Leading For Success: Finding Answers In Your Private Equity Data, Part I

HOW CAN FIRMS BENEFIT FROM ACCESSIBILITY, INTERACTIVITY, AND VISUALIZATION OF THEIR PRIVATE EQUITY DATA?

To explore current trends around data and information solutions in the private equity marketplace, we interviewed Altvia SVP, Industry Solutions & Strategy, Jeff Williams. The discussion will be presented in a series of blog posts in order to provide a comprehensive perspective on this trending subject.

Thanks, Jeff, for joining us to discuss what private equity firms need to know about data. Let’s start with a quick introduction: Please tell us a little about what you do at Altvia.

I lead the team at Altvia that is focused on finding and assessing private equity firm challenges that we believe can be—and really, have to be—solved using technology. Specifically, we’re interested in identifying problems or issues that, when addressed properly, help private equity firms differentiate themselves and become more operationally efficient.

The private equity data solutions we develop enable firms to collaborate and communicate more effectively—both internally and with investors. Our systems are true game-changers in the private equity ecosystem.

What is currently trending around technology in the private equity marketplace? What are people talking about, and which solutions do they need?

When it comes to the problems people are having with technology or problems that technology can help to solve, the big trends center around data. At a strategic level, how to store, accumulate, and analyze data is an important topic right now. And there’s a bigger conversation about relationships with limited partners regarding the ability to service them effectively and be good partners. Often these discussions focus on transparency. But at a relationship level, it’s really more about how these partners interact with each other.

So, the ability of firms to improve their service interactions with stakeholders is top of mind?

Yes. At the end of the day, private equity is a market that provides financial services. A lot of conversations lately are about the service itself and, more specifically, what service is actually being provided. When you look at service industries, they are traditionally driven by incremental steps of differentiation: How can they provide something even slightly better or different from their competitors?

Altvia offers a leading-edge private equity data solution: Altvia Answers. From the perspective of a firm, what exactly does Altvia Answers do?

Altvia Answers is very much a solution built to solve the private equity data problems we’re hearing about. For the better part of the past few decades, this industry has been active in using technology to generate data, and more recently, to consume additional sources of data. We’re at a point where older firms have accumulated data much less methodically than firms that are starting out today, and this reveals several important considerations:

  • Firms that have been in business longer have ended up with multiple systems along the way, and there are often no integration points between those systems.
  • Often, the systems on their own are not capable of doing much with the data they contain, nor are they capable of performing the complex analyses that firms need today.
  • The capabilities of modern technology within the realm of private equity data (complex queries, management of large volumes of information, and making sense of all your data) are not functions that exist in the legacy systems that many firms are using.

In a nutshell, people have systems that don’t interact, even though they’re relevant to each other. Firms would like to look at the data within them together, but there are tremendous inefficiencies with trying to bring those systems together, showing a lack of capabilities of these tools on their own.

Altvia Answers is a solution that addresses the entire chain of these issues by bringing data from disparate sources together in one place, then doing modeling using all of that information to establish a single source of truth for all of your data across all of your systems. Even better, Altvia Answers connects to the data systems a firm already has in place, with no need to export or upload information. This greatly simplifies the process.

It also facilitates very powerful and advanced private equity data capabilities in terms of analysis on a large scale, and it does that in the cloud in an automated fashion so there is no need to embark on time-consuming and error-prone manual processes.

And, most importantly, Altvia Answers enables business users to interact with their data across systems in very intuitive ways, and on any device, eliminating the need for highly skilled, IT-centric resources that would historically have spent weeks at a time developing an analysis. Altvia Answers is right at the fingertips of business users and executives at any point, ready for them to ask their own questions and get their own answers in an engaging and intuitive way.

As you were instrumental in developing and launching Altvia Answers, we’re guessing you have some great stories about how the solution works, specifically to help private equity firms. Could you share some examples?

One particular organization had spent nearly two years assessing vendors in an attempt to find a solution that could deliver on the vision they had. They felt it was not only compelling, but also very different from their competitors. They were looking for a system that would allow them to really provide a service that was highly differentiated, unique, and superior to their competition.

After talking with dozens of vendors, they found a few that came very close to their criteria, but there was always something missing from the bigger picture. As we talked with them and began to understand their vision, what we were able to do with Altvia Answers was allow them to identify the best-of-breed solutions across the entire chain of systems involved in executing their vision. This allowed them to use the best CRM solution, then put Altvia Answers on top to connect their entire system.

Now entirely integrated, this system provides the firm with a single place for business users to go in order to find, analyze, and understand data across their organization. Altvia Answers proved to be the key to a complete solution to their business challenges.

Altvia Answers helps firms position themselves as industry leaders?

Correct, and a big part of it is not only the ability to consume data across systems internally, but also to allow their clients to access important, real-time data that is relevant to them. For data-hungry clients, the scenario went from “We’ll send you a statement in the mail every so often,” to “You don’t even need to pick up the phone to ask us for information. You can access the data that’s relevant to you in real time, at any time.” And they can do so in a way that’s intuitive, efficient, interactive, and engaging.

It’s having a snowball effect on their whole business structure?

Yes, Altvia Answers, and the way it maximizes the value of private equity data, is serving as the cornerstone for more efficient internal operations and processes that are more organized and more systematic. This snowballs all the way through to providing new capabilities to their investors, which in turn strengthens their relationships and positions them as industry leaders.

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ABOUT JEFF WILLIAMS:

Jeff joined Altvia in 2011 and leads Product Management and Marketing. Prior to joining Altvia, he spent nearly four years as an Analyst and Associate, sourcing and evaluating investment opportunities in venture capital funds and late-stage venture financings in private companies. He was also actively involved in the fundraising process and used AIM extensively to manage both the fundraising and investing processes. Outside of work, Jeff enjoys skiing and playing golf.

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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 Salesforce.com 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 Salesforce.com 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 Salesforce.com — 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.