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How Private Equity is Leveraging Technology

Private equity and VC firms both have similar goals to help businesses create and deliver increased value, while also minimizing operational costs. With a growing reliance on technology to deliver on both, firms are increasingly challenged by what has historically been an investment trade-off (invest versus conserve). To make matters worse, technology resources have become harder to find and thus more expensive to source. Thus, firms are finding themselves faced with a need for a new approach. When balancing priorities in technology, there are four factors that need to be the driving force behind decision making, ultimately supporting the strategic goals of the company:

  • Flexibility & Responsiveness
  • Risks & Security
  • Mobility & Access
  • Deep Skills & Breadth of Knowledge

It is difficult to address all of these business requirements when you are a firm of 5-20 professionals.  Even larger firms of 50+ employees find it difficult to maintain skilled resources to address all of the challenges/requirements listed above.  We operate in a generation of “Now”!   As consumers, we are conditioned by the mobile apps we use to have technology which is reliable, responsive and secure. The demands are ever present in a private equity firm and its portfolio companies.

There are ways to achieve these goals while also managing costs.  The following outlines some key approaches and best practices which you can benchmark your firm’s operations:

Deploy Cloud Based Applications – Maintaining servers is expensive and risky.   Using cloud-based applications and hosted services is more efficient and secure than maintaining security, back-ups, and redundancy to support your operations.  Cloud based applications best support growth and contraction, as well as access and mobility.  Some of the more common applications showing rapid growth and use in private equity and professional services firms include:

  • NetSuite – NetSuite is one of the leading cloud based financial accounting and ERP systems today. It is rapidly replacing Quickbooks and MS-Dynamics.  The software company was purchased by Oracle and is making in-roads with small enterprises up to those just under $1 billion.  The application is very robust with multiple add-on applications and depending on the implementation requirements can be implemented in 6-8 weeks or less.  The application will also scale based on the business size, making pricing competitively low.  NetSuite also operates its own CRM allowing users to ditch Salesforce or other packages keeping things integrated in one application.
  • Cut the Cord on Phone Systems – Cloud-based phone applications like DialPad, etc. allow you to easily add lines, phone trees and users for as little as $15.00/month. Cloud based applications can integrate into your contacts on MS-Outlook and you can access your phone from your laptop, cell phone even a desk phone if you still need one.  Most users prefer a headset tied connected to their laptop.  Some applications will also replace video and teleconferencing services further consolidating applications and leveraging costs.  These systems are also ideal for portfolio companies which are growing through add on acquisitions and want to keep cost low and not have to maintain an on-premise phone system.
  • Microsoft Azure & MS365 and Google – The two leading cloud-based email applications are Microsoft 365 and Google. Companies are rapidly adopting these applications to eliminate the need for an email server and maintenance.  Microsoft Azure is their control platform which will allow full control over user access, security, authentication, servers, etc.  With the expansion of Microsoft Teams and SharePoint, as part of the MS365 environment, the firm can easily hold virtual meetings, share documentation and collaborate on deals.  In some cases, the firm can use these secure environments to eliminate the need for virtual data room services further leveraging your cost structure.  Users both internally and externally can be granted access to pre-established sets of data.

Outsourcing IT – Many firms outsource their IT today or rely upon one or two internal employees supported by outside services as backup.   This space has become very competitive.  As the demand for IT talent gets tighter, the cost of maintaining internal resources will increase.  In addition, retaining resources in periods of high demand will create employee turnover and increased recruiting costs.   If you are spending $5,000 – $10,000 per month and are a firm of less than 30 people, you are probably paying too much.   You should assess your total cost to serve based on your employee base and assets supported.  Factor in both internal and external costs and calculate the total cost to operate (“TCO”).   Outsourcing is most successful when choosing a firm which understands your business, employee base and how they want to be supported.  Similar to the way you may choose a hotel: service, cost and reliability.

Network Management & Security Administration – There are a variety of tools/applications which can monitor the network and security.   It is important that whether internally managed or when using a managed services provider (“MSP”) that these tools are deployed.   Examples include monitoring for network access and intrusion, warning of equipment failures, mass deployment of software upgrades, control of employee access, etc.  These applications can also be used to provide better planning of equipment replacement, budgeting and upgrades.

Relying upon an individual or two to support your organization is a risky proposition and come with hidden costs.  The combination of the right resource management and applications which best support and protect the organization is key to optimizing performance while best managing your cost of operations.

SAGIN is a professional services firm which provides IT Managed Services to Private Equity firms in addition to consulting and due diligence support for the past 10+ years.  Our key differentiators are:

  • Full service IT support management using U.S. based resources
  • Global applications management and deployment of leading network tools
  • Remote & on-site support
  • Full hardware and equipment administration
  • On call resources for IT due diligence in support of transactions and portfolio companies.


We can be reached at or or 312-281-0290

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