Event Recap: How Private Equity CFOs Are Approaching Digital Transformation

As private equity firms face rapid industry growth, heightened competition, and increased regulation, managing a fund has become exponentially more complex. Yet, today, many firms still live in Excel spreadsheets and back-and-forth email workflows that create data silos and leave valuable insights hidden across disparate documents and systems. 

With a growing number of private equity firms looking to digitally transform their operations to gain efficiencies and unlock hidden insights, Juniper Square and Chronograph recently gathered private equity CFOs together at an intimate roundtable discussion to understand top priorities driving digitalization roadmaps, execution challenges, perspectives on AI, and more. 

Goals Defining Private Equity CFOs’ Digital Transformation Journeys  

As private equity firms embark on digitalization journeys to dismantle data silos and address inefficiencies across front, middle, and back offices, key themes defining most CFOs’ digital transformation objectives emerged in the discussion. 

Establishing a Firm-Wide Source of Truth Across the Organization

While private equity firms have increasingly invested in technology over the last decade, the source of truth for fund data has broadly remained in spreadsheets. This said, more and more private equity CFOs are prioritizing ‘marrying’ their portfolio company, accounting and fund administration, investor, and pipeline data into a single source of truth by ensuring reliable interoperability between point solution technologies. Several factors are driving this: 

  • CFOs are looking to pair investor data with financial position data in a consolidated portal to create an ecosystem where key stakeholders — including finance, investor relations, and LPs — can view an investor’s position across multiple funds, know their history, and understand the performance of that client’s investments.
  • Many noted that with fund growth, systems become more prone to error and that maintaining a single source of truth across the organization is imperative to pull accurate data into firm-wide deliverables. Efficiently tracking and reconciling historical metrics at scale was also highlighted as crucial for obtaining a comprehensive portfolio view over time.
  • Attendees spoke to increasing and more granular LP requests as drivers in their digitalization efforts, citing the need to provide consistent information to investors regardless of where it lives across the firm. 

Unlocking Hidden Insights  

Establishing a single source of truth may be a key landmark on a firm’s digitalization journey; however, much of the excitement expressed by attendees lies in the insights that centralized data unlocks. Getting disparate data sources to ‘talk to each other’ and reveal aggregate insights CFOs ‘know are there’ but are often hidden across disparate systems is the end goal that firm leaders and investors increasingly expect of the finance suite. 

How can we push data into powerful reporting and BI applications? How can we rethink the data we’re sitting on to provide insights and be a better strategic partner to the investment team? How do we serve up those insights across the organization in a way that provides greater visibility? These are the goals many of the CFOs in the group were excited about and are actively striving toward.

Ensuring Technology Adoption and Utilization Across the Firm

CFOs recognize the critical efficiency gains technology and universal access to data can offer employees across a firm. However, they are equally aware of the speed, effort, and adoption risks involved in technology implementations. Many CFOs at the event expressed that getting buy-in from stakeholders across the organization and ensuring that the team fully utilizes the ‘tech stack’ are top priorities in their digitalization pursuits. 

Challenges Private Equity CFOs Face in Their Digitalization Journeys

While many CFOs expressed excitement about the possibilities digital transformation can unlock, they also shared the challenges they’ve encountered in their technology implementation efforts: 

Interoperability

Several CFOs discussed challenges in interoperability as a significant barrier to achieving their digitalization goals. Manual data replication across systems was cited as the biggest hindrance to achieving effective communication between disparate data, with many further noting the costly errors of inefficient processes and the risk of human error when moving data between systems. Without a comprehensive and complete view of partnership information, key financials, and portfolio company operating data, internal silos are inevitable, and firms may struggle to meet the reporting demands of a growing investor base.

Data Fidelity  

CFOs also cited managing discrepancies in reported metrics by portfolio companies across various reporting streams as another obstacle. For example, one CFO shared that the board decks they receive often have different versions of key KPIs than those reported via their quarterly collection process. Similarly, when an administrator’s numbers don’t align with internal accounting, CFOs start relying on shadow books, keeping their team stuck doing redundant, in-the-weeds work. In these scenarios, CFOs are often forced to accept just one reported version, challenging the synthesis of a trusted single source of truth. 

Data Granularity

Accessing granular data with the depth necessary to holistically view performance and risk across a portfolio has also been a challenge. One CFO shared this struggle regarding data collection across consumer and hospitality businesses within their portfolio. With ‘umbrella’ portfolio companies that have multiple locations, they need to collect data for each branch (often unstandardized) while maintaining flexibility to view performance at the branch and portfolio company level — a nuance and harmonization challenge that adds to the data management workload.  

Private Equity Digitalization Best Practices

Several best practices were shared for firms looking to mitigate these challenges. To start, initiating any digitalization journey starts with addressing three central questions: What data do I want to access, how will I aggregate it, and where will it live? Today, the industry is coalescing around implementing fundamental data aggregation solutions coupled with a portability layer:  

  • Pipeline and Investor Data Management: Aggregating investor data from onboarding tools, portals, fund admins, and CRMs is crucial for creating a unified view and understanding of investors. A consolidated home for this information aids in pipeline management, tracking investor relationships, fundraising efforts, and more.
  • Portfolio monitoring: Portfolio monitoring is the third leg of this three-point model, which involves collecting and aggregating post-investment data from portfolio companies. With the right tooling in place, firms can capture all reported metrics. Referring to the prior example, the CFO could capture both versions of a reported metric.

Looking forward, the ultimate culmination of a single source of truth is aggregating data from these solutions into a data warehouse. This unified repository empowers CFOs (and a firm) with a centralized view for actionable insights, enabling swift decision-making and enhancing the overall investor experience. 

Where the Private Capital Industry Is Headed With AI  

Looking ahead, the panel also discussed AI applications within internal operations. Generally, with accuracy paramount across private equity workflows, CFOs displayed a cautious approach to AI use case experimentation. That said, many shared areas where they are actively seeing value-add use cases: 

  • CFOs noted AI’s integration into larger tech tools driving efficiencies, such as Ramp’s capabilities in finance and AI recording tools for portfolio company call summarization.
  • Reliant on large datasets, attendees noted that AI experimentation is particularly ripe in sourcing and diligence processes. 
  • Another use case shared was streamlining fundraising efforts by creating answer libraries that can provide first drafts for due diligence questionnaires and PPMs. 
  • On the investment front, some CFOs are experimenting with AI to enhance productivity. For example, one CFO used AI and Outlook connectivity to generate lists of LinkedIn profiles based on their team’s weekly meetings. 

The discussion underscored the industry’s early stages in AI experimentation, a trend Charlie Tafoya, CEO of Chronograph, has observed across the board — from first-time fund managers to multi-billion-dollar asset managers — noting, “For digitalization of private capital as a broader theme, I would describe us at the bottom of the third inning or the top of the fourth. We’re in the relatively early days.” He emphasized that firms are still working to establish infrastructure, achieve a baseline of data availability, and operationalize processes — all necessary steps for effective AI utilization. 

Christine Egbert, a panelist and General Manager of Fund Administration at Juniper Square, further reinforced the importance of quality data and infrastructure in AI, advising, “When allocating funds to AI investments, divide your dollar evenly between data cleanup and actual AI technology.” 

Ultimately, private equity CFOs today are increasingly pursuing scalable data solutions that provide seamless data connectivity across front, middle, and back offices to unlock insights, provide efficiency gains, and create a firm-wide source of truth. Looking ahead, establishing a robust, future-ready data architecture will prove imperative for experimenting with advanced data analytics and AI use cases. 

About Chronograph and Juniper Square

Chronograph was founded by GP and LP investors to bring modern technology to private capital markets. Built for all fund types, Chronograph GP automates portfolio company data collection, analytics, valuation, reporting, and information warehousing, allowing investors to redeploy time to strategic priorities. Learn how Chronograph empowers private equity firms with flexible data collection tools, unmatched data accessibility, and seamless data integrations across point solutions. 

Juniper Square is an institutional fund administrator and technology provider to private equity firms, allowing more than 2,000 GPs and their LPs to seamlessly connect and communicate across every stage of the investment lifecycle. See how Juniper Square can enhance transparency between you, your advisors, and your investors by combining expert accounting, treasury, and investor services with a modern portal experience.

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