Achieving one source of truth
Multiple siloes of data
When it comes to technology solutions, five to 10 years ago, private capital firms used to try to select a single software vendor to deliver all functional requirements across the front, middle and back office. This approach had limited success. Most vendors had strengths in certain areas but key weaknesses in others. None could deliver all functionality well.
Over the last five years, a series of new solutions delivering specific functionality successfully entered the market. As a result, most managers have now moved towards a ‘best of breed’ approach, where their technology stack is made up of multiple different solutions covering particular functionality.
While these solutions deliver their specialist functionality very well, they often fall down when it comes to integration and reporting capabilities. The result is that most private capital managers now have multiple siloes of unconnected data. They often have different versions of the truth across systems and teams, with no easy way to combine data and deliver unified reporting. There are inevitably gaps in functionality which are not covered by any system, which results in duplication of data in Excel.
Some managers have tried to solve the challenge of having multiple best of breed systems by integrating systems across their business. This is an expensive and onerous exercise which also means they can’t easily switch systems in and out of the organisation. Also, managers still face the issue of inadequate reporting.
Another impact of system fragmentation is that the overheads and the need for systems professionals within private capital firms has increased. Barnaby Piggott, CEO at Holland Mountain, advises: “Having multiple best of breed solutions and point technology increases the need for data governance and dedicated system expertise. This was less of a consideration five to 10 years ago.”
Bringing it back together
The most efficient solution to the challenge posed by multiple data siloes is to implement a data platform that sits above all the operational systems and spreadsheets, consolidating and aggregating the data and creating one source of truth for the firm. This was the rationale behind the development and launch of Holland Mountain’s Data Platform.
Recognising the private capital industry’s increasing data challenges, Holland Mountain acquired data warehousing and data analytics company, Consolidata, in 2018. This business was made up of a team of highly skilled data scientists who had been developing a data platform over the last decade, deploying it across various industries. Having worked with Consolidata on several mutual clients, Holland Mountain saw the enormous value the data platform, along with this team’s expertise, could bring to the private capital industry.
“After the acquisition, we focused the team on the needs of the private capital industry, spending two years honing the data platform and building out a series of connectors to the key private capital systems. We now have a relatively ‘plug and play’ solution which can be easily layered on top of a firm’s current technology stack, and deliver value faster than traditional, internally developed data warehouses and for a far lower cost,” explains Piggott.
With the power of this platform, Holland Mountain can work with private capital GPs, LPs and fund administrators to understand what they want to do with reporting and analytics, AI or machine learning. “Then, we can overlay our platform, which allows us to aggregate data across the front, middle or back office source systems and Excel. The result is a single source of truth within the firm,” he says.
“We are not here to replace existing operational systems. Investors and managers should be purchasing the right operational systems to meet their functional requirements. But once those are in place, they can benefit from a solution like ours that draws the data back together so firms can use their “data as an asset””.
The potential offered by ‘one source of truth’
Once private capital firms have achieved ‘one source of truth,’ they can truly start leveraging their data as an asset. Their highly paid employees can spend time analysing data rather than manually aggregating and reconciling it. They can begin to combine data and ask new, interesting questions. This will produce meaningful analysis and insights, giving the firm a competitive advantage.
If all the data is in one place and properly governed, more innovative projects such as Machine Learning and Artificial Intelligence suddenly become much easier.
A rapidly evolving technology landscape
The private capital technology landscape is changing faster than ever. What is today’s best technology might not be the same in two years. CFOs and COOs are having to continually analyse the technology market to ensure they are not being left behind. When selecting a system for any part of their business, without proper scoping and requirements and market research, they run the risk of making the wrong choice.
One other thing to keep an eye on is the amount of M&A activity and private equity investment going on in the technology space. Business ownership will have an affect on the quality of service and the product roadmap.
A question we get asked all the time is, “how do we future-proof our technology stack?”. The only way to truly future-proof a firm’s operating model is to design it for flexibility. The traditional data warehousing route leads to systems which are intricately meshed together and are very difficult and costly to unwind. Our ‘plug and play’ Data Platform enables firms to be nimble as they are able to change one of the underlying components of their technology stack if they need to.
Discussing the industry trends more broadly, Piggott says: “Private capital managers need to move away from their inherent reliance on Excel. For that to happen, the industry needs more technology and better technology. Private capital is a low volume, high complexity business. For vendors building solutions that are flexible and robust enough to cater for the industry’s needs, it is a significant challenge.”
Private capital managers have historically been slow to invest in systems, technology and data solutions. The firms that gain competitive advantage over the next five years will be those that have made a significant investment in their technology and data strategy.
CEO, Holland Mountain
Barnaby Piggott is a Private Capital Operations, Technology and Data expert. He has over 18 years’ experience working with Private Capital firms across the UK, US & Europe on operational & data strategy, system selection & implementation and data analytics & business intelligence.
Barnaby began his career in Private Equity with AnalytX (now eFront), before spending six years with a boutique Private Equity consultancy. He founded Holland Mountain in 2009 and the company has since delivered 250+ successful operational & data strategy and change management engagements for over 65 Private Capital clients, including most of the UK’s largest Private Equity firms. Barnaby is a CFA Charterholder, a CIPM Certificant and a PRINCE2 Registered Practitioner.