There are many software solutions on the market today that help fund managers track their deal flow and manage fundraising. It seems like each solution employs a different software implementation strategy ranging from an extensive and prolonged engagement with a consultant (on one end of the spectrum) to the software provider that just provides access to the software and says “Good luck!” (on the other end).
You could argue that each of those approaches has its advantages. A long period with a consultant means your team will get all its questions answered and have a good understanding of the software when you go live with it. Being handed the keys means you’ll have to fend for yourself, and that can prompt you to delve deeply into its functionality. But, of course, both methodologies have their drawbacks, too.
So, while selecting the right software is critical, evaluating which software implementation strategy is right for your firm is just as vital. In fact, as we noted in another blog, ensuring widespread adoption of your private equity software solution is crucial to your success. And if your software implementation doesn’t go well, you’ll face an uphill battle in getting people to use it and maximizing its value to the firm.
Our extensive experience with firms of all types and sizes has proven that a so-called off-the-shelf (OTS) solution—one that’s used as is, with few if any modifications—can be a good fit for organizations that have fairly standard business processes. OTS software may also be the right choice for your firm if you’re price-conscious and looking to get a good amount of functionality for your dollar.
Software implementations with OTS solutions tend to be fairly straightforward. Because the same system is delivered to all customers, the software implementation process tends to be standardized and well-documented.
And the lack of customized functionality doesn’t have to be negative. Many firms find that there’s value in getting their software implementation and data entry completed quickly. For one thing, this approach minimizes implementation-related costs. Plus, enabling teams to get productive faster can mean increasing your revenue faster. So, in effect, the software pays for itself more quickly.
In addition, rapid software implementations can lead to greater buy-in from users, as they start seeing positive results and want to capitalize on that momentum.
Then, as your organization grows or users recognize the potential value in expanding the system, you can customize the solution or add functionality. Of course, this strategy requires that you buy a solution that’s scalable and expandable in the first place.
Software Implementation for Customized Solutions
If a private equity software solution will be highly customized, the software implementation is, by necessity, more involved. An expert or team of experts must work with users first to understand their needs and then modify the software to meet them.
This approach can be very beneficial if your organization has unique processes. It means you’re not forced to fit round pegs into square holes, so to speak. That said, when done right, this approach involves looking at your existing processes from a new perspective. Yes, the software will be modified to support whatever workflows you choose, but it’s wise to first ensure that those workflows make good business sense and that they’re clearly documented, well-understood, and universally practiced.
Then, when it’s time for the actual software implementation, there’s a tremendous value (and comfort) in being able to rely on the skills and experience of people who do software implementations for a living. They bring with them the latest industry-specific best practices and can ensure that your team is able to capitalize on them.
Expert software implementations are, not surprisingly, more costly. However, in terms of the total cost of ownership, paying for an expert-led software implementation can result in a system that provides greater value for a longer period.
Investing in a New Solution
As the private equity industry gets continually more competitive, firms have a greater sense of urgency when considering technology that can give them an edge. However, rushing to purchase a solution and conduct a software implementation is never a good idea. Firms that take the time to evaluate both the new system and the software implementation process always come out ahead of those that make snap decisions without considering the big picture.
You want to be sure that your firm is in the former category!