CoE Business Case

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CoE Business Case

  1. 1. MARMARA UNIVERSITYINSTITUTE FOR GRADUATE STUDIESIN PURE AND APPLIED SCIENCESCENTER of EXCELLENCE inINFORMATION TECHNOLOGYG. ERSEN CELEBIFINAL WORKDepartment of Engineering ManagementISTANBUL, 2012ADVISORProf. Dr. Neset Kadirgan
  2. 2. G. Ersen CELEBI, a Master of Science/Engineering Management student of MarmaraUniversity Institute for Graduate Studies in Pure and Applied Sciences, defended hisfinal work entitled ―Business Case for a CoE‖, on 12 27, 2012 and has been found tobe satisfactory by the jury members.Jury MembersProf.Dr. Neset Kadirgan (Advisor)Marmara University ...............(SIGN)..................İSTANBUL, 2012MARMARA UNIVERSITYINSTITUTE FOR GRADUATE STUDIESIN PURE AND APPLIED SCIENCES
  3. 3. APPROVALMarmara University Institute for Graduate Studies in Pure and Applied SciencesExecutive Committee approves that G. Ersen CELEBI is granted the degree of Masterof Science/Engineering Management in Department of Engineering ManagementProgram on 12 27, 2012. (Resolution no:).Director of the InstituteProf. Dr.
  4. 4. iTABLE OF CONTENTSABSTRACT................................................................................................................................................iiiABBREVIATIONS......................................................................................................................................vLIST OF FIGURES....................................................................................................................................viiLIST OF TABLES ......................................................................................................................................ix1. INTRODUCTION ............................................................................................................................111.1. CoE Definition in the lecture...........................................................................................................111.2. Key characteristics of a (CoE):........................................................................................................131.3. Responsibilities: ..............................................................................................................................131.4. (CoE) Framework:...........................................................................................................................141.5. Key Performance Areas for (CoE) ..................................................................................................151.6. (CoE) Benefits.................................................................................................................................182. MOST COMMON CoE IMPLEMENTATIONS IN CURRENT IT INDUSTRY:..........................222.1. BPM CoE: ......................................................................................................................................222.2. Business Intelligence .......................................................................................................................262.3. PMO ................................................................................................................................................282.4. Test CoE..........................................................................................................................................302.5. Performance CoE.............................................................................................................................332.6. Integreation Competence Center (ICC) ...........................................................................................352.7. Banking CoE ...................................................................................................................................352.8. Finance CoE (FCoE) .......................................................................................................................362.9. SOA.................................................................................................................................................392.10. ERP CoE........................................................................................................................................402.11. Cloud Computing ..........................................................................................................................413. The Business Case: ...........................................................................................................................433.1. ―Decision through the opportunities and business needs‖...............................................................433.2. WHY CoE is Needed.......................................................................................................................474. COCLUSION....................................................................................................................................48
  5. 5. iiiABSTRACTThe Centers of Excellence (CoE), also known as Competency Center trend veryrecently has gained traction within the IT department of large organizations. Althoughthe (CoE) concept itself is not quite new; however top companies in the sector arecombining (CoE) together with some other recent concepts such as BI1, BPM2, CloudComputing, SOA3, mobile applications and services,..,etc accordingly to their marketingstrategies.Definitions are vary in the lecture for CoE and the expected benefits, which you canfind some mixture of them as a part of this study as well but I found a lack ofinformation in the area of defining the conditions and drivers for an organization tobuild a (CoE).This study, aimed to shed a bit light for the questions raised above. Despite there are alot of sectors and the domains which may implement (CoE); this study primarily will befocusing on IT area and IT organizations and their needs.December, 2012 G.Ersen, CELEBI
  6. 6. vABBREVIATIONS(CoE) : Center of ExcellenceCC : Competence Center1-BI : Business Intelligence2-BPM : Business Process Management3-SOA : Service Oriented Architecture4-BPR : Business Process Re-Engineering5-TOC :Total Cost of Ownership6-TOC :Theory of Constraints7-BICC : Business Intelligence Competency Center8-TCoE : Test Center of Excellence9- SDLC : Software Development Life Cycle10-PM :Project Management11-PMO :Project Management Office
  7. 7. viiLIST OF FIGURES.................................................................................................................................... PageFigure 1.1 ROI for (CoE) ...........................................................................................................................12Figure 1.2: Sample Coe Framework...........................................................................................................14Figure 1.3: Sample CC Framework:...........................................................................................................15Figure 1.4 Race pit stop..............................................................................................................................18Figure 1.5 Forrester BPM Report...............................................................................................................21Figure 2.1 Gartner Report :Top 10 Business priorities in 2012..................................................................22Figure 2.2 Flavors of BPM (CoE) ..............................................................................................................24Figure 2.3 BICC and BI Operating Model .................................................................................................26Figure 2.3: Improving BI capabilities via BICC ........................................................................................27Figure 2.4: BI Maturity Levels...................................................................................................................27Figure 2.6: Key Interactions of CoE...........................................................................................................28Figure 2.7 PPM CoE Corporate Relationships ...........................................................................................29Figure 2.8 CoE: Coordinating function responsible for managing the organisation‘s portfolio.................30Figure 2.9: TCoE Elements ........................................................................................................................31Figure 2.10 TCoE extended capabilities.....................................................................................................31Figure 2.11 TCoE model ............................................................................................................................33Figure 2.12 PCoE Model............................................................................................................................34Figure 2.13 ICC Models and comparison:..................................................................................................35Figure 2.14 FCoe Model.............................................................................................................................38Figure 2.15 SOA CoE Model .....................................................................................................................39Figure 2.16 Cloud Computing Models.......................................................................................................41Figure 2.17 Business Cloud Technical capacity View ...............................................................................42
  8. 8. ixLIST OF TABLESPageTable 2.1: FCoE functions and Activities ..................................................................................................38Table 3.2 Business Units and Domains ......................................................................................................43Table 3.3 Expenditure Formula..................................................................................................................44
  9. 9. 111. INTRODUCTION1.1.CoE Definition in the lectureA center of excellence refers to ateam, a shared facility or an entity thatprovides leadership, evangelization,best practices, research, support and/ortraining for a focus area.The focus area in this case might be atechnology (e.g. Java), a businessconcept (e.g. BPM), a skill (e.g.negotiation) or a broad area of study(e.g. health). A center of excellencemay also be aimed at revitalizingstalled initiatives. [Wikipedia]A team of people that promote collaboration and using best practices around aspecific focus area to drive business results. [27]In today‘s world, the Centre of Excellence (CoE) applies to any organization whowants to create and use excellent state of art and showcase its technological, serviceand business oriented capabilities to the entire world in a competitive environment.CoE is the combined effect of emerging business model and technologies. [53]A Competency Centre or Centre of Excellence can be a highly effective way toimplement and sustain specialist capabilities where a consistent, expert and costeffective service is required across organisational boundaries and where acomprehensive view is required to ensure synergies are identified and exploited. [1]Business competency centers are strategically placed business intelligence and ITteams that work single mindedly to promote expertise, compliance and regulationthroughout an organization [3].A center of excellence is a premier organization providing an exceptional product orservice in an assigned sphere of expertise and within a specific field of technology,business, or gov-ernment, consistent with the unique requirements and capabilitiesof the COE organization. [37]Also known as a Center of Excellence (COE) or a Center of knowledge, aCompetency Center endeavors to encourage and provide business intelligence (BI)skills, standards and best practices, which are not limited to a single project; itsbenefits permeate throughout a division or organization.
  10. 10. 12A (CoE) is essential for maximizing the effectiveness and quality of your businessand for greater success and increased value, at less cost and in less time. The endresult is of course an efficiently run business with improved technologymanagement, tremendous value to IT, and successful end user adoption.A (CoE) initiates all over development- of people, technology and the entireprocess. The idea is first to ensure success and later to sustain that success.Centre of Excellence (CoE) refers to creation of assets for an organization andreaping maximum business benefits from the usage of such assets. The objective ofcreating CoE for any organization is always customer centric and is meant forproviding unique solutions to their customers. [53]A center of excellence an organizational unit that embodies a set of capabilities thathas been explicitly recognized by the firm as an important source of value creation,with the intention that these capabilities be leveraged by and/or disseminated toother parts of the firm.Centers of excellence represent a focus for a superior set of capabilities within thefirm, including tangible resources such as equipment, licenses, and patents, andintangible resources such as knowledge and experience capabilities that are able tocreate value for more than one line of business.Figure 1.1 ROI for (CoE)[4]
  11. 11. 131.2.Key characteristics of a (CoE):Focus on a particular domain of expertiseTakes an enterprise wide view, enables reuse by identifying commonalityProvides a shared service across the enterpriseHas an End-to-End lifecycle responsibility, e.g. from requirements definitionand architecture through to operational supportProvides thought leadership, awareness of the market and how best practice canbe applied to the organisationCommunicates its activities and disseminates knowledgeHas authority for its domain of responsibilityDelivers clearly defined capabilities, boundaries, roles and responsibilitiesProvides strong process, methods and governanceDedicated small core team of highly skilled resource1.3.Responsibilities:Support: For their area of focus, CoE‘s should offer support to the businesslines. This may be through services needed, or providing subject matter experts.Guidance: Standards, methodologies, tools and knowledge repositories aretypical approaches to filling this need.Shared Learning: Training and certifications, skill assessments, team buildingand formalized roles are all ways to encourage shared learning.Measurements: CoEs should be able to demonstrate they are delivering thevalued results that justified their creation through the use of output metrics.Governance: Allocating limited resources (money, people, etc.) across all theirpossible use is an important function of CoEs. They should ensure organizationsinvest in the most valuable projects and create economies of scale for theirservice offering. In addition, coordination across other corporate interests isneeded to enable the CoE to deliver value.
  12. 12. 141.4. (CoE) Framework:A COE is an organization recognized as a world leader in accomplishing its mission. Inthis framework, that accomplishment is characterized via the following dimensions:Figure 1.2: Sample Coe FrameworkThe framework and the approach to developing the appropriate criteria were derivedfrom elements of both the balanced scorecard (BSC) [Kaplan 1998] and the BaldrigeCriteria for Performance Excellence [Baldrige 2008].
  13. 13. 15Figure 1.3: Sample CC Framework:[1]1.5.Key Performance Areas for (CoE)1.5.1. Internal business process:Has the operational work system, capacity, and capability to accomplish itsassigned mission in an outstanding manner whereo its operational work system is aligned with organizational needs asdetermined by the organization and is repeatable, integrated, andapplied consistentlyo it has the capacity (environment) to accomplish mission or tasks (e.g.,equipment, facili-ties, work, and support processes exist and are inuse)o it has the capability (leadership, both management and technical),knowledge and skills, and an education system for all employeesexists and is in useConsistently equals or exceeds established effectiveness and efficiencyrequirements in its measured operational performance in accomplishing theassigned mission.Collects and uses measures to make management decisions in managing theinternal business
  14. 14. 161.5.2. Customer Focus:Provides measured, customer-focused performance5 addressing customersatisfactionElicits customer needs or requirements proactively and collaborativelyResponds in a timely manner to customer requestsDelivers customer-defined, high-quality products and servicesAnticipates customer issues and problems compatible with the COE mission1.5.3. Leadership:Has proactive leadership to create and promote an environment forempowerment, innovation, organizational agility, and organizational andemployee learningHas senior leaders intrinsically involved with setting organizationperformance goals and expectations, setting and deploying organizationalvalues, establishing short- and longer term direction focused on creating andbalancing value for customers, their customers, and other stakeholdersHas senior leaders who communicate values, vision, directions, keydecisions, and expectations through the leadership system to all employeesHas senior leaders regularly reviewing organizational performance forimprovement purposes and needed actionsHas senior leaders focus on sustaining and growing the organization in termsof both the depth and breadth of its expertiseHas senior leaders who focus on finding and sharing new insights that relateto both the problem space and solution space relevant to the COEHas senior leaders that embody the value of ―learning is never over‖ throughtheir visible, continual learning in both traditional and new areas of enquiryHas senior leaders who can facilitate appropriate interactions with leadingacademic and practitioner organizations with the fields relevant to the COEorganization
  15. 15. 171.5.4. Innovation and Learning:Has the demonstrated and proven ability to incrementally innovate andimproveHas the demonstrated and proven ability to anticipate the direction ofpromising solutions to address the COE‘s problemsHas the demonstrated and proven ability to introduce and gain traction forrevolutionary as well as incremental innovationsHas the demonstrated and proven ability to develop the transitionmechanisms needed to turn innovations into accepted technologyimprovementsHas the demonstrated and proven ability to create and leverage the valuenetwork needed to support introduction and deployment of innovations thatare relevant to the COE‘s customers and their customersHas an environment that fosters both incremental and innovative learningDevelops, institutionalizes and applies leading-edge technology in theaccomplishment of its COE mission1.5.5. Financial:Has a financial management system that supports advocating effectively forboth incremental and revolutionary innovations, as appropriate for itsdomainHas an established financial management system that accommodates theorganization‘s needs to accomplish and improve its mission performanceHas and implements a financial management system that is sufficientlyflexible to accommo-date customer needs and changes in customerrequirementsHas a financial management system that allows appropriate differentiation ofnon-recurring and recurring costs related to proposed innovations
  16. 16. 181.6. (CoE) BenefitsFigure 1.4 Race pit stopThe key question for many CIOs today is not whether the CoE approach would benefitthe organization, but rather how best to make the transition to the CoE model fromexisting state.Those who have followed disciplined approach towards setting –up and implementingCoE successfully have realized many business benefits. CoE offers the means tocoordinate the effort by creating a common set of resources, models and tools to meetthe broad set of business needs—while taking advantage of existing organizationexpertise, standards and infrastructure.IT organizations of all types and dimensions are embracing the CoE model as a practicalway of consistent and continuous ally improvement of their business operations.Industry analysts also support the move to the CoE model.A CoE is an organization, focused on optimizing application or service characteristicssuch as quality, performance, or availability. It provides management an automationplatform for processes, consulting, and support services, leadership as well as advocacyto optimize these attributes.In IT world, CoE acts as a central point of contact to facilitate collaboration between thelines of business, enterprise architects, database administrators and applicationdevelopers. It helps in speed adoption, improve knowledge sharing, lower the TOC5And broaden the reach and context of enterprise application deployment, migrations,consolidations and upgrades.CoE Brings together a dedicated team of appropriate domain expertise and enables theorganizations to identify core patterns of integration, share best practices, leverage skillsand standard tools across the enterprise.
  17. 17. 19A CoE provides a central source of standardized products & services with expertise, andbest practices. It can also provide the entire organization with visibility into quality andperformance parameters of the delivered application and support functions, helpingthem to keep everyone informed and keeping the applications and services aligned withbusiness objectives.The strategy and roadmap for CoE are required to launch and sustain the businessneeds. Without a COE, you will lack the necessary ecosystem and opportunity tooptimize resources, funding, competencies, and governance structure, hence theideology of the CoE should be in synchronization with the philosophy of theorganization business imperative. [53]Providing cost-efficient support:o Time and cost savings achieved through rationalisation and re-use of e.g.patterns, business processes and services etc.o Environments and supporting technologies (i.e. source control, webhosting systems, test environments), are shared and their use maximizedleading to reduced costs and implementation time-lines.Delivering resourceful performance.o Greater predictability achieved through consistent estimation, processand management controlso Faster learning curve and lower blended rate achieved through standardmethods and approaches. Training is co-ordinated and shared across theCoE to ensure maximum take-up. Trainers become CoE specialists andcan provide more specific knowledge of theuse and application of thetechnology and methods.Eliminating IT holdups.o Operational efficiency and excellence achieved through the use of bestpractice tools and approaches across the enterpriseManaging the technical infrastructureo Common data models are developed which makes future integration andreuse of rule bases possible.Maintain and enhance business processes, methodologies, andpractices.o Reduced rework through consistent and coherent use of processesand methods and the implementation of appropriate quality standardsand checkso Ability to market internally in order to be able to increase use of thetechnology and grow rule development practice.
  18. 18. 20Promote a single business standard across the enterprise.o Consistent and appropriate sourcing decisions and service providermanagement ensuring optimal cost / risk evaluation and predictabledelivery.Promote familiarity with business knowledge across theenterprise.o A flexible approach to project engagement and service deliverysuitable for customers with varying levels of internal capabilityEncourage development of advanced skill sets.o A staff career structure can be developed to promote staff and improveretention.Provide a single point of contact for business relationships.Decreased time to market.o The rapid response capability of the CoE helps reduce total time fordevelopment and servicing, resulting in faster time to market and on-timeresponse to business needs — all at a lower total cost.Culture of qualityo The transition from islands of expertise to standardized qualityprocesses and toolsets helps focus the organization on quality issues andspeeds the evolution to a culture of quality.High-performing companies make business process improvement a core competency.These leading firms share a common characteristic: they continually find clever ways toimprove the process of process improvement.As companies develop successful BPR4projects, they‘re giving greater thought as tohow to capture, promote and disseminate the best process improvement ideas that arecreated throughout their organizationAs a result, high-performing companies are implementing business process competencycenters or business process centers of excellence (CoE). These committees set priorities,create a strategy map, standardize procedures and collect best practices for businessprocess initiatives.―A center of excellence provides visibility in the company about the idea of businessprocess improvement, and helps the idea catch on in organizations that might otherwisebe resistant to change.‖
  19. 19. 21According to some research almost half of the enterprises thatreported clear and measurable benefits from their BPM efforts had a BPMCenter of Excellence (COE) in place; only 10 percent of the group reporting mixedresults had a BPM COE in place.It is important to note that a COE does not compete with other industry-acceptedpractices such as Lean, TOC6, and Six Sigma, which target some of above activities.Rather it complements and leverages any existing expertise and process initiatives in anorganization. [63]Forrester study of BPM shows that having a center of excellence significantly enhancesthe ability of an organization to meet or exceed the goals that center supports.Figure 1.5 Forrester BPM Report.Source: Forrester October 2007 US and UK Enterprise Architecture and Business Process Management Online Survey
  20. 20. 222. MOST COMMON CoE IMPLEMENTATIONS INCURRENT IT INDUSTRY:Since (CoE) concept can be applied to different line of businesses, in this chapter youcan find some examples and a brief overview about them.2.1.BPM CoE:Figure 2.1 Gartner Report :Top 10 Business priorities in 2012Particularly in light of today‘s volatile economy, organizations are looking totrim the fat off their operations. In a receding market, process agility is anobjective that organizations strive for. In order to leverage businessopportunities with a short window of execution, an organization must be able toadapt its processes quickly and efficiently.―[BPM and Beyond: The Human Factor of Process Management, October 2008]The most common types of actions IT executives have been recently taking toincrease ITs business orientation and cut costs through the adoption of standardmanagement processes, shared services, and coordinated IT governance.To turn initiatives into sustainable programs that continuously improve andtransform processes, business process professionals must establish centers ofexcellence (COEs) as quickly as the organization can support them.
  21. 21. 23Advanced COEs in areas like ERP and BPM drive process innovation from thecustomer perspective, support business transformation led by senior executives,while also optimizing investments in process resources across the enterprise.When implemented as a shared service, or distributed across functional units andcross-functional processes, COEs connect business stakeholders with skilledprocess pros, service suppliers, and IT vendors through five essentialcapabilities:1) clearly articulated portfolios of business process services;2) formalized relationships with business stakeholders and suppliers;3) effective working structures for delivering the portfolio;4) efficient service management processes;5) integrated quality assurance.―Best practices and case studies show that while business process technologies,methods, and tools may differ from initiative to initiative, mature COEs employsimilar organizational and management practices for greatest impact.‖ [57]Regarding to experts, a center of excellence is ideal where there are multipleplayers contributing to each project. A BPM center of excellence often consistsof IT and business people and serves as a formal hub to coordinate goals,priorities and governance for process implementations.If centers of excellence are tied to BPM success, why aren‘t more peopleimplementing them?One reason might be credibility. For organizations new to BPM, it‘s a businessculture change. Justifying the value of BPM isn‘t always easy, especiallywithout proof.―That‘s why it‘s often easier to implement BPM successfully on a couple ofprojects first and then set up a center of excellence as phase two.‖ [66]BPM COE (Center of Excellence) is essential to an enterprise BPMstrategy.However, positioning of the COE within the organization is a keysuccess factor. There are various flavors of BPM CoE that serve differentpurposes and most organizations would go through some of these beforereaching the right positioning and right level of maturity. Thereare variousflavors of BPM COE – sometimes in combination, sometimes in progression:
  22. 22. 24Figure 2.2 Flavors of BPM (CoE)2.1.1. Competency & Resource Management: Focuses on competencydevelopment and resource management, and formulating the knowledgeframeworks, standards, methodologies and best practices. The primaryfocus being brainpower and not necessarily as a hub for all the hardwareand software requirements too.
  23. 23. 252.1.2. Solutions Center Model: For organizations that have a little better laidout plan on the iniatives on BPM implementations, this model wouldprovide a more efficient delivery and governance around initiatives. This,however, still resides more on Technology side due to the nature of theprojects.2.1.3. Factory Model : This offers a better chargeback and resource usagemechanism between the business needs and Technology capability. Thisalso works better for a more well-defined BPM strategy where thedefinition of the projects are more tuned to the business process objectivesand enterprise strategy. This moves governance closer to business and abetter handshake is possible.2.1.4. Business Process Centric Factory: This is driven by the processcentricity, the KPIs and the process improvement objectives. The Processowners more involved throughout the initiatives and really help focus onbusiness outcomes.High-performing companies make business process improvement a corecompetency. These leading firms share a common characteristic: theycontinually find clever ways to improve the process of process improvement.Ideally, though, a CoE doesn‘t simply perform the role of process cop, butcollects the best ideas throughout the enterprise, so the skills and experience ofall employees can be leveraged.―If you‘re doing it right, a CoE is keeping a knowledge library and beingproactive about presenting ideas for constant process improvement,‖ [26]One study found that nearly half of companies that experienced a clear,measureable improvement from BPM have implemented a CoE. Of thecompanies that failed with BPM, a mere 4 percent have a CoE.Various studies suggest that organizations with a Process Centerof Excellence can see benefits such as:Increased usage of business process management practicesIncreased business user satisfactionBetter understanding of the value of BPMIncreased productivityIncreased decision-making speedDecreased staff costsDecreased software maintenance costsIncreased operational consistencyHigher knowledge retention and faster transfer
  24. 24. 26That is achieved by providing functions in and support for:BPM methodologyProcess engineeringBPM tool usageTraining and skill transferKnowledge managementRepository of reusable artifactsIn addition, a formal BPM strategy through a COE can help withreducing the overall cost of automating business processes.2.2. Business IntelligenceBICC7can be defined as a team of dedicated Business and IT specialistsaccountable for defining, owning and managing the execution of the company‘sBI1strategy and agenda. While many leaders, stakeholders, contributors,managers, analysts, developers and user communities participate in BI1efforts inone way or another, a BICC7serves as the catalyst and glue that creates,promotes ,and holds together the overall BI1operating model.Figure 2.3 BICC and BI Operating Model[50]The BI1program is not simply the sum of the various projects and independentefforts, but instead reflects a comprehensive network of people, processes, andtechnology working as one integrated operating model supporting and enablingthose projects and efforts.
  25. 25. 27Figure 2.3: Improving BI capabilities via BICC[50]Figure 2.4: BI Maturity Levels[50]A company whose strategy takes a holistic approach to their BI1 program will have abetter opportunity and capability to minimize risks and maximize value. A matureBICC7 set of capabilities (people, process, technologies) enables quick reaction tochanging business needs, including:Better enterprise-wide decisionsFewer information disagreementsLess effort to develop and maintain information over timeLower long-term technology costs with better scalabilityFigure 2.5: BI architecture
  26. 26. 28[42]2.3. PMOA CoE can accommodate the possible mix of roles and activities related toassurance, improving programme, PM10capability and capacity, as well asmonitoring and controlling the departmental portfolio.The role of CoE is to support the senior management of the organization inachieving successful delivery of the portfolio. The activities of CoE will involveinteractions upwards to the management board, inwards to individual programmesand projects, and outwards to external bodies, other CoEs and delivery partners.Figure 2.6: Key Interactions of CoE
  27. 27. 29[6]Figure 2.7 PPM CoE Corporate Relationships[6]
  28. 28. 30Figure 2.8 CoE: Coordinating function responsible for managing the organisation’s portfolio.2.4.Test CoEWhen the 2011-2012 World Quality Report survey participants were asked whetherthey have already implemented a Testing Center of Excellence, only four percentindicated that their companies have a fully operational TCoE8, and an additional sixpercent said that they have started the effort of establishing a TCoE8 within the pasttwo years.
  29. 29. 31Figure 2.9: TCoE Elements[17][17]Figure 2.10 TCoE extended capabilities
  30. 30. 32[39]2.4.1. Benefits of TCoEThe benefits of TCoE can be cathegorized as quality, time and cost; andcan be achieved in timely manner.2.4.1.1.Quality: Ad hoc test methods used by organizations are capable ofidentifying 70% of the defects in average. The TCoE model usesformal steps for test planning, execution and verification and skilledresources to raise removal rate significantly 95% for functionaltesting and 98% for regression testing.2.4.1.2.Cost: Cost savings achieved from the reduction of overall defectdensity in the SDLC79. In Most large enterprises, the IT budget isapproximately 4%-8% of the sales budget. Any savings on this is adirect add-on to the bottom line.2.4.1.3.Time: TCoE Model helps reduce time to market by effective usageof automated testing tools and contunially improved operations.Newer services can be offered to customer in shorter period of timeand with higher quality.
  31. 31. 33Figure 2.11 TCoE model[39]2.5.Performance CoE2.5.1. The business value of the Performance CoE model :2.5.1.1.Lower costs, higher revenues: The efficiency of the PerformanceCoE model helps cut the cost of test lab infrastructure and operationswhile improving application performance, resulting in more satisfiedend users and competitive advantages that drive revenue.2.5.1.2.Higher profits: The Performance CoE model delivers betterapplication software, more satisfied end users, faster deployment ofhigh-performance software-driven services, and, ultimately, increasedcompetitiveness and profitability.2.5.1.3.Improved business productivity: Higher application performancetypically yields higher end-user productivity. For example, theproductivity of a clerk entering orders into an ERP system depends onthe response efficiency of the system.2.5.1.4.Decreased time to market: The rapid response capability of thePerformance CoE helps reduce total project time, resulting in fastertime-to-market of high performance applications and on-timeresponse to business needs—all at a lower total cost.2.5.1.5.Greater flexibility: Organizations can implement a PerformanceCoE on a small scale, leveraging existing resources, and expand itscapabilities as the value is proven.
  32. 32. 342.5.1.6. Tighter alignment: By defining and measuring Key PerformanceIndicators (KPIs), the Performance CoE helps keep the applicationperformance aligned tightly with business needs.2.5.1.7.Career advancement: The Performance CoE model creates acompelling new career opportunity for IT professionals, leading tobetter HR, and helping the organization recruit and retain top talent.2.5.2. Specific support services provided by a Performance CoE include:Performance benchmarkingPerformance testingCapacity planningInfrastructure optimizationProblem diagnosticsExamples of typical KPIs include:Number of customersNumber of requests for serviceTotal number of projectsNumber of referencesRevenuesGross marginsFigure 2.12 PCoE Model[8]
  33. 33. 352.6.Integreation Competence Center (ICC)2.6.1. Value system for the ICC (Integration Competence Center)A value system is set of principles and hypotheses that enterprisestrategically adopts in order to govern materialization of the enterprisesystem. Key points are:Integration Technologies will changeMultiple Integration Technologies will co-existObjective of ICC is to deliver value and not ―deploy technology‖There is lot more to Enterprise Integration Management than justTechnologyIntegration Systems should be managed like an enterprise portfolioFigure 2.13 ICC Models and comparison:[7]Enterprises have option of adopting a strategy that takes best of both models.2.7.Banking CoEMany banks and financial institutes are currently undergoing changes regardingtheir IT Infrastructure and Business Applications landscape. Their challenges areamong others to increase efficiency, reduce costs and add value to their clients bycreating innovative products and services.Banking Competence Center (BCC) addresses those challenges in a uniqueway with specialists embedded in the national and international enterprise networks.
  34. 34. 36The specific knowledge about Banking Systems coupled with a large experiencein the financial services industry makes (BCC) a strong and reliable partner to helpclients manage, migrate or host their IT Infrastructure and Business Applications.2.8.Finance CoE (FCoE)2.8.1. The changing FPM landscape and a growing need for FinanceCenters of ExcellenceTo understand why an FCOE makes sense for companies with a full-function FPM solution in place, or for any company looking to add to theFPM solution they have, it‘s important to look at how the financialperformance management landscape is changing. In the past, FPM was thepurview of the CFO and finance organization — with very little executiveor organizational involvement. Finance gathered up as many spreadsheetsas possible and accessed static, historical data and created enterprise plans,budgets and forecasts — sometimes collaboratively with business. Theytypically looked at actuals and decided on a percentage increase forearnings, revenue and products, or a percentage decrease for expenses. Thishas never been the ideal way to go about FPM. We learned that expensereduction was not at the top of most CFOs‘ agendas [―IBM 2010 GlobalCFO Study‖]. Instead, CFOs ranked ―providing inputs intoenterprise strategy‖ as their most important priority. CFOs indicated thattheir role as strategic advisors is broader and more important than ever.More than 70 percent play a critical role in enterprise risk mitigation,business model innovation and selection of the key metricslinking performance to strategy execution. The pressure to helpthe business make all manner of decisions better, faster and with morecertainty is intense. As we have learned in the last few years, the globaleconomy is unpredictable, prone to substantial and sudden highs and lows.To keep a competitive edge, companies must be prepared to makedecisions in compressed time frames compared to the last half of the 20thcentury, responding quickly to changing business and marketplacedemands. As a result, a comprehensive FPM initiative— one that assuresthat a company‘s success will not be a flash in the pan, but long-term —can now connect operations and finance for continuous enterprise planning.2.8.2. What is an FCOE and what does it do?As organizations realize that FPM is more than a tool, they have beguninvesting resources to help manage performance more effectively and gaincompetitive advantage. To approach FPM as a strategic asset, manyorganizations are combining IT staff and FPM users into coordinatedteams. These emerging organizational structures bring together people —with interrelated disciplines, domains of knowledge, and experience—withwell defined processes, standards and technology. The goal is to achievegreater business efficiency on a foundation of trusted information, anddeliver more effective decision-making across the enterprise. These teamsform the foundation of an FCOE because, to paraphrase the multiple
  35. 35. 37definitions available, a center of excellence is a group of people whocollaborate to promote best practices in a specific focus area anddrive successful business outcomes.2.8.3. What benefits come with a Finance Center of Excellence?To ensure that you can support your organization‘s long-term performanceagenda, you need a managed, repeatable approach. An FCOE can help yourorganization define the knowledge, standards and resources that can wringmore value out of your FPM solutions and technology. An FCOEis essential to the strategic deployment of FPM technology because it:Maximizes the efficiency, use and quality of FPM everywhere inyour businessDrives end-user adoption by streamlining integration with routineplanning and analysis workflowEncourages alignment between IT, finance and business areasIncreases your enterprise‘s understanding of performancein finance terms (the ―Financial IQ‖)Reduces organizational overhead associated withmaintaining budget, plan and forecast consistency and useIncreases the success of FPM solution and technology deploymentsby helping them deliver more value, at less cost and in less timeHelps you base your strategies on business priorities for maximumROI and added valueImproves business agility and technology management, which inturn drives business efficiency.The finance center of excellence consists of a team of four peoplewho support the enterprise planning, budgeting andforecasting functions in a variety of ways:Bottom-up budgeting and forecasting templates — standard andcustomizedSupport for identifying business drivers and key metrics,particularly with a new business or line of serviceDevelopment of the majority of the planning applicationsReview of models built for solutions that planning application, evenat the metadata level to ensure consistencyPlanning and forecasting education:Twice annually, an update on the planning system — what it does,how to work through a monthly forecast and/or budgetAssistance with standard and ad hoc reporting across the year forbusiness and for management
  36. 36. 38Table 2.1: FCoE functions and Activities[23]Figure 2.14 FCoE Model
  37. 37. 39[23]2.9.SOASOA is a way to design software for distributed computing environments thatinvolves the use of independent services, or activities that provide a certain businessfunction, to support the needs of a business. Not only are these services used toexchange information and support business processes, but they can also be reusedby other applications.Given that SOA implementations can have a huge impact on IT and the organizationas a whole, experts advise setting up some sort of governance and best practiceseffort to help ensure a successful migration. For many, part of that effort willinclude creating a COE to gather information about SOA implementations and toleverage best practices within the organization.The center of excellence can act as the governance body for an SOAimplementation, overseeing what goes into a new architecture that the organizationis creating and ensuring that the architecture will meet the current and future needsof the organization,"Its a shift from being project oriented to building out an architecture with long-term assets that are going to be used in future projects," he says. "That requires acentral group." [22]Figure 2.15 SOA CoE Model
  38. 38. 402.10.ERP CoEERP is a long term commitment. Without a center of excellence approach,employees take undocumented knowledge with them when they leave. Dependenceon consultants leads to cost overruns.An ERP COE will de facto have to establish goals, measure performance, anddemonstrate the value to the organization.To be successful, the goals of the ERP COE must be aligned with the goals of thebusiness. Therefore, IT must understand what they are. This is different from thesundry, ad hoc, and ad infinitum requests of LOB managers. IT management mustseek to understand not only the companys short- and long-term goals, but also itsstrategies, culture, politics, policies, and values.An ERP COE can be mutually beneficial to both IT and its brethren LOBs. If theERP COE can help to solve problems, be prepared when issues arise, and contributeto the growth and/or betterment of the organization, it will become a valuable tooland IT may come to be held in higher esteem.
  39. 39. 412.11.Cloud ComputingEnterprises require a host of custom applications to manage day-to-day businessprocesses. Historically, this means supporting three IT layers: (1) theApplications themselves; (2) the Platform needed to develop them; and (3) theunderlying infrastructure; each with its own support and maintenance costs.More and more organizations these days are looking to shift this IT paradigm bybuilding business applications quickly, using off-the-shelf capabilities withoutworrying about application upgrades or infrastructure scaling. The advent of‗Cloud Computing‘ has provided businesses with such a lightweight alternative.Almost all well known global IT and Consultancy firms have already built their(CoE) in different areas on the world which specified in Cloud Computingtechnologies.Figure 2.16 Cloud Computing Models[69]
  40. 40. 42Figure 2.17 Business Cloud Technical capacity View[74]It is possible to extend the list of the implementation areas above (e.g. SoftwareDevelopment, Enterprise Architecture) though, however it is not needed in this context;please see the recommended readings section for further details.
  41. 41. 433. The Business Case:3.1.“Decision through the opportunities and business needs”This is the core part of this study to clarify, why an organization decides to build an(CoE) while there are vary of concepts to improve the efficiency, productivity andquality also reduce the cost such as Lean, Six Sigma,…,etc.For instance most of the symptoms identified by BPM and BPR as mentioned earlierwould lead an organization to consider whether a (CoE) is needed or not.It is very common that corporate organizations continuously review and restructure theirprocesses in order to optimize the ultimate benefits. Although such initiatives add valuein holistic approach and could be considered as a success from process engineeringperspective; however by the time either by nature of the business itself or based on thechanging market needs these processes may cause some disadvantages for specificbusiness domains and it may not be efficient to redesign all the processes for the sake ofone business domain or unit. Actually this the reason why (CoE)s by definition responseto needs of a specific Business Domain/Unit.To be more specific I will be referring to tables below to explain how some businessdomains could feel the impact more than the other ones.Table 3.1 ProcessesProcess Time CostProject Man. X C1SoftwareDevelopmentY C2Change Man. Z C3SecurityMan.Q C4Hosting (Inf.Man)W C5Support T C6Test Man. S C7PerformanceMan.R C8Table 3.2 Business Units and DomainsBusiness Unit #Domain # HostingServicesExpected#Projects 2011Expected#Projects 2012A 20 400 50 250B 30 500 120 40
  42. 42. 44C 40 1000 100 60D 30 600 90 70Sum 120 2500 410 420For instance IT department that providing hosting, consultancy software development,project management, security, change management, performance, test and supportservices of a corporate, which have different business units and domains. As you cansee the figures above in the Table 3.1 and Table 3.2 IT department could achieve a hugefinancial success by making major cuts for C5 and W in 2010-2011 due to high numberof the hosted services for all the business units even with minor reduction for the rest ofthe processes.When Business unit A completes the financial analyses for 2012 may find out that itwon‘t be financially effective to work with internal IT department for the new projects.The reason is not very complicated and self explanatory once the programme budgetformalized as in the following table for 2011 and 2012.Table 3.3 Expenditure FormulaExpenses of Business Unit A Year[400 * {(W *C4)+ (Q*C5) + (T*C6)} ]+ [50 * {(X*C1) +(Y*C2)+(Z*C3)+(S*C7)+(R*C8)}]2011[400 * {(W *C4)+ (Q*C5) +(T*C6)} ]+ [250 * {(X*C1) +(Y*C2)+(Z*C3)+(S*C7)+(R*C8)}]2012As described in the Table 3.3 and Table 3.2 the total number of the projects has notbeen increased significantly for 2012 but there has been a significant increase in termsof number of the project for business unit A.Because the previous improvements on the IT processes haven‘t been as successful asthe Infrastructure Man., Security Man. and Support for the other processes (it may notbe targeted at all) now IT department might be losing certain amount of business.Probably business can sign a contract with an external company to deploy all theprojects for 2012.(Business may still want to keep hosting the services internally)This is the reason why (CoE) also called as Competency Center. Now might be the righttime to consider build an internal (CoE); in order to response to the business needs witha skilled group of people and deploy all the projects in a way that business unit A wouldfind effective, meantime IT organization gain some benefits on top of keeping the all ITbusiness functions and resources utilized as well. Main decision point here should be;whether the (CoE) meets with the corporate strategy or not.One of the reasons for business to choice internal (CoE) instead of a 3rdparty isbasically ultimate benefits, which would be reached possibly by the extension of thesimilar needs to other Business Units and Domains.
  43. 43. 45This approach can also be considered as creating a SME in the organization since mostof the time for such a case competitors are (focused on a specific business domain)small or medium size enterprises. The advantage of SMEs is capability of acting anddelivering fast solutions for the customers without loosing too much effort and time dueto internal processes. Another advantage of an SME is holding necessary skills for thebusiness.Very similar to case above enterprises also can build (CoE)s for the external customersin order to deploy a specific product suit and/or technology such as BI, CRM, ERP,Cloud Computing,…,etc.Before explaining any other benefits of (CoE) for the Business Unit A in the samescenario above, we can focus on another case, out of business environment toemphasize the benefits in a simple form.One of the most common project management case for all human beings is planning aholiday. You can see the parallelism between following scenario and the one above.Consider that you are planning a 2-3 weeks long holiday in a trans-Atlantic or trans-Pacific country(s) that you haven‘t been before. What are the challenges that you needto consider while you are planning your trip?1. If you need a visa for the country(s)a. How to applyb. How long does it take to receive the visac. How much does it costs2. Flight tickets:a. How much does it cost?i. Which airlines are flyingii. Different dates different pricesiii. Any special discount that you can have.b. Direct and transit flightsc. Comfort3. Accommodationa. Hotel, pension,…,etcb. Standards & Pricec. Compliance to destinations in scope4. Places to visita. You may lost in the number of the places that you can visitb. How to find the most common advises5. What to do6. What to eata. Different tastes and (un)expected resultsb. Quality of the foodsc. Prices7. Health and insurancea. What to do in case of emergencyb. What kind of insurance and preventative actions you may need.c. What are the common issues and solutions.
  44. 44. 468. Entertainmenta. What to do?b. When.9. Securitya. List of the not to do(s).b. Warnings.10. If you are planning the trip for a group of people you need to optimize all thepossible combinations to fit for everyone‘s taste.Of course we can extend the list with much more details but it is not needed at themoment. If you go trough financial approach to find cheapest flights andaccommodations you can reduce the costs but you may not cover all the fun or you mayspent more time on the way, you may first find out (due to visa obligations) when youcan fly earliest,..,etc. Missing any important detail can cause a fail that your holidayturns out a disaster.To plan such a trip successfully may take too much time and also too much risk. Whatabout a travel agency which offers an end-to end service including visa application,flight tickets, hotel bookings, guided tours and one price for all?First of all you can get a better overview on the whole trip and you can try to plan verysimilar trip yourself (or via another agency as well) and compare the price, quality andtime to decide.This is exactly what expected from a (CoE) as well. A (CoE) should be guiding tocustomer as a single point of contact, providing end-2-end overview on the requestedservice and within competitive price, quality, time range. With different wordscentralization is one of the benefits of (CoE) for the corporate.Usually when you compare the prices, the one offered by agency should be much betterthan you can get yourself. The reason behind it is the same with the example we had asIT department; ―Business Case‖. The agency should have been identified the destinationfor expected number of clients and booked flight tickets, hotel rooms accordinglymonths ago with much lower prices than you can get.Again referring to previous chapters probably one of the most important factors whichimplies your decision to choose your agency for the trip would be their experience onthis destination (in case of equal budgets offered more than one agency) which isactually in parallel with the maturity level for the (CoE).
  45. 45. 473.2.WHY CoE is NeededCreating a CoE is a proven, yet flexible approach to obtain the strategic benefits ofbusiness in all its forms, while maintaining control on costs, quality and operation.CoE can bring tremendous benefits to an organization, by creating the necessarystate of art to provide service and product excellence to their valued customers andusers. CoE is used to provide the best technical solutions to the challenging,complex, and evolving business needs of customers.There are various reasons for organizations to create CoE and the most common areas follows:To keep pace with technologies and their impact on how business is conducted,Organizations create dedicated Centers of Excellence (CoE) in varioustechnologies.Creating a CoE addresses the need of organizations to maximize the usage ofhardware, software and highly skilled personnel to provide solutions to thecustomers, partners or end users.A CoE enables to centralize technology as well as create a repository ofsolutions, and reusable components, sharing best practices and knowledge base.Reuse of technology in some cases can be leveraged across different segments ofbusiness.It provides timely information, measures, KPI‘s to the users and seniormanagement throughout the organization enabling them to take appropriate andtimely decisions in competitive advantage.If CoE is created for providing services and products then enterprises canrapidly realize the benefits of a CoE by leveraging service and product expertisewith the help of consistent methodology and industry knowledge.CoE for some organizations is meant for Implementing the most optimaltechnologies, architectures, and frameworks to provide best-of-breed solutionsand services to the customers and Clients.Some organizations use CoE to enable implementation of all needed regulatoryrequirements.A CoE enables collaboration across business units to ensure consistency andintegration of value stream, business data and governance models.CoE can provide a governance framework that enables open participationfrom every business unit, business partner, IT and other keystakeholders.It provides a clear mapping between business models and IT modelingparadigms that can be used to clearly communicate businessrequirements to IT.
  46. 46. 48Create a focal point where business strategy can be translatedinto operational reality.4. COCLUSIONCurrent industrial environment is pushing all the organizations to review theirprocesses for improvement either in order to gain competitive advantage or just tosurvive.As explained CoE is one of the most powerfull tool or concept that helps to anyorganization to achieve some specific benefits and improvements.One of the most valued component for all the organizations in today‘s world, istime. One of the purpose of this study is also helping the readers to find out if theCoE is not the right choice for them to avoid wasting their time with try and failapproach.Basically what you may have achieved by reading this study is: ―if the CoE is theright concept for your organization to adopt‖I believe that you could find what benefits to expect and what is the purpose ofbuilding a CoE.In short the decision is depending on the expectations and the circumstances of theorganization and the business.Decision makers should consider all the parameters, benefits and needs beforetaking the final decision. It is not quite possible to establish a framework ordesicion support system based on a couple of standard questions or parameters toanswer this question . In contrary minor details can be quite significant for anyorganisation when they are evaluating the necessity of a CoE.
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  52. 52. 6. About the AuthorAdı Soyadı : Goksal Ersen CelebiDoğum Yeri ve Tarihi : Istanbul, Turkey. 1977Yabancı Dili : English, CzechE-Posta : ersen.celebi@dhl.comÖğrenim Durumu (Yüksek Lisans öğrencileri son satırı silmelidir.)Derece Bölüm/Program Üniversite/Lise Mezuniyet YılıLise Fenerbahce Lisesi 1994Üniversite Computer ScienceEngineeringIstanbul University 1998İş Deneyimi (Eklenecek bir bilgi yoksa silinmelidir.)Yıl Firma/Kurum Görevi2006- DHL ITS Production Services2003-2006 Bizitek Technical project Manager7. RECOMMENDED READINGS

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