The short answer to the question “When is the right time to implement fund management software?” is, “Right now!” And that’s not simply because we’re in the fund management software business.
There are two main reasons for implementing an industry-specific solution, as described below.
A Source of Performance Metrics
LPs today are doing more quantitative analysis on their returns than ever before. Consequently, it’s never been more important to have fund management software with robust features for capturing detailed investment performance metrics.
And just as importantly—if not more so—you’ve got to have a way to share them efficiently with your LP base. More than simply expecting quality returns, LPs have increasingly high expectations about transparency.
At the same time, there’s been general downward pressure on management fees over the last several years. Effective data management using advanced fund management software is a key to meeting those increased transparency demands from LPs without increasing headcount, the workload of middle-office functions, and ultimately a firm’s bottom line.
A Repository for Institutional Knowledge
The other reason for implementing a software solution is that it can help you get better at capturing, structuring, and storing the qualitative, institutional knowledge that is so important in the alternative investment industry.
It’s not called private capital for nothing. Complete, accurate, up-to-date information is hard to come by.
Being able to capture and, more importantly, connect the disparate pieces of data that people across the firm come across when conducting business can create a very significant competitive advantage. Many times, investment and marketing teams are geographically and logistically asynchronous, making in-person collaboration and knowledge sharing impractical. Consequently, having a centralized, easily accessible data source is vital to a firm’s success.
Show What You Know: Telling Stakeholders About Your Fund Management Software
We sometimes get asked by firms if they should tell LPs about the software they’re using. Our answer is, “Absolutely.” Before committing to a fund or a period of service, LPs want to know that they’ll have full transparency into a firm’s activities.
They also want to be reassured that the firm is doing all it can to leverage every scrap of information it can get its hands on. Explaining that you use fund management software that prioritizes those features and goals can put their mind at ease.
And there’s no better time to do that than right now!