How to Avoid Pitfalls When Choosing Fund Management Software

Purpose-built fund management software is essential for any private equity firm or fund manager that wants to be successful. Not only does the right fund management software enable users to handle all the tasks necessary to engage with stakeholders effectively and track those efforts, but it also empowers them to do so with maximum efficiency.

In other words, implementing a well-designed fund management software solution can help you get more done with less effort! However, the key there is “well-designed.”

If in your eagerness to get a system in place you make a poor decision, you may do more harm than good. Many low-end fund management software systems are sitting idle today at private equity firms around the country because they were hard to implement, use, maintain, or all of the above.

And as a result, many fund management software champions are licking their wounds and wishing they had never promoted the idea of buying a system.

6 Key Considerations for Finding the Right Software

To ensure that the solution you select meets your needs and will be used to help your firm achieve its objectives for years to come, it must be:

  1. Easy to implement. If it takes months and months (or more!) to get a fund management system up and running, enthusiasm for it will decline or disappear altogether. This isn’t to say you want to hurry through an implementation. It means you need to find a system with a great design that makes it simple to get it up and running.
  2. Customizable to your needs. Forcing people who will use the fund management software to completely overhaul how they do things to align their processes with the system’s features is not going to go over well. You may find processes that should be changed, but your fund management software should also have some flexibility.
  3. Easy to use. People are much more likely to use a system if it’s intuitive and user-friendly. If there’s too much mental “heavy lifting” required, there is a good chance they’ll simply do things the old way, and your adoption rate will suffer.
  4. Secure. There’s no worse feeling than to arrive at the office in the morning and be told not to log into your fund management software because it’s been hacked. The thought of all that important—and often sensitive—information in the hands of cybercriminals, and all the damage that may be done to relationships you’ve worked so hard to build, can be crushing. You need a system that’s well-protected from unauthorized access.
  5. Open to integration. Your fund management software likely isn’t the only mission-critical application at your firm. Being able to share data between and among systems is vital to efficient operations. Implement a system that doesn’t have this characteristic and you can look forward to lots of double-entry of information.
  6. Well-supported. You will have questions about how to use your software most effectively. You must be able to get answers from friendly, knowledgeable experts who know both the product and the industry. There should also be self-help resources available.

The Risks and Rewards of Buying Fund Management Software

There are tremendous rewards to be had from implementing advanced software. If you’re not using the right system, now is the time to find it and make the switch. But you need to be clear-eyed about the risks of putting just any system in place.

If you are, you can look forward to a huge increase in both the quantity and quality of the work your teams can produce. Interested in seeing the right system in action? Contact us today to request a demo.

A traditional crm was built for general ‘customer’ scenarios

Software platforms have made the world a better place by making work a better place. Indeed the world is better off when people enjoy their jobs even marginally more, and workplace applications on big CRM platforms like have done that and much more.

But the potential that platforms like these offer presents diminishing returns: once the platform provider has engineered too many industry specific components into its platform, its usefulness for other industries begins to be threatened, and with that so do the usefulness of the component tools built into the platform.

So it is with the CRM category that has defined: it is generic enough to work for many industries, and yet still offers the potential for others to round off the edges and nail more vertically-oriented and extremely tailored software solutions.

Private capital markets are actually a great demonstration of this dynamic. Where generic CRM platforms simplify — appropriately so — to assume there’s a business, a customer, a sale, and service of that customer, there are a few industry-specific pieces that are missing.

Take for example, that investors become customers by investing through legal entities the GP raises. It’s a subtle but important nuance that just doesn’t make sense at a platform-as-a-service level (because it’s overly complicated for a simple one-time sale that many industries require), but which can easily be added without 10 years or software engineering. Once provided, the rest of the platform’s components become tremendously powerful again and you’re set to take over the world.

As a traditional CRM in our pillars methodology, these nuances must be present to properly account for investors in these legal entities, potential target companies and which are owned by these entities, the context of all interactions with these parties (as well as the appropriate overlap, ie co-investments), and how you’re arriving at finding these opportunities on both sides of the equation, such that you’re able to piece together what’s effective and what’s not. Not just because we say so, but because these are the very relationships and data that are key to the motivation behind a CRM in any industry.

It’s critical, too, that the valuable publicly-available information that helps to enrich CRM systems and save users painful steps of entering it themselves is fully-integrated at the platform level.

Again, look no further than the 3,000+ pre-built integrations that — the creator of the CRM platform concept — has at a platform level to do so, and which only exists by way of holding just short of overly-specifying certain industry workflows that would present challenges to properly integrate.

Stakeholder reporting and communication (investor relations) draws on a range of datasets

The traditional “customer service” model of CRM systems once again makes overly-simplified assumptions about the customer relationship when applied to private capital markets.

In fifteen years I personally have yet to hear the terms “warranty” or “service call” in this market because it’s just not the same. But make no mistake, as uncomfortable as it may be to say aloud, customer service is more important now than ever and it’s constantly happening; the industry is, after all, considered to be a financial “service”.

As it turns out, that service is primarily information-based — it’s driven by data and takes the form of reports and analysis that drive decisions, and then end up again in investor-facing reports and analysis.

The foundational elements of a private capital markets CRM must be built such that they accommodate this data (like we discussed above), but so too that it can accommodate additional supporting data that investors (customers!) need in the context of service.

Oftentimes this supporting data — financial metrics and time-based values, for example — is believed not to meet the traditional definition of CRM and the natural thought is “well, better do this in Excel!”.

While I happen to believe Excel is still the greatest software application ever built, its introduction to this value chain we’ve discussed herein actually creates the problem many firms suffer from: key data needed to provide customer service (again: effectively the entirety of a firm’s reports and analysis) is now in disparate systems and detached.

Both of those dynamics are important and distinct: not only is this supplemental data disparate, but when brought together there is no logical association that can be made between the two data sets.

Allow me, then, to make the point very simply: not only can this financial and time-based value data (you may be thinking about is as “portfolio monitoring” or “accounting”) be a part of a CRM, it is arguably the most important part of a CRM because it’s at the core of what providing service to the customer entails — information that comes out of data!

Firms need a digital method to engage stakeholders (ie investor portals)

Investor portals are not new; in fact, for many of us — including myself — they conjure up horrifying nightmares in which we’re aimlessly guessing at folders to find the newest document we need.

So in lies the opportunity: not only have the portals we’ve come to hate not simplified the process of acquiring information, they’ve failed to create an entirely new experience that is “customer service” driven.

To be fair, this is not a B2C market where you’d be long out of business for not having focused on customer service and thus the customer’s technology-driven experience. But don’t expect to be around too much longer if you aren’t thinking about this shift.

Today’s institutional investors increasingly expect this same consumer-like experience, and a massive opportunity is being missed by not providing it. It’s not about providing them the experience they desire; it’s more about the ability to measure engagement that is had in return.

Put simply: what’s keeping the market from providing this experience is the availability of the information that’s required to create the service that provides the experience.

If you’ve hung in this long, you know that by focusing on your CRM, you have the data that’s required to manage the customer relationship and the technology-driven experience through which that information is shared to create a differentiated and opportunistic customer experience.

fund management software