siphon off the small piece of rot.  just like an infected wound on a person, you need to dress and clean such a wound.  after you suck out the rot/fungus/bacteria-whatever, it should be ok.  it doesn't look like it has advanced any into the body/cap.
sometimes (some) sarcophytons develop such "infections" from a slight overabundance of coral slime/mucus that the coral exude from irritation (e.g. something just touched it, water conditions, etc.).
overall, the coral looks fine though (looks like a s. serenei if i had to guess, the polyp spacing toward the center sets it apart from s. elegans).  they just need to be kept clean every now and then.  hth