Digital Transformation

How Tech is Changing the Portfolio Monitoring Process

Learn more about modern tech solutions in private equity and how they're innovating the way firms are managing their portfolios.

Blog Post

5 minutes

Feb 03, 2022

New technology is changing the way many industries manage their data and processes, and private equity is no different. 

Whether it’s managing or analyzing data, reporting, or project management, firms that find ways to effectively use new technology will give themselves a competitive advantage over those that don’t. 

The Need for Technology In Portfolio Monitoring

In a time where storing data digitally is the norm for most industries, private equity companies risk stagnation by relying on old processes to organize, manage, and monitor their data. 

These traditional ways of data management are slow, manual, and inefficient, using simple tools like spreadsheets and by-hand data entry.  

Simply put, these organizations aren’t getting the most out of their data because of the way it is being generated, stored, and handled. 

An industry that requires frequent use of stored data for filings or requests requires data referencing from multiple sources. 

But, when maintained manually, this is a slow and difficult process. 

A 2017 panel found that 48% of private equity professionals questioned said they considered data management an operational challenge and that problem still exists today.

Modern PE firms still object to new technology for a variety of reasons, from the complexity of the implementation to being just too busy. 

No matter the reasoning, without optimizing old processes with digital solutions, organizations risk falling behind more advanced competitors and losing out on revenue. 

Preparing a Plan for Big Data

The issue at hand will only get worse the longer firms wait to rejuvenate their technology stacks, because they’re dealing with more data than ever before, and that amount is getting bigger. 

From 2015 to 2020, the amount of data created by private equity firms skyrocketed from 15.5 zettabytes (or 15.5 trillion gigabytes) to 59 zettabytes (59 trillion gigabytes) and it is predicted to reach 148 zettabytes by 2024. 

graphs that showcase how private equity firms are using more data than ever before

How can any organization handle that much data with manual processes? Realistically, the answer is: they can’t. 

To effectively utilize that much data in daily operations, firms must invest in technology that can help them sort, manage, and increase the quality of the data they’re collecting. 

Poor data quality costs the US economy up to $3.1 trillion each year.

Data management systems can have a big impact on how firms make decisions by revealing additional insights and trends that make it easier to make informed decisions. 

PE firm Two Six Capital turned a pioneering use of data science into over $27 billion in closed private equity transactions.  

Firms are also feeling the pressure from internal stakeholders to include additional use of data to prove regulatory compliance and performance. 

Investors and stakeholders are demanding more detailed reports each year and these reports have a major impact on fundraising efforts for firms looking to boost capital.  

With more data to manage and pressure from outside to utilize data, data management is a burden firms can no longer push to the side. 

What Happens When Private Equity Firms Invest in Technology?

Private equity firms can have an aversion to new technology, but what happens when they do cave and support the implementation of innovative solutions? Success. 

43% of firms have already seen a measurable return on their investment after investing in digital technology and 53% of firms have seen a measurable return in investor servicing. 

New technological investments in data management and workflow planning are seeing major returns. 

53% of firms now see technology as a key competitive differentiator that enhances their capabilities.

The Benefits of Moving Away from Manual Portfolio Management

The benefits of including more advanced technology into portfolio management processes are far-reaching, touching many different areas within PE firms.  

For example, automating data collection and management means saving a lot of time typically spent combing through or organizing data. 

That additional time can be spent on more high-value tasks which require more creativity, critical thinking, and decision making.

Making better use of time increases productivity and removes a lot of wasted labor on repetitive tasks like data input. 

Organizing unstructured data more quickly also makes it easier for firms to use that data and in more meaningful ways, like using it to influence informed decisions. 

Modern Private Equity Technology Solutions

Private equity portfolio management technology involves a range of different innovative tools and software; from project management to automation and data collection and management. 

Finding a tool that does it all can be just as important to help manage the array of moving parts. 

One of the biggest technologies private equity firms are investing in is the use of is the use of a project management service called Smartsheet to manage projects, data, and other processes: 

  • Project Management: Streamline workflows, eliminate data silos, and improve overall project and portfolio management. 
  • Demand Management: Optimize data intake to use for informed decision making. 
  • Integrated Resource Management: Manage teams and resources with time tracking, project management tools, and reporting. 
  • Portfolio Management: Smartsheet’s Control Center delivers consistent management and visibility of projects, portfolios, reporting, and more. 
  • Budget Management: Monitor and track real-time budgets. 

Bottom Line

In private equity, investing in technology to help manage portfolios, data, budgets, and projects has become an absolute necessity to meet the data demands of today. 

More and more firms are catching on and diverting resources to shore up their processes with automation and data analysis technology and those who don’t risk being left behind. 

Want to learn more about innovating processes and implementing new technologies into your private equity firm? Contact us today to speak with an expert and get started. 


Digital TransformationData AnalyticsPrivate Equity


Additional Resources

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