Leading for Success: Operational Efficiency for Private Equity Fund Managers
Operational Efficiency for Private Equity Fund Managers
By Ben Hendershot, Altvia
Operational efficiency is a hot topic for Fund Managers right now amongst a number of media publications and our client base. The general sentiment is that resource requirements within a Private Equity firm are growing faster than AUM. With the increased demand from institutional investors for greater transparency and the never-ending pursuit of the highest quality deals in a competitive market, it’s no wonder why Fund Managers are prioritizing operational efficiency.
In the early days of fund management software, we had to explain what the Cloud was. It was a rather new concept and was at times considered a risky endeavor. Fund Managers were more comfortable storing their data on a server in their office or housed in various spreadsheets on employee hard drives. Times have definitely changed. We no longer have to explain what the Cloud is nor how it is likely more secure (due to sophisticated authentication, data redundancy, etc.) than the on-premise server at the office. We also don’t have to explain the efficiencies that result from having access to your data from anywhere, anytime via an Internet-connected device. The general consensus with prospective clients is that they understand the operational efficiency that the Cloud has created.
One area that we still discuss with many clients is what you store in the Cloud. While the fears of storing Limited Partner data have largely gone away (or can be handled with permissions), there is still a hurdle to get over the importance of storing operational data in a system. We work to educate prospects on the value of having as much institutional knowledge in systems so that it doesn’t walk out the door when someone leaves or disappears when a laptop fails. Not only is this understanding important to communicate, its adoption is fundamental to the ability to act on that data. In other words, it’s really hard to be transparent with Limited Partners if all of your data is not in one place.
One of the most fundamental requirements to demonstrate operational efficiency is the ability to produce analysis and reporting in a timely manner. Whether it’s providing deal flow statistics, performance metrics, or responding to an ad-hoc request from a Limited Partner, they all hinge on having data structured in a way that allows it to be reported efficiently. Altvia has 10 years of experience structuring the data that drives the operations of Fund Managers. We have made significant investments in understanding what the outputs are in developing our internal data structure. At the same time, we realize that the best structure to get data out may not lend itself to the most efficient input of data. As such, we have designed our asset data management input flows to allow the user to input data efficiently while storing it in a way that allows for efficient analysis.
In closing, organizational adoption of whatever systems you have are a prerequisite to attain the highest levels of operational efficiency. A top-down and bottom-up culture that data is valuable is critical. The acknowledgment and realization that you are investing time in data now to benefit the firm for years to come can be a powerful value proposition in creating a culture of operational excellence. It is absolutely astonishing to see the power of the data managed by the numerous customers of ours that have firm-wide adoption of our technology solutions. The analysis they can extract is nothing short of amazing. It validates the value our solutions provide and makes us not feel so bad about all the preaching we do along the way to encourage user engagement with the technology.
Ben Hendershot came to Altvia with a background in management and IT consulting. He has worked extensively both domestically and internationally delivering complex solutions to large and small clients. At Altvia, Ben is the Chief Operating Officer and focuses on translating the company’s vision into action, and working in close collaboration with the Leadership Team to make this vision a reality for employees and clients.
In his free time, Ben enjoys exploring the Colorado back-country and traveling with his family.