What is a Center of Excellence in Software Development: TurnKey Explains

What is a Center of Excellence in Software Development: TurnKey Explains

If you run a startup or high growth software company, you know that innovation is key—it’s what sets you apart from the competition and helps you grow faster than the rest. But innovation takes time and resources, which can be hard to come by at any stage of a company.

That’s why many firms consider establishing an innovation Center of Excellence (CoE) in software, especially one that is located offshore to take advantage of cost savings. This offshore CoE acts like a supercharged research and development division, infusing your software dev efforts with creativity and productivity.

In this piece, we’ll explain what a Center of Excellence is and how it can help your startup or company grow. We’ll also give you some tips on how to get started if you’re interested in setting one up yourself.

What is a CoE in Software Development?

Generally speaking, the term “Center of Excellence” is used to describe a facility or division that has a particular area of focus or expertise.

In the software development industry, a Center of Excellence is a dedicated software development team – from product owners to software engineers to QA and more– that act as an autonomous unit to drive innovation. That’s why you will also hear them referred to as Software Development Centers of Excellence (SDCoE) as well.

The idea is that by having a central location for software development, companies can save money and time while simultaneously improving the quality of their software products. Most companies choose to locate their CoE offshore in regions –like Eastern Europe or Latin America – that offer a lower cost but the same level of technical expertise.

center of excellence

SDCoEs are responsible for a lot more than just writing code. They also play a vital role in the planning, designing, and testing of software applications. In addition, SDCoEs often provide training and support services to help other developers stay up-to-date on the latest best practices. 


As a result, SDCoEs play a crucial role in ensuring that software applications are well-designed, reliable, and user-friendly. While the specifics of what SDCoEs do can vary from organization to organization, their overall goal is always to promote excellence and innovation in software development.


A Center of Excellence also provides infrastructure and tools to help development teams work more efficiently. 


Here is a brief overview of the main components included in most Software Development Centers of Excellence.

Main Types of Software Development Centers of Excellence

There are four main types of Software Development Centers of Excellence: Corporate, Government, Academic, and Open Source.

  • Corporate software development centers are usually created by startups and high growth companies in order to centralize their software development efforts (particularly those focused on innovation).
  • Government software development centers are usually created by national governments in order to develop software for use by that government.
  • Academic software development centers are usually associated with universities and research institutes.
  • Open source software development centers are usually created by volunteer communities of developers.

If you like the sound of a Center of Excellence but need a pro to get you started, TurnKey is your best bet.

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Each type of center has its own strengths and weaknesses. For example, corporate software development centers tend to be very well funded but may be less flexible than other types of centers.


Government software development centers may be more accountable to the public but may have less funding than other types of centers. 


Academic software development centers may be more innovative but may be less focused on practical applications, while open source software development centers may be more collaborative but may be less organized.

The Center of Excellence Model: Two Main Principles

The Center of Excellence (CoE) model is a framework that software companies can use to improve their performance. 


The model has two main principles: 1) Focus on a few key areas and become the best in those areas, and 2) continuously learn and improve. 


As it relates to the first principle (be the best in a few key areas), most CoE experts recommend that companies first identify the competencies they are most in need of and then invest heavily in those areas.   For example, if a company really needs to infuse AI in its product, then the CoE should be focused on building world class AI capabilities.

In terms of continuously learning and improving, companies should establish a feedback loop so they can learn from their mistakes and constantly improve their performance. By following these two principles, organizations can use the CoE model to improve their overall performance.

The Five Main Reasons Companies Use a Center of Excellence Approach

Once primarily the domain of large corporations, more and more startups and high growth software companies are turning to offshore CoEs to help them compete in today’s global economy. 


Here are five key reasons why companies use offshore CoEs in software development.

benefits of coe

1). Centralize knowledge management

As the business cliche goes, knowledge is power. But what happens when that knowledge gets spread too thin? If too many people are responsible for managing it, the risk of losing track of important information increases. That’s where Centers of Excellence come in. 


By centralizing knowledge management within a specific team or department, companies can reduce the risk of critical information falling through the cracks.


In addition, Centers of Excellence can help improve the efficiency and accuracy of knowledge management processes. By streamlining these processes, companies can save time and money while ensuring that critical information is always readily available.

2). Improve product quality

When it comes to improving the quality of software development, Software Development Centers of Excellence (SDCoEs) are a key piece of the puzzle. By creating an environment that is focused on excellence and continuous improvement, SDCoEs help to ensure that software development is delivered on time and meet or exceed customer expectations. 


In addition, by sharing best practices and lessons learned across the organization, SDCoEs can help to raise the overall level of quality for all software development initiatives. As a result, companies that invest in establishing an SDCoE can expect to see a significant return on their investment.

3). Foster professional growth among employees

SDCoEs not only help a company optimize its agile software development process, but they also help foster professional growth and development among employees.  This provides staff with an ongoing opportunity to improve their skills and knowledge. 


As a result, SDCoE developers are better equipped to handle the challenges of the software development process. In addition, a SDCoE can also help to improve communication and collaboration among employees. By promoting a culture of sharing best practices and knowledge, employees are able to work together more effectively to deliver high-quality software products.

4). Accelerate product development velocity

As anyone who’s ever been involved in software development knows, timelines are often one of the biggest headaches. There are always unforeseen delays and unexpected problems that crop up, no matter how well you plan. That’s where a SDCoE can help. 


By centralizing all of the resources and expertise needed to develop and deploy software, an SDCoE can help quicken software delivery timelines. By having everything in one place, you can avoid the need to coordinate between multiple teams and locations.


In addition, an SDCoE can also help to reduce duplication of effort and optimize processes. As a result, an SDCoE can be a powerful tool for improving the efficiency of software development.

TurnKey uses a unique hiring and onboarding methodology that helps us build rockstar CoE teams with minimal turnover.

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5). Gain a competitive advantage

Companies are always looking for ways to gain a competitive edge. One way they can do this is by establishing Centers of Excellence. By bringing together experts in one area, companies can tap into a wealth of knowledge and experience that can be used to improve their products and services.


In addition, Centers of Excellence can also help promote creativity and innovation within a company. By encouraging employees to think outside the box and work together, Centers of Excellence can help companies develop new and better ways of doing things. 


As a result, it’s not surprising that more and more companies are establishing Centers of Excellence as a way to stay ahead of the competition.

How to Establish an Effective CoE for Your Startup or High Growth Company

Building a successful offshore CoE requires careful planning and execution. Here are some key tips we’ve learned from our many years of experience at TurnKey.

coe establishment

Step #1: Define the scope of the CoE

What are the CoE’s goals and objectives? What areas will it cover? Who will be responsible for it? This can be a difficult task, as there are many possible ways to organize a CoE. 


One common approach is to base the CoE around a specific industry vertical. This can be helpful if the company wants to focus on developing expertise in a particular area. 


Another option is to structure the CoE around a specific function, such as a technical expertise (like machine learning) or a product in your portfolio. This approach can be beneficial if the company wants to create a centralized repository of knowledge for that function. 


Ultimately, there is no right or wrong way to define the scope of a CoE. The most important thing is to choose an approach that will best meet the needs of the company.

Step #2: Create a governance structure

Now that you’ve defined your goals and objectives, it’s time to start thinking about how you’re going to govern your offshore Center of Excellence. There are a few different models you can follow, but a common thread is the importance of making sure that everyone has a voice in the decision-making process. 


One popular governance structure is the steering committee. This group is typically responsible for setting the direction for the Center of Excellence and making decisions about resource allocation.  The steering committee should be composed of staff within the CoE as well as folks from the broader product development organization back in headquarters.

Step #3: Build a team of development experts

Building a team of development experts is critical to the success of any Center of Excellence. The team should be composed of individuals with complementary skills and experience who can collaborate effectively. 


Additionally, the dev team should be able to provide expertise in all aspects of the center’s operations, from its strategic direction to its day-to-day operations. Furthermore, the team should be able to provide a mix of perspectives, including both customer and developer points of view. 


Not surprisingly, it can be a daunting task for startups to figure out how to find the right staff for their offshore CoE. But we have great news: we here at TurnKey are experts in building high performing Innovation Centers of Excellence.   We have deep experience in recruiting top developers to stand up and optimize your CoE. And every developer goes through a robust screening protocol to ensure they’re a perfect fit for your organization.

quote about coe

Step #4: Implement processes and procedures

When you’re setting up a Center of Excellence, it’s important to have well-defined processes and procedures in place. This will help to keep everyone on the same page and know what’s expected of them. It can also help to streamline operations and make your center more efficient. 


There are a few key things to keep in mind when you’re aligning processes and procedures. 


First, try to involve all stakeholders in the process. Second, keep it simple. It’s important to have a process that is easy to follow and understand. Third, be flexible. Things change, and your process should be able to adapt as needed.


Finally, establish metrics by which you can measure success. Without these, it will be difficult to know whether or not your efforts are actually making a difference.

Step #5: Monitor and evaluate performance regularly

It’s important to monitor and evaluate the performance of your CoE on a regular basis. This will help you identify areas that need improvement and make necessary adjustments. There are a few key metrics you should track:


Output: How much work is your CoE able to accomplish each month? This can be measured in terms of deliverables produced or tasks completed.


Quality: Are the deliverables produced by your CoE of high quality? This can be assessed through customer feedback, external evaluations, code peer reviews, or other means.


Efficiency: How efficiently is your CoE operating? This can be evaluated by looking at the ratio of input (e.g., hours worked) to output.

Flexibility: How flexible is your CoE in terms of being able to adapt to changes in scope, timelines, etc.? This can be gauged by how often changes are made to plan and processes, and how well the team handles unplanned work.

How TurnKey Can Help You Build an Effective Offshore CoE for Your Startup or High Growth Company

Given how important a Center of Excellence can be to a company’s software development efforts, we’ve invested heavily in all the resources needed to create high performing offshore CoEs for our clients.


To this end, TurnKey is your operational partner that:

  • Custom recruits your CoE development staff from scratch to ensure that you get the absolute best folks for the job.
  • Limits potential churn of your developers to ensure continuity and stability of your dev team.
  • Establishes a flexible team structure that can be scaled up or down easily as needed.
  • Handles all administrative and legal hassles.
  • Provides best practices for integrating the offshore CoE into the culture of the broader product development organization.

Ready to partner up and put all the awesome benefits of a CoE to work for you?

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What are the areas of expertise of a Software Development Center of Excellence?

A Center of Excellence in software development is responsible for developing and maintaining specific software applications, as well as for providing training and support to software developers. A Center of Excellence typically has a team of developers who are knowledgeable in a variety of software development topics, including programming languages, application development tools, and software development methodologies.

What is the benefit of a Software Development Center of Excellence?

When it comes to software development, there are usually a lot of moving parts. Developers have to take into account the operating system, the hardware, the code, and the user interface, just to name a few. This can make it difficult to keep track of everything and ensure that the product works seamlessly. That's where a Software Development Center of Excellence comes in. The SDCoE acts as a dedicated team within a company that is responsible for developing and maintaining a specific function or product.  By having a SDCoE, the development team is more focused on a set of problems and more efficient in delivering high quality software.

What are the risks of implementing a Software Development Center of Excellence?

There are a few risks to implementing a Center of Excellence for software development. One risk is that it can silo knowledge and best practices within the CoE, rather than sharing it across the organization. This can lead to other teams feeling like they are not part of the "inner circle" and create resentment. Another risk is that the CoE can become overloaded with work, leading to unrealistic expectations and burnout among team members. Finally, there is the risk that the CoE will become bureaucratic and inflexible, stifling creativity and innovation. However, these risks can be mitigated by having clear goals and objectives for the CoE, involving all stakeholders in its development, and making sure that it remains responsive to changing customer needs.

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Stacy Diachenko

With a Master of Arts in Technology for Translation and Interpreting (yes it’s as cool as it sounds!), I’m 100% a technophile and wordsmith. I love making tech stuff sound human, and I constantly stay on top of the latest trends in technology. My goal is to write fun, insightful articles that are always ahead of the curve.