Private Equity Strategy: Is Your Portfolio Ready for Generative AI?

For years, Blue Margin has been highlighting the advancing role of data in business through articles such as:  

• • How Can PE Firms Differentiate Through Digital Transformation? 
  • How Successful Private Equity Companies Leverage Data 
  • The Critical Role of Data Intelligence to Maximize Private Equity Returns  

The importance of data in the modern business landscape is well understood, and many private equity firms have moved their portfolio companies toward a unified view of company performance through better data accessibility and visibility – even if it sometimes comes in the form of Excel spreadsheets.  

So, while you may not have world-class BI infrastructures in place across your portfolio, when it comes to leveraging data for value creation, you already know what good looks like.  

But leading private equity firms are now asking – what does great look like? 

Imagine this: Instead of sifting through spreadsheets or waiting for your data analytics team to generate reports, you simply type a question into Power BI: "What were our sales for Q2 in the Southeast region?" And within moments, generative AI provides you with a detailed visualization and answer. That's the power of generative AI, and it's going to transform the way businesses access and interpret their data. 

Tech giants are already betting big on generative AI. For instance, Microsoft has made a $10bn investment in OpenAI and showcased the capabilities of generative AI and natural language querying with its Power BI Copilot demo earlier this year. (Watch a demo here.) 

In the next 6-12 months, AI analytics is set to revolutionize the business world. Here's why: 

• Efficiency: McKinsey's research indicates that "knowledge workers still spend 19% of their time searching for and gathering information." Generative AI can drastically reduce this time, allowing professionals to focus their time and energy on decision-making and strategy.  
• Competitive Edge: As Miro Kazakoff, Senior Lecturer at MIT Sloan, puts it, “In a world of more data, the companies with more data-literate people are the ones that are going to win.” Companies prepared with an AI-ready data platform – and a workforce equipped to use it – are likely to see a huge competitive advantage.  

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The Middle Market Playbook: Strategic Data Management

How Leading Private Equity Firms are Adapting

In order to leverage these upcoming AI tools, company data will need to be accessible in a data lake environment that supports them, so how are PE firms preparing their portfolio companies for this imminent shift? 

Data Organization: Ensuring AI-Ready Platforms 

PE firms are emphasizing the importance of a robust data platform, ensuring their portcos are AI-ready. By preparing now, you will give your management teams a data platform that supports natural language querying, and drastically reduce the time spent on data collection and analysis.  

Training and Upskilling: Equipping Management and Data Teams 

It's not enough to implement the technology; your team needs to know how to use it. Leading PE firms are working to ensure their management and data teams know how to use AI analytics tools. One way we’re supporting our clients is through a dedicated customer success team as part of our Managed Data Service. We ensure portfolio companies have the support and training they need to effectively use their data.  

Strategic Partnerships 

By collaborating with data management partners, PE firms are ensuring they have access to the latest advances and best practices in the field. Our team is poised to stand up data platforms in less than two weeks and manage the platform ongoing ensuring our clients’ data is always optimized, secured, and refreshed on a schedule (usually daily, but can be configured more frequently for specific customer needs). 

What This Means for You 

The future of data analytics is not just about data collection and visibility; it's about accessing and interpreting it efficiently. Generative AI is the tool that promises to bridge this gap.  

For now, great looks like preparing portfolio data to leverage generative AI analytics.  

If you're not already on the generative AI bandwagon, now's the time. Here's what you can do to prepare: 

• Stay Informed: Subscribe to our podcast, The Dashboard Effect. We’ve been regularly featuring AI advances as they relate to data analytics and business intelligence.  

• Seek Expertise: If you're curious about how generative AI can benefit your portfolio, let's chat. Reach out for a quick discussion on how we’re working with our private equity partners to help them implement the latest trends and strategies.  
  

Blue Margin increases enterprise value for PE-backed companies by rapidly deploying data management solutions at the forefront of technology. Our Managed Data Service puts VCPs into operation through easy access to real-time analytics and produces faster sales at higher multiples. Learn more about our approach and philosophy through our book and weekly podcast, The Dashboard Effect.