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How to Establish an Artificial Intelligence Center of Excellence: Unleashing the Power of AI in Your Organization


In today’s fast-paced digital landscape, harnessing the full potential of Artificial Intelligence (AI) is critical for organizations to stay competitive and innovative. One effective way to achieve this is by establishing an Artificial Center of Excellence (CoE), a strategic hub that drives AI initiatives, fosters innovation, and cultivates a data-driven culture.

In this article, we will provide step-by-step instructions on how to create an AI CoE, backed by real-world case studies, highlighting potential pitfalls and opportunities, and offering forward-looking statistics that demonstrate the benefits of such an initiative.

Step 1: Laying the Foundation

To build a successful AI CoE, start by defining clear objectives aligned with your organization’s overall strategy. Identify key stakeholders, including top-level executives, data scientists, and business leaders, who will champion the initiative. Secure adequate funding and resources to support the CoE’s operations, and appoint a skilled team leader with a strong background in AI and data analytics.

As part of laying the foundation it is important to consider the different operating models which is really not different compared to other Centers of Excellence or support organizations serving other parts of the business.

The choices are:

  1. Hub and spoke/ hybrid.
  2. Centralized
  3. Decentralized

The setup of a Center of Excellence (CoE) for AI can be approached in multiple ways, and the organizational structure you choose can greatly impact how your AI capabilities evolve. Here’s an elaboration on each of the three models you mentioned:

  1. Hub and Spoke/ Hybrid:

    This model provides a balance between the centralized and decentralized models. In this approach, there is a central AI CoE (the hub) that sets the overall AI strategy, best practices, standards, and guidelines. This hub also offers education, knowledge sharing, and technical expertise to the rest of the organization. The spokes, on the other hand, are decentralized AI teams that reside within different business units or departments. These spokes apply the AI strategy and practices in their specific context, working on projects that are directly relevant to their business unit. The hub and spokes collaborate closely, ensuring consistent use of AI technologies while also meeting the unique needs of individual business units.
  2. Centralized:

    In a centralized model, the AI CoE is a dedicated team that serves the entire organization. This team is responsible for setting the AI strategy, developing and deploying AI models, maintaining AI systems, and training employees on AI usage. The benefits of this model include greater control over AI activities, easier standardization, and more efficient use of resources. However, this model can also result in slower response times to individual business units’ needs, and it might create a disconnect between the AI CoE and the specific business contexts.
  3. Decentralized:

    In this model, there is no single, central AI CoE. Instead, each business unit or department has its own AI team that handles its AI activities. This allows each unit to apply AI in a way that is highly relevant and responsive to its unique needs. The downside to this model is that it can result in inconsistency in AI practices across the organization, duplication of efforts, and potential difficulties in coordinating AI initiatives.

In all these models, it’s important to note that the purpose of setting up an AI CoE is to build, scale, and sustain AI capabilities within the organization, align AI projects with strategic objectives, ensure ethical use of AI, and foster an AI-driven culture. The choice between the models will depend on the organization’s size, maturity in using AI, organizational culture, and specific business needs as laid out in the illustration below:

Source: Data Iku

Step 2: Assembling the Dream Team

Forming a multidisciplinary team is essential for an AI CoE’s success. Combine data scientists, software engineers, domain experts, and business analysts to ensure a holistic approach to problem-solving. This diverse talent pool will bring unique perspectives and foster collaboration between different departments, leading to innovative AI solutions. This is especially important from a use case perspective since not all AI is equal when looking at different use cases and requires specialized knowledge across different domains:

An AI Center of Excellence (CoE) serves as the focal point for the development, implementation, and oversight of AI technologies within an organization. This ensures that AI initiatives are aligned with the organization’s overall strategy, and that the necessary tools, skills, and best practices are in place. Here are the core AI technologies an AI CoE would need to cover, broken down into the categories of Artificial Intelligence, Machine Learning, and Deep Learning:

  1. Artificial Intelligence:
    • Natural Language Processing (NLP):

      This technology enables machines to understand, interpret, and generate human language, including speech. It forms the backbone of applications such as chatbots, sentiment analysis, and language translation.
    • Expert Systems:

      These are computer systems that emulate the decision-making ability of a human expert. They are commonly used in complex problem-solving domains, for example, medical diagnosis.
    • Robotics Process Automation (RPA):

      RPA involves the use of software robots or “bots” to automate routine, standard tasks that were previously done by humans.
    • Knowledge Representation & Reasoning:

      This involves methods for representing knowledge in a form that a computer system can utilize to solve complex tasks, such as determining an appropriate response to a complex query.
    • Computer Vision:

      This technology enables machines to identify, classify, and understand images and video, effectively ‘seeing’ and interpreting visual input similarly to how humans do. It’s vital in applications like facial recognition, object detection, autonomous vehicles, and image restoration.
    • Speech Recognition:

      This technology allows systems to understand spoken language and convert it into text or commands. It’s crucial for voice-controlled applications like digital assistants (Siri, Alexa), transcription services, and customer service automation.
  2. Machine Learning:
    • Supervised Learning:

      This type of ML involves algorithms learning from labeled training data, and then applying what they’ve learned to new data. Key algorithms include linear regression, decision trees, and support vector machines.
    • Unsupervised Learning:

      This involves algorithms that learn from and make predictions based on unlabeled data. Key algorithms include clustering methods like k-means and hierarchical clustering, and dimensionality reduction methods like principal component analysis (PCA).
    • Reinforcement Learning:

      Here, an algorithm learns to perform an action from experience. It is typically used in navigation, gaming, and real-time decisions.
    • Ensemble Methods:

      These techniques combine the predictions of several base estimators to improve generalizability and robustness. Techniques include bagging, boosting, and stacking.
  3. Deep Learning:
    • Convolutional Neural Networks (CNNs):

      CNNs are particularly effective for image and video processing tasks, like image recognition and video analysis.
    • Recurrent Neural Networks (RNNs):

      These are used for sequential data tasks, such as language translation and speech recognition. Long Short-Term Memory (LSTM) units are a popular type of RNN.
    • Generative Adversarial Networks (GANs):

      These are used to generate new data that mimics some given data. GANs are popular in the field of image generation and enhancement.
    • Autoencoders:

      These are used for unsupervised tasks, such as anomaly detection and dimensionality reduction.

An AI CoE would also need to consider aspects of data management, including data collection, cleaning, and labeling, and infrastructure considerations such as on-premises servers vs. cloud computing, and the use of GPUs for training large models. Ethics and privacy considerations around AI technologies should also be a core part of the CoE’s remit.

Step 3: Fostering a Data-Driven Culture

A critical aspect of any AI CoE is promoting a data-driven culture within the organization. Encourage employees to adopt data-centric decision-making, and provide training and workshops on AI-related topics. Ensure that data privacy and ethics remain at the forefront of all AI projects.

Case Study: Netflix’s AI CoE

Netflix, a global entertainment giant, established an AI CoE to enhance content recommendations, streamline content production, and optimize user experience. By leveraging AI algorithms, the CoE transformed the streaming platform into a personalized entertainment hub, resulting in increased user retention and engagement.

Step 4: Identifying High-Impact Projects

Prioritize projects with the potential to deliver tangible benefits to your organization. Start with smaller, manageable projects to gain momentum and build confidence in your CoE’s capabilities. Track and measure the impact of each project, leveraging key performance indicators (KPIs) and data-driven insights.

The AI Center of Excellence Operating model includes the following steps:

  1. Govern:

    This is the first step in the process, where overarching principles, ethical guidelines, and rules are set up for how AI systems are to be used within an organization. This step is crucial to ensure that the AI system aligns with the organization’s values, follows industry standards, respects user privacy, and is used responsibly.
  2. Discover:

    This involves identifying potential opportunities and use cases for AI within the organization. It includes researching, brainstorming, and evaluating different scenarios where AI could bring about improvements or innovations. It’s important to conduct a thorough feasibility study and impact analysis at this stage.
  3. Design:

    After identifying the AI opportunities, the next step is to design the AI solution. This includes specifying the AI model’s architecture, selecting the right algorithms, and deciding on how the system should process and interpret data. The solution should be designed in a way that it meets the set objectives and fits into the existing infrastructure.
  4. Deliver:

    This stage involves the actual building, training, and implementation of the AI model. Data scientists and AI engineers transform the design into a working model by coding algorithms, tuning parameters, testing and validating the system. Once the model is trained, it’s deployed into the operational environment.
  5. Sustain:

    After deployment, the AI system must be monitored, managed, and maintained to ensure it continues to function effectively and deliver the desired outcomes. This includes activities like system updates, retraining the model with new data, managing system failures, and addressing user feedback. The AI model should also be audited regularly to ensure it continues to adhere to the governance principles established in the first step.

Step 5: Building AI Infrastructure

Invest in robust AI infrastructure, including high-performance computing clusters, cloud-based services, and data storage solutions. A scalable and agile infrastructure will support the CoE’s evolving needs, enabling the seamless development and deployment of AI models.

Case Study: Google’s AI CoE

Google’s AI CoE is renowned for its groundbreaking AI research, innovation, and product development. The CoE’s projects range from improving search algorithms to developing autonomous vehicles, showcasing the transformative potential of AI across various industries.

Step 6: Collaboration and Knowledge Sharing

Encourage collaboration between your AI CoE and external research institutions, startups, and industry experts. Participate in AI conferences, workshops, and hackathons to stay abreast of the latest advancements. Foster a culture of knowledge sharing within the CoE and across the organization.

Pitfalls and Opportunities:

While establishing an AI CoE presents immense opportunities, several pitfalls must be navigated. Common challenges include data quality issues, organizational resistance to change, and skill shortages in the AI talent pool. However, overcoming these challenges can lead to increased operational efficiency, enhanced customer experiences, and a competitive advantage in the market.

Why do we need an AI Center of Excellence?

According to a recent survey conducted by Gartner, organizations with well-established AI CoEs are 35% more likely to make faster, data-driven decisions, resulting in a 20% increase in overall productivity. Additionally, IDC predicts that AI investments will reach $110 billion by 2025, underscoring the growing importance of AI adoption for business success.

The CDO TIMES Bottom Line

Establishing an AI Center of Excellence is a transformative journey that empowers organizations to unlock the true potential of AI. By following these step-by-step instructions and learning from successful case studies, businesses can build a powerful AI CoE that fuels innovation, fosters collaboration, and drives long-term growth. Embrace the AI revolution and set your organization on a path to success in the data-driven future.

Change: Establishing an AI Center of Excellence (CoE) can transform the organization, fostering innovation and cultivating a data-driven culture. This process involves laying the foundation, assembling a skilled multidisciplinary team, promoting a data-centric mindset, identifying impactful projects, investing in robust AI infrastructure, and encouraging collaboration and knowledge sharing.

Decision: Organizations must decide on the structure of the AI CoE (centralized, decentralized, or hybrid) and prioritize high-impact AI projects. They also need to choose between on-premises servers and cloud computing for AI infrastructure.

Outcome: A successful AI CoE can increase operational efficiency, enhance customer experiences, and provide a competitive advantage in the market. According to Gartner, organizations with well-established AI CoEs are 35% more likely to make faster, data-driven decisions, resulting in a 20% increase in overall productivity.

The timeline for establishing an AI CoE depends on the organization’s size, maturity in using AI, and specific business needs. It’s an ongoing process that includes monitoring, managing, and maintaining AI systems after deployment. IDC predicts that AI investments will reach $110 billion by 2025, indicating the growing importance of AI adoption for future business success.

In today’s fast-paced digital landscape, harnessing the full potential of AI is critical for staying competitive and innovative. Establishing an AI CoE empowers organizations to unlock the true potential of AI, paving the way for long-term growth in the data-driven future.

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By employing the expertise of CDO TIMES, organizations can navigate the complexities of digital innovation with greater confidence and foresight, setting themselves up for success in the rapidly evolving digital economy. The future is digital, and with CDO TIMES, you’ll be well-equipped to lead in this new frontier.

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Carsten Krause

As the CDO of The CDO TIMES I am dedicated delivering actionable insights to our readers, explore current and future trends that are relevant to leaders and organizations undertaking digital transformation efforts. Besides writing about these topics we also help organizations make sense of all of the puzzle pieces and deliver actionable roadmaps and capabilities to stay future proof leveraging technology. Contact us at: to get in touch.

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