A Few Observations from the Front
When we founded PIP 8 years ago, information technology was an important, yet often secondary area of focus at both the Private Equity and Portfolio Company level. Over the years, we have seen a shift in attitudes towards IT, and today it is viewed as a critical area of importance. Information Technology has become one of the largest single portfolio company expenditures, and is an area where meaningful cost savings can be achieved, contributing directly to the bottom line. IT is also an area where crippling expenses can occur if IT challenges are not properly dealt with as a portfolio company grows.
With this shift in attitudes regarding IT, procedural changes have followed. We’ve summarized some of the most important for you to think about with respect to your own processes:
- 1. Private equity firms are getting much more involved in decision making. They realize that technology is not just a mandatory operating expense. They now realize technology can pin-point customers, improve repeat purchase frequency and streamline operations. In other words, effect the top and bottom line. The trick, of course, is to know what you need, and what is just IT fluff.
2. Because PE firms are paying higher multiples for Portfolio Companies, more often than not operational improvements are an important initial business building strategy. The question we hear on literally every engagement is, What can we do to make our companies-in their current form-better, right now? We applaud this pragmatic “first focus.” Impatience is good, so long as it is intelligently directed and aligned to the longer term direction.
3. Private Equity professionals are asking to be copied on IT deliverables to their portfolio companies. They’re busy, and they don’t want to get mired in detail, but they sure as heck want to know what’s going on, rather than being given some “sanitized executive summary.” You might want to ask yourself, what’s in my email inbox?
4. IT Projects are being signed off on much quicker than in the past. PE firms are focused on getting it done right now. Waiting to see how things turn out when left to the portfolio company is simply passé. And we are doing our best to keep up: PIP is now the IT Consulting Company of choice to the PE industry because we identify your most pressing needs, offer the most cost effective solutions, then get done on time and on budget. Suggestion: Demand nothing less from all your strategic partners!
5. Projects that increase competitive advantage and/or those that increase EBITDA are the top priority. While everybody recognizes the “other stuff,” like productivity per employee and reducing IT costs are important to address, these activities are taking second seat. You just need to be careful about mortgaging the future, by focusing exclusively on the here and now.
Special Offer to PIP Clients and Prospective Clients Only…
We think what’s going on is so important, PIP has developed a highly interactive 45-minute workshop, Do It Now, specifically for busy PE professionals. In less than an hour, in the convenience of your own offices, we guarantee you’ll pick up a tip or two you can apply to your businesses starting tomorrow.
Your IT department needs to play a significant role in facilitating the growth of your business.
“Nautic Partners has worked with Performance Improvement Partners for several years. They are a unique set of seasoned technology personnel with deep experience who can quickly dive into a wide array of businesses. We have been very satisfied with the work they have done with our portfolio companies.”
-James LaRowe, Managing Director
Nautic Partners, LLC