TABB surveyed 119 senior private equity executives across the US, Europe and Asia, covering a wide variety of strategies including buy-outs, venture capital and fund of funds.
The survey revealed 57 per cent of fund managers and general partners consider the time required in getting a complete view of portfolios as one of the major barriers to operational efficiency.
This was followed closely by a lack of front-to-back system integration at 50 per cent, and a lack of frequent and timely reporting, also at 50 per cent.
The survey also found 67 per cent of firms believe the investment management platform is either “very important” or “extremely important” in achieving operational efficiency.
While a majority of 70 per cent said providing access to interactive investor reporting was important, the survey discovered that only 23 per cent of respondents are currently providing this access.
One third of the firms said they found generating on-demand performance reports challenging.
The research also found almost all survey participants are currently challenged by regulatory issues and that 39 per cent find it “very” or “somewhat” challenging to operate within current market conditions.
The need for technology for improving investment performance was another key issue, with 42 per cent of those surveyed stating that prioritising technology as a strategy would result in at least some improvement in the quality of investment decision making.
TABB Group partner and director of research, Adam Sussman, said increasing investment in information systems is a vital requirement for helping private equity firms “effectively compete in the increasingly democratised world of private equity”.
“Whether deploying on premises or leveraging the systems provided by a third-party administrator, the investments in technology will help lead to increased levels of operational efficiencies, enabling PE firms to quickly adapt and respond to the reporting challenges imposed by investors and regulators,” said Mr Sussman.
SunGard chief operating officer Lauren Iaslovits said the study confirms that private equity firms recognise the value of increased transparency and more effective data management.
“Increasing stakeholder demands to be kept informed mean that private equity firms need a ready ability to transform data into useful, digestible, reportable information that can be utilised, as well as help to improve the quality of their decision-making,” said Ms Iaslovits.
“The challenge that many private equity firms still must overcome though is that operational inefficiencies are hampering them from delivering the intelligence they need to support internal stakeholder reporting – and, even more critically, their investment decisions.”
