This is the second part of a two-part article covering the common complexities of utilizing data and technology in the private equity industry, and mitigating challenges by outsourcing to a fund administrator. If you have not read through part one which discusses data and technology trends in the private equity sector and its impact on firm efficiencies, you can find it here.
Common Complexities of Technology Implementation
What are the common complexities faced when implementing technology platforms?
Although the use of technology can help differentiate investment firms, while gaining a strategic advantage, problems can occur when data and technologies are not implemented, utilized or managed effectively. Careful consideration for integrating digital tools into existing business models is crucial. Decision makers must consider the main complexities a firm may face as they explore technology and data solutions:
- Understanding operational complexities and the goals to be achieved through investments in technology; implementing digital solutions must be thoroughly understood and analyzed to achieve short- and long-term goals.
- Digitization is a wide-scale operational shift, requiring decision-makers buy-in to shift the organizational culture toward a data-driven approach.
- All constituents must be on the same page before implementing new systems; not all limited partners want to use online portals to review or submit fund documentation or reports.
- Executing data strategy requires a technology infrastructure that can administer large volumes of data and support advanced analytics. Not all technologies can help general partners or fund managers reach their data strategy goals.
- Additional technology adds a new level of complexity that needs to be proactively managed.
- Data integration involves combining data from multiple sources to create a unified view, requiring careful planning and attention to detail. Integrating data from various sources and across multiple workstreams poses many logistical and technological challenges. Close collaboration between executive leadership, technology professionals, and business stakeholders is required to align the data strategy with broader business objectives.
Mitigating Challenges of Implementing Technology by Outsourcing to a Fund Administrator
What are the benefits of partnering with a Fund Administrator?
Fund administrators understand how crucial technology is to offer and maintain reliability to their clients; having enhanced software and analytics specific to the alternative investment industry is paramount.
Platforms such as Investran, eFront, and VPM allow data to be tracked and maintained securely. Using a secure, sophisticated network of platforms minimizes the risk when using paper-based documentation and cumbersome manual processes and allows for transparent and secure reporting. These platforms perform the data input and output in a more controlled and reliable environment.
FIS Investran, Ultimus’ proprietary applications uACCESS™ Pro and uINVESTOR™ store and distribute investor correspondence through a secure web-based platform. These portals allow access to online, updated data and reporting to fund managers, general partners, and limited partners.
A tech-enabled private fund administrator should be able to support even the most complex fund structures with controlled security measures in place. Look for general partner and investor portal options that provide real-time, cloud-based portal, allowing access to advanced data visualizations, intuitive reporting, and analytics, as well as secure document access in order to deliver investors secure access to their data from anywhere. When it comes to asset manager’s fundraising, a digitized onboarding platform could help private fund managers simplify their limited partner experience by saving time and raising capital more efficiently. Also, well-equipped fund administrators work with APIs that allow for integration with CRMs, fund administration tools and other technology software. Along with these industry leading platforms, a fund administrator should tout professionals and processes that give you a greater level of control, quality, and transparency to serve as a seamless extension of your firm.
The cost to individual managers to invest in the right technology can be expensive and overwhelming. Partnering with a fund administrator who already invests in these industry leading platforms allows fund managers access to advanced technology while avoiding much of the cost, vetting process, and time-commitment of in-house implementation and on-going maintenance. There are a few simple steps to follow when evaluating if outsourcing to a fund administrator is right for your firm:
- Identify: Assess current processes to detect how technological inefficiencies impede asset manager and limited partner experience.
- Prioritize: Review overall fund strategy and expected outcomes from improved processes and systems. Seek processes that will have the highest impact on limited partner and fund manager experience, operational efficiencies, and profitability.
- Inquire: Reach out to fund administrators to learn how they leverage technology and data strategically to deliver excellent client service. Compare services offered, technology and platforms used, pricing, client support, etc.
As technology in private markets continues to advance, general partners and fund managers will continue to face increased demands for accurate and timely reporting. It’s critical for investment managers of all sizes to maximize the utilization of data to best achieve their business objectives. Partnering with a fund administrator can alleviate the high costs of bringing technology in-house and help meet the expectations of investors. At Ultimus LeverPoint, we leverage industry leading technology to navigate the complexities of fund accounting and utilize your firm’s data to help you achieve a strategic advantage.
ULP #17138836 08/07/2023