Which Private Equity Software Implementation is Right for You?

By Ben Hendershot

There are a number of software solutions on the market today that help Private Equity fund managers track their deal flow and manage fundraising.  It seems like each solution employs a different implementation strategy ranging from, on one end of the spectrum, an extensive and prolonged engagement with a consultant to, on the other end, the company that just hands over the software and says “good luck.”  Selecting the right fund management software can be a difficult process but evaluating which implementation strategy is right for you is often as important as evaluating the functionality of the software itself.

Our experience has taught us that an out-of-the-box solution can be a good fit for organizations that have fairly standard business processes.  This, I think, is just the nature of out-of-the-box software and for the price-conscious buyer, out-of-the-box software can provide a decent amount of functionality for your dollar.

One implementation strategy for out-of-the-box software is to purchase software that has the potential to grow with your organization.  Simply getting up and running on software and getting your data in the system can reduce up-front implementation costs and is often enough to provide significant value and get widespread buy-in from your team.  When your organization grows or when your team realizes the potential value in expanding the system, you can further customize or increase functionality at that point.  Of course, this strategy requires you to buy software that you can grow into in the first place.

A more in-depth implementation involves engaging an expert or team of experts to help your organization configure the software to mirror your business processes.  These engagements are more expensive than an out-of-the-box implementation obviously, but can be extremely beneficial, especially for organizations that have unique processes.  In this type of implementation, you’re able to rely on people who are more efficient at implementing software than you are and often you can benefit from the industry-specific best practices and experience that an implementation team brings to the table.  In terms of total cost of ownership, paying for an expert implementation up front can result in a system that provides more value for a longer period of time.

Finally, one often hidden benefit to a more in-depth implementation is that it gives an organization an opportunity to solidify its business processes.  We run into many clients who have a process in their head and who rely on that business process to a certain extent every day, but the process is not formalized or well-documented.  Going through an implementation for fund management software requires a thorough understanding of a fund manager’s business process so the implementation will initiate a conversation that results in a clearly defined process.