The Most Important Tool Private Equity Firms Need to Boost Growth and ROI

In a tech-driven business culture, you can’t effectively lead others if the technology and tools you depend on are behind the times. This is true, not only on a practical level, in terms of the capabilities and data insights you need in order to stay agile and outperform expectations, but also on a leading-by-example level as well. This understanding is particularly relevant for private equity firms, whose mission implicitly involves optimizing and increasing the value of the companies in their portfolio by providing both structure and guidance.

Portfolio companies not only need leadership that’s tech-savvy enough to shepherd them through their own digital transformations, they also need leaders who can light the way forward, preparing them for the road ahead with a depth of understanding that only the latest data analytics and AI-enabled tools can supply.

In order to achieve the best ROI, portfolio companies need to leave legacy systems behind, so they aren’t hobbled by spiderwebs of siloed data trapped in a hodgepodge of mismatched spreadsheets and outdated accounting applications without cloud capability.

And if the private equity firm itself is hampered by legacy systems and disconnected, disorganized data, it’s that much harder to get its portfolio companies modernized and moving forward, which in turn holds back the growth, scalability, and agility of the portfolio companies.

It’s also worth noting that the compliance and reporting needs of private equity firms are typically complex, given the need to manage multiple entities. Trying to manage those needs manually with aging and inadequate systems creates a self-sabotaging drain on the time and talent of team members who could be focusing on higher-level tasks. It’s like a leaky pipe that wastes resources and puts a drag on forward momentum.

How the Right ERP Solution Lifts All Boats

The good news is that with a well-chosen enterprise-level ERP solution in place, all of the challenges outlined above can be transformed into powerful advantages. Here are some of the key benefits that the right ERP can deliver:

• Improved Data Integration and Visibility: You can’t connect the dots if you can’t see all of them. By centralizing your data and making it more accessible, you’ll enable your teams to analyze and interpret it efficiently and in real time. As a result, you’ll have better visibility into every stage of your business processes—from forecasting and planning to reporting.
• Better Decision Making: Better data leads to smarter decisions. A great ERP system will give you the ability to analyze your financial data in multiple ways, whether by segment or legal entity, and consolidate everything into a single report. With better analysis and reporting, you’ll be able to plan further ahead and make more successful strategic choices.
• Streamlined Financial Management: When it comes to finances, efficiency is the name of the game. The right ERP system will help you manage revenues and expenses with greater control and less effort. And when you can automate key workflows, approvals, and other finance functions, you can also maintain leaner finance teams, giving you a notable advantage in a time of ongoing labor and talent scarcity.
• Managing Complexity: For private equity firms, a certain amount of complexity comes with the territory. After all, they need to manage data and accurately allocate costs for multiple entities and funds while also tracking deal spend for potential acquisitions. This makes it crucial to have a system that can manage multiple environments under one umbrella without breaking a sweat.

Which ERP Is Best for Private Equity Firms?

Taking all of the above into consideration, there’s one ERP that stands head and shoulders above the rest in its ability to respond to the particular needs of private equity firms and take their tech capabilities to the next level: Oracle’s NetSuite.

Here’s some of what NetSuite brings to the table:

• Accessibility: Private equity firms need to make data available to a lot of stakeholders, and this is an area where NetSuite really excels. With NetSuite you can offer full data access to internal teams, while also offering read-only access to partners and other external stakeholders. This can reduce the amount of time spent responding to information requests and compiling bespoke reports manually.
• Integration: NetSuite is adept at integrating and managing data from multiple environments, and consolidating input from multiple financial teams.
• Cloud Capabilities: NetSuite delivers all of the benefits of a modern cloud-based ERP, including advanced AI-powered analytics features, a reduced need for IT staff, evergreen updates, lower maintenance costs, and a much smaller footprint compared to on-premises systems.
• Security: NetSuite offers the kind of exceptional security that private equity firms need, given the multiple internal and external stakeholders who have access to data. It begins with strong encryption, role-based access controls, and robust password policies. NetSuite adds layers of additional protection that include multi-factor end-user authentication and token-based application authentication. NetSuite’s round-the-clock monitoring and dedicated, tenured security team—backed up by advanced tools, controls, and policies—helps deliver powerful data security.
• Modular Expandability: One of NetSuite’s greatest advantages is its arsenal of modules that let you expand its capabilities as needed. Modules like SuiteBilling, Revenue Management, OneWorld, Multi-Book Accounting, Fixed Assets, Financial Management Cloud Services, and SuiteTax can help you move beyond core functionality to keep up with your business needs and prepare you to take on new challenges.

With Sikich’s team of experts helping you implement NetSuite smoothly and rapidly, you’ll be able to go live in weeks, not months. We can also help you fine tune your implementation and provide ongoing support so you get the most from your ERP, with flexible plans that let you tap into as much or as little support as you need.

Want to learn more about how Sikich can achieve the full power and capabilities of a cloud-based ERP for private equity firms? Reach out to us today.