The Importance of Digital Center of Excellence (DCoE) In 2024

To get the most out of data and be customer-centric, businesses are taking advantage of digital technologies. According to BCG research, only 30% of digital transformations are successful and meet or exceed their target value. One of the key elements for the successful implementation of digital transformation across the organization is a Digital Center of Excellence.

What  is a digital center of  excellence (DCoE)?

A center of excellence is a team that consists of different department leaders such as product managers, digital operations leaders, business unit leaders, technology experts, etc. A digital center of excellence is responsible for successfully implementing the organization’s digital transformation and working toward a common goal.

A well structured DCoE add value to every step of digital transformation: 3 stages to establishing a DCoE

1. Make strategic choices

In order to take advantage of digital technologies such as artificial intelligence, machine learning, automation, IoT, and augmented reality, businesses need to first identify the places where digital technology can be most beneficial. 

• Specify criteria: In order to achieve the desired business outcomes, businesses need to have a clear view of their current state and the future growth opportunities of the new technology. If the new digital solution does not fit the business processes, it will waste time and create real costs for businesses in both the short-term and the long-term. 
• Ensure the right digital solution is in the hands of the right people: A DCoE is composed of different roles and tasks. The lifecycle of a digital transformation project has different phases, e.g. technical aspects, regulatory issues, maintenance, finance, etc. Select people from different departments and assign them roles that match their area of expertise.

2. Pursue a holistic approach

Understanding business processes is critical to introducing digital technologies into business operations. It helps businesses identify which digital technology can be most beneficial. 

It is necessary to have a shared business goal and to ensure that it is properly understood by all units in the business. Evaluating the benefits of the new technology for the business from a holistic perspective and providing transparent communication between the units will help identify and solve the challenges that arise in the digital transformation process. 

One way to measure the benefit of the selected new technology is that users are able to use it and that the relevant department has improved its business processes. Thus, DCoEs will have a comprehensive understanding of how the digital transformation process affects each aspect of their overall business success.

3. Prioritize resources

Prioritization of resources is about more than simply the project’s actual cost or budgeting. Some basic steps for building a well-structured project prioritization process are as follows:

• To have value-based prioritizing, identify the business’s strategic goals with all relevant people.
• Synchronize your tasks with your overall strategy
• Determine which projects provide value and which do not
• Gather necessary project information and assess each project according to the criteria to determine the cost and resources needed to complete the project.

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