Most organizations discover too late that licensing a new enterprise platform is the easy part. By month nine of a Dynamics 365 implementation, the CIO faces a familiar problem: development teams are building the same reporting solution three different ways, shadow IT is spinning up unauthorized Power Apps, and nobody knows which integrations are active or whether they’re still maintained. The question shifts from “what can we build with Dynamics 365?” to “how do we manage what we’ve already built?”
The answer is a Center of Excellence, or CoE. But too many organizations approach CoE as an IT compliance function, when what they really need is a governance operating model that balances innovation with control. The difference between a CoE that stifles adoption and one that accelerates it comes down to how it’s structured, who runs it, and what decisions it actually owns.
Why a CoE Matters, and Why It Can Fail
A Center of Excellence is fundamentally about scaling capability safely. Dynamics 365 and the Power Platform make it possible for any department to build solutions without custom code. Finance can create a roll-up reporting app. Operations can design a custom workflow in Power Automate. HR can automate employee onboarding with Business Central. That capability is valuable, but without guardrails, it creates real problems.
Organizations end up with disconnected databases, data duplication, APIs that call into each other in ways nobody documents, licensing agreements nobody tracks, and worst of all, solutions that depend on a single person’s knowledge because nobody else knows how they work. Compliance teams start asking uncomfortable questions about data security, audit trails, and whether that Power App contains customer data it shouldn’t. Finance realizes they can’t account for total Power Platform costs because teams are subscribing independently. IT loses visibility into what’s running.
The instinct at this point is usually to shut it down: no more low-code development without IT approval, no more self-service, back to centralized control. But that approach guarantees that adoption stalls and shadow IT expands.
A properly functioning CoE does the opposite. It creates channels for safe innovation. It makes it easy for the right solutions to move forward quickly. It protects security and compliance without being gatekeepers. It distributes knowledge instead of centralizing it in one person’s head.
The Core Operating Model: Three Layers
An effective CoE sits across three layers of governance, and each layer has different stakeholders and decision rights.
The first layer is Strategic Governance, which answers high-level questions about where Dynamics 365 fits in the organization’s broader technology roadmap. This is a quarterly or semi-annual conversation among CIOs, CFOs, line-of-business leaders, and enterprise architects. It covers questions like: which business processes are we standardizing on Dynamics Finance and Operations versus Business Central versus custom development? How do we allocate the Power Platform premium licensing budget across departments? What integrations are strategic versus tactical? This layer exists to prevent redundant technology investments and to align platform adoption with business priorities.
The second layer is Operational Governance, which is where most of the actual CoE work happens. This layer owns the standards, the templates, the processes for approving new solutions, the documentation requirements, and the ongoing health of solutions already in production. It’s usually staffed by a mix of IT architects, a business analyst or two, and representatives from the business units actually using the platform. They review new Power Apps for security and scalability. They maintain a catalog of existing integrations. They enforce standards for naming, documentation, and code review. They decide when a prototype is ready to move to production and who owns it afterward. This layer runs on a weekly or bi-weekly cadence.
The third layer is Community and Enablement, which builds the skills and knowledge base that allow the organization to actually use the platform effectively. This includes training programs, documentation, a repository of templates and examples, and forums where developers and citizen developers can ask questions and share solutions. This layer is usually owned by the business units themselves or by IT’s learning and development function, but it should be resourced as a key part of the CoE’s charter, not treated as an afterthought.
Key Design Principles
Several principles determine whether a CoE actually works.
First, ownership matters more than representation. It’s tempting to create a steering committee with representatives from every department, but what actually scales adoption is having clear owners: a sponsor from the business who cares whether the solution delivers value, an owner who knows how it works operationally, and an IT steward who ensures it stays secure and compliant. The business owner drives the roadmap. The operational owner is accountable for uptime and data quality. The IT steward is accountable for security and compliance. When roles are clear, decisions are faster.
Second, CoE should remove friction for good solutions, not add it. Many organizations set approval bars so high that citizen developers give up. The right standard is not “everything must meet enterprise architecture specifications,” but rather “does this solution have an identifiable owner, proper error handling, documented dependencies, and appropriate security controls?” Some solutions can approve in days. Others need weeks. Urgency and risk should determine the timeline, not blanket requirements.
Third, establish a clear criteria for retirement. Solutions do not live forever. A Power App built two years ago to work around a process gap should be retired once the process is redesigned. An integration that was tactical should either be decommissioned or formally handed to a long-term owner. CoE should have the mandate to retire solutions that are unmaintained, redundant, or no longer needed. This is how you prevent technical debt from accumulating.
Fourth, fund it properly and staff it with people who know the platform. If the CoE is underfunded or staffed by people rotating in for six months, it becomes either a compliance police force or invisible. CoE roles should be permanent, owned by people with genuine Dynamics 365 and Power Platform expertise, and the organization should accept that CoE people are not available for project work. They’re invested in scalability and governance, not delivery.
Implementation Sequencing
Most organizations do not need a full three-layer CoE from day one. Sequencing matters.
If you’re early in a Dynamics 365 implementation, focus first on Operational Governance. Establish standards for development, set up a basic review process for significant customizations, and document what you’re building. This can be two people for a company of 500 to 1000 employees.
Once you have multiple production solutions and a growing Power Platform user base, add Community and Enablement. Create documentation, templates, and a way for developers to share solutions. This is where your learning investment starts to pay dividends.
Strategic Governance is usually the last layer to formalize, and it comes when you have enough solutions in production that technology decisions are starting to conflict or duplicate. At that point, a quarterly alignment conversation prevents expensive missteps.
Measuring Success
CoE effectiveness should be measured on business outcomes, not activity metrics. The right KPIs are things like time-to-deployment for new solutions, adoption rates for platforms you’re standardizing on, percentage of solutions with active owners, compliance pass rates on security audits, and total cost of ownership including licensing. Internal metrics like number of solutions reviewed or number of approvals processed are vanity metrics. What matters is whether the organization is getting faster and safer at delivering technology solutions, not how busy the CoE is.
The Reality
Building a CoE is not a one-time project. It’s an operating model that evolves as your platform footprint grows. Early on, it might be a single person who serves as architect and approval gatekeeper. Over time, as solutions multiply and stakes rise, it becomes a cross-functional team. At that stage, it can become a political lightning rod if it’s not carefully balanced between the needs of innovation and the demands of control.
The organizations that get it right treat CoE as a strategic capability, not a compliance function. They staff it with people who actually know Dynamics 365 and Power Platform. They give it clear decision authority. And they measure it on whether the organization is adopting faster and managing risk better, not on how many rules it can enforce.
If your organization is still in the “everyone build whatever you want” stage, that window of agility is closing. A governance framework isn’t about slowing down. It’s about scaling without breaking things. That distinction is what separates companies that harness platform capability from companies that are managed by it.
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