TDWI | Training & Research | Business Intelligence, Analytics, Big Data, Data Warehousing

Ten Mistakes to Avoid When Creating a Center of Excellence

A common trend among progressive companies is the establishment of one or more centers of excellence. Simply put, a center of excellence (or COE) is a team of people established to promote collaboration and the application of best practices within its area of influence. To be successful, the center of excellence must have a clearly defined charter and the authority to fulfill its responsibilities to the company.

• By Lisa Loftis, Claudia Imhoff, Ph.D., Jonathan G. Geiger
• December 27, 2006

• Foreword
• Mistake 1. Failing to Establish Authority and Governance
• Mistake 2. Failing To Define a Clear COE Charter
• Mistake 3. Lack of Business Alignment
• Mistake 4. Ignoring the Enterprise’s Culture
• Mistake 5. Unclear Roles and Responsibilities
• Mistake 6. Inappropriate Staffing Skills and Resources
• Mistake 7. Inadequate Communications
• Mistake 8. Failing to Publicize and Promote Best Practices and Procedures
• Mistake 9. Lack of Technology Control
• Mistake 10. No Emergency or Appeal Process
• About the Authors

Foreword

A common trend among progressive companies is the establishment of one or more centers of excellence. Simply put, a center of excellence (or COE) is a team of people established to promote collaboration and the application of best practices within its area of influence. To be successful, the center of excellence must have a clearly defined charter and the authority to fulfill its responsibilities to the company.

Within the world of business intelligence (BI), companies may establish a single center of excellence, or they may establish separate centers for each of the major BI functions. The number of centers of excellence is not critical; what is critical is that each avoids the mistakes enumerated here. The most significant, critical success factors for the center of excellence include visible executive support that provides the COE with recognized authority; a well-understood purpose and supporting processes; effective, ongoing communications with the business leaders, BI development and support teams, and BI users; and a strong emphasis on leveraging business intelligence capabilities to provide business value.

This Ten Mistakes to Avoid provides information on practices to avoid and practices to emphasize as you deploy a center of excellence within your organization.

1. Failing to Establish Authority and Governance

Failing to provide strong governance and establish clear authority procedures prior to building the center of excellence can render the group rudderless and ineffective. A cross-functional body with executive-level membership is required to create the COE, set and promote its scope, provide funding and other resources, and visibly grant it the authority to carry out its responsibilities. With the governance and authority established, the COE is positioned to efficiently and effectively carry out its mandate, provide templates and other information to promote best practices, and ensure a collaborative environment so that the organization can reap the benefits of reuse and repeatability from a properly planned and positioned COE.

An effective BI program requires resources that often do not contribute directly to the first project. These include the COE, infrastructure components, tools, and technologies. Tool vendors often provide information to justify investments in the technological components. The investment in the COE itself, however, must be promoted from within, and the governance body must take measures to provide sufficient funding. The first BI project, in addition to providing the project deliverables, must also support the COE by initiating the creation of reusable best practices. Without adequate funding and recognition of the first BI project’s impact, the COE won’t even get off the ground.

Once established, the COE’s success depends on project teams adopting its best practices. Here again, strong governance is needed to combat the common “not invented here” syndrome. Executives must help steer the culture from one in which teams operate independently to one that recognizes the value of collaboration. Without this collaboration, the COE will be viewed as just a thorn in the side of the project teams.

2. Failing To Define a Clear COE Charter

There are many options for the role of the COE and for determining who within the organization actually builds BI applications. Some very effective COE organizations simply set and document best practices and provide guidance to distributed application teams across the organization. Others provide the described guidance, but are also responsible for ensuring that distributed application teams comply with the documented policies and conduct project reviews and spot audits to ensure compliance is happening. In a third variation, the COE documents best practices, owns some of the development work themselves (possibly for a defined set of data subjects), and provides services to those business units that wish to hire them to do the work on data subjects outside their direct ownership. Finally, the COE can do all BI development work across the organization. Each possible organizational construct is valid and can yield an effective COE. However, given the possible variations, a clear charter and mission for the group is imperative. The charter should explicitly describe what the COE will (and will not) do. If COE services are not mandated, terms and conditions for acquiring these services should be spelled out, including charge-back terms and allocated overhead costs.

If the COE does not have clearly defined and communicated areas of focus, the organization can end up with one of two equally negative possibilities:

• Turf wars—with the COE, business units, and other IT groups fighting about who owns data, definitions, standards, quality, funding, and development responsibility.
• Underlaps—where critical processes are unintentionally (or worse, intentionally) left out of all parties’ scope of focus.

3. Lack of Business Alignment

The center of excellence supporting business intelligence must always keep in mind the purpose of business intelligence. Business intelligence exists to provide information that can help people understand the past and present so that they can shape the future. While the COE needs to deal with technology issues, it must be careful to approach them based on business requirements. For example, a new tool should not be pursued unless it has the potential of increasing the value of business intelligence to the organization.

The center of excellence deals with business and technical issues. Technical issues (such as data integration or quality challenges) are frequently the most visible, and the COE team must be careful to avoid focusing on these without putting them into context. The business strategies, drivers, and goals provide the context for business intelligence, and the COE needs to understand them. The COE is in a unique position to help the company leverage its information resources to support business priorities. The team must use these priorities to determine the work that it will pursue, the support that it will provide to the organization, and the information that it will disseminate to help business users best apply business intelligence capabilities.

4. Ignoring the Enterprise’s Culture

To be effective, the COE must be structured to function well within the organization’s existing culture. While it is possible to change an organization’s customs through effective change management (strong leadership, proper training and communication, targeted metrics), it is difficult to effect any change that is not in keeping with the basic culture of the company. Existing levels of cooperation between business units, relationships between IT and the business (for example, does the business often do an end-run around IT?), historic technology funding and cost allocation methods (cost-center or charge-back), and the strength of the governance committee must all be taken into consideration.

If your organization is one where business buy-in is high, cooperation is good, and resources are scarce, you might want to start with a model where the COE provides training, templates, guidance, and deliverable reviews, but the actual project work is done locally. On the other hand, if you can’t ensure cooperation across units, you might focus on developing strong governance to secure authority for the program while also building a central COE that takes responsibility for doing the work as well as developing the templates and best practices.

5. Unclear Roles and Responsibilities

The COE concept is relatively new, and the roles and responsibilities for it may not be understood at first. This can easily lead to confusion and potential conflicts with other corporate functions. It is easy to create a mission and objectives for the COE, define its processes and procedures, and determine its reporting structure, yet neglect to clearly establish the roles and responsibilities of the personnel assigned to the function. This mistake creates the potential for redundant roles, gaps in activities, and frustrated personnel. Worse, it may be perceived that the COE is inefficient, chaotic, and not living up to its billing.

To avoid such a bad first impression, each role and its corresponding responsibility should be clearly defined and carefully mapped to a set of activities, procedures, and processes. All members of the COE must understand where their job starts and ends, and the person placed in each role must have the required experience and knowledge, or be provided with education to address deficiencies. This mapping will identify any gaps in responsibilities. These gaps must be filled, either by developing new roles or by expanding a role’s responsibilities.

6. Inappropriate Staffing Skills and Resources

Demand for the work products of a center of excellence is high in most enterprises. If the COE is understaffed or staffed with inexperienced, untrained resources, the business will rapidly become frustrated with the lack of progress and the COE will become viewed as an obstacle to be avoided.

We recommend that a COE start with a small staff of highly knowledgeable experts in the areas of data integration and BI. If the company has completed successful BI projects, people from those projects may be selected for the initial COE staff. If these are not available, the company may temporarily engage seasoned BI consultants to fill these roles at first.

As the success of the COE grows and the number of projects increases, the COE must be able to staff to the new levels of demand. Each role previously filled by a consultant needs to be filled by an internal resource. Knowledge transfer is critical to making the shift to the internal staff.

In addition, these resources must constantly keep up with new technological capabilities, design techniques, or other BI breakthroughs. Funding must be available for training, attending conferences, visiting vendors, and other means of updating the skills of the COE staff.

7. Inadequate Communications

A problem that has always plagued both data warehousing and business intelligence is that they are often viewed as very expensive programs. It is not enough for the center of excellence to merely integrate data and develop a business analytics environment. To fully leverage information for corporate value, the COE must communicate with the organization in various ways. One way is to interact regularly with the business and technical community. Through these interactions, the COE team members will become more aware of satisfaction levels, strengths and weaknesses of the existing environment, and benefits that are being received. In addition, the COE may learn of unique uses of information, so that it is in a position to inform others of opportunities to further leverage information in the BI environment.

The COE should pursue other forms of communication as well. These include newsletters with information about internal activities as well as activities elsewhere, and developer or user forums where people can exchange ideas and techniques.

8. Failing to Publicize and Promote Best Practices and Procedures

A primary role of the COE is to define and document best practices, templates, training programs, communication programs, and standards. Unfortunately, this takes time, particularly the “defining” part. The more people who are involved, the more potential there is for differing standards, lack of documentation, conflicting definitions, and overlapping (or worse, underlapping) processes. This is particularly true when the list of projects is long, resources are scarce, and potential for bottlenecks is high. Thus, it is imperative to establish the discipline for processes and documentation early to ensure that new innovations, tools, and technologies follow existing standards. This will allow the COE to expand mentoring activities; it will also reduce training times and allow resources to become productive faster. Processes and documents that should be established up front (and refined as necessary) include data acquisition and metadata, business requirements–gathering templates, change management processes, training programs, and so on.

In addition, skilled data warehouse resources are in short supply in today’s market, and high demand for COE services, along with internal resource constraints, has the potential to cause the COE to become a bottleneck. A popular workaround for this common problem is to contract external resources in times of high demand. Best practices documentation is an effective and efficient way to ensure external resources are performing to the same standards as the rest of the COE.

9. Lack of Technology Control

A problem that often plagues a company building a COE is that each set of business users selects and acquires tools to meet its needs. We often hear from companies that “we have one of everything,” and often, they don’t even know exactly what they have. While having multiple tools is often advisable, having too many tools can be detrimental to a company. Lack of tool standards limits portability of applications and people, requires additional training courses, limits collaboration among groups, increases software licensing costs, and often requires redundant data marts and other data sets.

The center of excellence must get a handle on the technology within its scope of responsibility. As a starting point, it should develop an inventory of installed tools, possibly with assistance from purchasing. Once the inventory is established, the center of excellence should review tool use, determine if there are opportunities to reduce the number of tools, and initiate actions, in conjunction with business users, to arrive at the standard tool set. Once this is achieved, the center of excellence should become the focal point for interacting with the vendors and should acquire the skills required to provide the needed support and education within the enterprise.

10. No Emergency or Appeal Process

For most business requests, the center of excellence will follow its documented procedures and processes. However, situations will arise when the business must have a data set, report, analytic result, or application created unexpectedly. If the COE refuses to consider the request or deal with the emergency, then the business will find another way to solve its problem. Usually this means doing an end-run around the COE and creating a silo or shadow BI application. While it may be a short-term fix to the emergency, this is not good for anyone in the long run.

The COE must have a process in place to accommodate emergency requests. The process should include a recognized approach for evaluating the emergency so that the emergency request is pursued or rejected with the backing of the governance body. To pursue the emergency, the COE may have to shortcut its own processes and procedures to avoid an end-run. A stopgap procedure should be developed that streamlines or goes around the normal procedure, perhaps even leading to a standalone application. The key to success in this situation is to ensure that, if a shortcut is taken, the appropriate long-term solution is pursued once the emergency has been handled. Once that solution is in place, the shortcut should be removed and no longer used.