering professional development.

N-iX CoEs include teams such as:

  • The Solution Group
  • The Software Development Office (SDO)
  • The Quality Management Office (QMO)
  • The Project Management Office (PMO)
  • The UI/UX Offic
  • DevOps
  • The Machine Learning Group. 

All of them support the product delivery process and assist in the professional development of employees.

Let’s break down how CoEs support the product delivery process even further with this flow chart.

N-iX CoEs rely on three phases: the discovery phase, project initiation, and delivery phase.

To make the focus areas more business-oriented, we organized our CoE teams not around a specific technology or a domain, but rather around different parts of the product delivery pipeline. CoEs then provide expert consulting during each stage.

For example, the solution group and UI/UX team can help build a product’s prototype and design the architecture in addition to offering expert knowledge.

Mid-sized IT Firms Can Grow Substantially by Setting Up CoEs

Establishing a CoE calls for time, effort, and money. So how do you know if building a CoE is right for you?

To answer the question, let’s take a look at what it takes to set up a CoE and the potential returns.

Setting up a CoE is the best strategy for a mid-level IT company that’s looking to grow (large companies are defined as over 1,000 employees). These companies already have a considerable amount of expertise — not to mention, their people are willing and qualified enough to coordinate these centers and provide training.

They also have enough resources to invest in the professional development of employees.

CoEs provide companies with a strong playing card in the highly competitive IT talent market. Having a bigger talent pool and a better employer image provides an IT company with the capacity to build teams faster. They can then work with big companies that need large development teams and rare expertise, such as embedded engineers or blockchain developers. 

CoEs Offer Major Benefits

A CoE gives you plenty of benefits, such as:

  • Strategic planning and research 

By having your CoEs research the latest tech and business trends, you can align them with your business needs. This allows you to keep up with fast-paced changes by always being ready for implementation.

  • A sustainable internal talent pool

CoEs can encourage key talent to join the team and organizes them in effective ways.

  • Standardized professional levels 

Roles will have set competencies, allowing you to have a clear and objective view of available expertise within your IT company.

  • More appealing employer image 

CoEs can help attract talent because they promote growth opportunities (both for junior and senior developers) and a chance to work with new, trendy technologies.

  • Mentorship culture

Developing a culture of both formal and informal mentorships, training, and knowledge sharing.

  • An internal network of reliable experts 

You now have experts who can help evaluate a candidate’s technical skills for a specific project. They can also provide consulting in case of bottlenecks, change in requirements, and more.

  • Sales support 

CoE team members can assist in tenders that are relevant to CoE focus areas.

Effective CoEs Operate on Clear Goals

There are several steps you need to follow to organize a successful Center of Excellence.

1. Define the Specific Goals You Want to Reach

By having specific, tangible goals you can measure the effectiveness of the center and the invested resources. This also makes it easier to organize the center’s scope of work and identify core skill sets to meet these goals. 

2. Define the Scope of the Center 

How many focus areas will it cover? What budget and how many employees will you need to support its operation? 

By defining the scope of the center, you place restrictions on projects your CoE team undertakes. This helps to ensure that the CoE focuses on the most strategic areas.

3. Make Your Center Operational 

Having an operational center means understanding how to best leverage your resources’ skills. Here is a list of tips to consider that will encourage a positive working environment for your CoEs. 

Create a Strong Community of Practice and Training

CoEs are first and foremost about people with expert knowledge who can share it, both in formal and learn-at-lunch mode. Therefore, it’s important to organize tech meetups, a cross-company mentorship program and other professional development services. 

Also, it’s crucial to establish a culture of providing feedback and create a favorable environment for informal training and mentorship. 

Provide Employees With Growth Opportunities 

To increase your employees’ motivation, you’ll need to provide them with growth opportunities and relevant professional development services. 

Opportunities can range from a traineeship program that nurtures junior and middle software engineers to an architecture associate program that provides senior software engineers with ways to transition into tech lead and architect roles. 

It’s also a good idea to reimburse employees for earned certifications. 

Use a Competency Model

A Competency Model provides employees with a more transparent career path so that they understand what they need to do to grow and get promoted. Also, it allows you to get an objective view of available expertise within a company when allocating experts for a project. 

Standardizing professional levels and competencies help with core performance evaluations while enforcing professional goals.

Engage CoE Members in R&D Projects and Product Discovery

It’s important for employees to have a chance to do interesting jobs that help them grow, improve their skills, and spark motivation. Involving CoE members in discovery projects allows your company to be more oriented on solution development.

Involve CoE Experts in a Pre-Sales Process

You can re-enforce your company’s expertise to clients and address any uncertainty they may have by publicizing your CoE findings. For employees, it’s another opportunity to polish their soft skills such as presentation and negotiation.

Promote Your CoEs

Finally, if you’ve invested effort, time, and money in setting up and maintaining a CoE, don’t keep quiet about it. CoEs improve your employer brand image and motivate external professionals to learn more about the company. 

Some might decide to join your company just to enter the CoE. Also, marketing your CoEs can help you raise financing to extend their activity.

Having a CoE Can Benefit IT Firms

Setting up a CoE in your software development company allows you to grow expertise, create a sustainable internal talent pool, and engage external employees more easily.

Additionally, you can increase your internal employees’ motivation and deliver quality software solutions that people like and use.

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