For Private Equity, Data Chaos = Value Depletion

[fa icon="clock-o"] 9/5/18 9:31 AM [fa icon="user"] Jon Thompson [fa icon="folder-open'] Power BI, Data Management, Private Equity, Data Analytics, dashboard

Middle market private equity firms share a common denominator: their portfolio companies rely on a menagerie of software platforms to manage finances, sales, locations, product lines, services categories, ad nauseum. 

According to research by Andrew McAfee and Erik Brynjolfsson of MIT, companies that inject big data and analytics into their operations show productivity rates and profitability that are 5% to 6% higher than those of their peers. (Harvard Business Review)

Investors need a cohesive financial and operational picture of their portfolio companies in order to remain aligned with executive teams on value-creation priorities. But with so many data inputs and variables, gaining a clear, shared picture can be a herculean task.

You have three basic choices for managing your data. You can keep reporting as usual (slow, cumbersome, and static), rip and replace software to consolidate to a single platform (expensive, and not viable in most cases), or consider integrating the data between systems with a data intelligence tool (dingdingdingding!).

Consider this: most software systems provide two broad functions - process flow and reporting.  If your process flow is working reasonably well, but your reporting is fragmented or incomplete, consider NOT ripping and replacing software, but creating a virtual integration of the reporting data.

With a data intelligence platform (we prefer Power BI, SQL, and Azure), you can virtually integrate all your systems in one place – secure and streamlined.  Because even if your disparate software platforms have good reporting functionality, they’ll be siloed and won’t provide the filtering, KPIs, and end-user access that a built-for-purpose data intelligence tool will. 

Lack of visibility into portco performance works against value-creation. By investing in a private equity data intelligence solution, everyone can read from the same playbook to see what’s working and what’s not up to the day or hour.

If you’re interested in seeing how data intelligence can increase your portco outcomes, contact Jon Thompson.

 

Jon Thompson

Written by Jon Thompson