In the first installment of this series, we examined what Altvia Answers is and how private equity firms can differentiate with data. In the second part of the series, Altvia’s Chief Strategy Officer, Jeff Williams, takes a deeper look into why interest in data is on the rise, and why firms and fund managers are actively looking for data solutions. We’ll also discuss how Altvia Answers operates behind the scenes to bring data together for firms and business users to access and interact within a secure data room.
A recent article published by FundFire reported that private equity managers are dramatically ramping up initiatives around how data is accessed and used in order to gather more accurate information and make better business decisions. Industry reports and trends are telling us that data is becoming the most significant operational challenge that firms are facing. Have you observed this in the industry as well?
Absolutely. We’re seeing “data” make more and more appearances in industry studies, headlines and even keynote topics at large industry events. And, it’s a trend that’s coming up more often. Data has long been an issue for firms, but it’s becoming a bigger priority to have faster and simpler access to data, and it has only been in the last couple of years that talks have increased. It’s a topic that’s definitely growing in importance.
What are some of the specific challenges that firms are facing right now regarding data?
Firstly, firms need to understand what data they need, then how to find it in order to gain insights and make better decisions. Firms have data; they just may not have good or efficient access to it. The value chain of taking data and pulling insights out of it is complicated, and it’s a multi-step and slightly different process for every firm. But on a basic level, the process involves acquiring the data itself, then recognizing, structuring and bringing it together, and finally analyzing and consuming it. That sounds straightforward enough, but when a firm actually attempts this–even on a small scale, much less a large scale–it’s much harder to follow a clear and defined process for how to perform these steps; where to do them, when to do them, and once it’s done, how to know that it’s been done properly. There are enough challenges just in a single step of this process, and a whole host of unique problems can escalate quickly for individuals and firms at any point. So, for a firm to be successful with a data process, it’s really a matter of looking at what they are trying to accomplish and what the problems really are, then finding out how best to solve them.
Firms and managers are finding that an inability to access and use the data they have is a problem. What are some of the contributing factors, and what’s a good way for firms to approach these issues while searching for a data solution?
The process of acquiring data, then organizing, storing, accessing, analyzing, and reporting on it is definitely harder than it sounds. When you look at this process across firms, many are still relying on data in spreadsheets for the majority of these steps. A lot of extra time, resources, expertise, version control issues, and risk is involved with spreadsheet dependency, and it can ultimately be far more complicated than it should be to answer data questions. With Altvia Answers, we have tried to help eliminate this kind of dependency. We focused on the problems that people had, and how we could solve those problems in a way that helps eliminate human error and compliance risks. Technology is at the core of the product in terms of how problems are solved, freeing up teams to focus on more human-centric work.
With the release of new solutions comes new terminology and buzzwords. What are data warehousing and ETL, and why is it helpful for individuals in the private equity industry to know what they are?
On a high level, data warehousing is the storage of data. You might ask then, isn’t all data stored? And yes, it is, but in the absence of warehouses, you end up with data stored in many different places and any number of different versions. A data warehouse is designed to store and warehouse data to allow technology to provide leverage.
ETL (Extract, Transform, Load) is a buzzword as well and is largely misunderstood. Basically, you need to acquire data, then prepare, analyze, and consume it. ETL the process of extracting data from a place, then transforming and organizing it properly. Once extracted and put into usable formats, it can be served up for analysis and consumption in forms such as simple queries, visualization, charting, tables, and more. ETL is one of the major keys to solving data problems: extracting, transforming and loading data is a technology process, and we can eliminate human error risk and save time and resources by allowing technology to do these processes.
Combining the two concepts of data warehousing and ETL allows data to be stored in a single place. In addition, there are no questions as to version control issues, and by allowing technology to do the steps, your firm’s skills and resources can instead prepare for analysis.
In addition, with Altvia Answers, business users can get that information themselves, without swivel chair between programs or waiting to get data from other teams. The way we have approached Altvia Answers is to make technology do all of this work instead of humans, then enable the end consumer–like business users without IT skills and time to do all of those things–to be able to interact with the properly-prepared data out of the ETL process, and in a matter of clicks in seconds, filter down the criteria they’re looking for, ask questions that they have, and get the answers back immediately in real-time without human intervention, time or risk.
How does Altvia Answers help firms surpass the competition by becoming more operationally efficient?
Data continues to grow in importance because these challenges are becoming more persistent. Many people are aware that data is the key to these issues, but they may not know how to actually implement solutions that create leverage around data instead of hassle or struggle.
Operational challenges differ between firms, but can largely be boiled down to an increase in demand for reporting–financial reporting, regulatory reporting, investor reporting, and so on. In spite of differences between firms, data is what drives much of the process, along with relationships with customers and investors. In relation to financial reporting, this means ensuring that data is accessible, consumable and workable so that we can understand our business and therefore make competent decisions on how it’s run.
Altvia Answers is designed to make working with data painless, easy, less error-prone, and independent of specific resources or wrong, miscalculated or outdated data. With Altvia Answers, a business user can get real-time data in three clicks, rather than three weeks, allowing teams to focus on finding new investment opportunities and prospects. What we’re developing with Altvia Answers is the future of differentiation: the ability not only to answer the questions that people are asking, but to allow them to ask questions and answer them themselves as well. We believe that not only can you differentiate by optimizing your firm’s operationally competency, but we believe you can take it further and start to enable your customers, investors or constituents to self-serve, and that’s not something a lot of people are yet doing. That provides the level of differentiation that people in our industry are chasing.