STATE OF PLAY

FINDINGS & INSIGHTS:

DATA ENDGAME: FROM IMPROVED PERFORMANCE TO BETTER DEALS

5 minute read time

KEY FINDINGS

73% of all firms consider performance optimisation as the most critical outcome of a data strategy for back office operations

66% of all firms consider measuring portfolio / project performance as the most critical outcome of a data strategy for investments and deals

STATE OF PLAY

FINDINGS & INSIGHTS:

DATA ENDGAME: FROM IMPROVED PERFORMANCE TO BETTER DEALS

5 minute read time

KEY FINDINGS

73% of all firms consider performance optimisation as the most critical outcome of a data strategy for back office operations

66% of all firms consider measuring portfolio / project performance as the most critical outcome of a data strategy for investments and deals

Firms are building data strategies with specific targets in mind, whether cleaning up their data, cutting costs, or measuring portfolio performance, but improved valuations are also on the table.

What is the most critical outcome of a data strategy from a back-office/operational perspective? For 73% of respondents, performance optimisation—such as accuracy/removal of human error—is one of their top-three outcomes. This is followed closely by better data quality and integrity (69%), regulatory compliance (62%) and cost reductions (56%).

Notably, improving the investor experience is seen as far less critical—only 12% cite this as a top priority. This suggests that firms may be missing out on an opportunity to engage with investors. That said, the subject of investor engagement through data is mentioned frequently by survey respondents, no matter the size of their firm.

“Investors want to receive data in a seamless manner,” says the managing director of a US-based private debt firm with an average fund size less than €250 million. “In addition, they want us to provide more digital services where they can compare the performance of holding companies.”

Aside from improving the investor experience, some firms are looking to trade on tech credentials to boost their profile: “Technology investments have become a way to attract stakeholders,” says the partner of a similarly sized US-based private debt firm that is looking to deploy predictive analytics. “Even if the investment may be unnecessary, it is still carried out in an attempt to improve the company’s image.”

What do fund managers consider the most critical outcome of a data strategy for back office operations?

SOURCE: Aztec Group & Acuris Report – Differentiation Through Data (Nov. 2022)

PERFORMANCE OPTIMISATION SUCH AS ACCURACY / REMOVAL OF HUMAN ERROR

BETTER DATA QUALITY AND INTEGRITY

REGULATORY COMPLIANCE

DRIVING DOWN COSTS

BETTER INVESTOR EXPERIENCE

Used effectively, data can drive deals

From an investment/deal standpoint, two-thirds of firms say that they consider measuring portfolio and/or project performance to be one of the most critical outcomes of a data strategy. Drilling down into the data, 70% of private debt and multi-asset fund management firms agree with this sentiment, followed by two-thirds of private equity firms.

“Data helps in getting a proper view about a company’s performance,” says the CEO of a multi-asset firm based in the US, with an average target fund size between €250 million and €500 million. “It is crucial to streamline the portfolio from time to time, and data strategies can ensure many positive changes.”

The potential for more accurate valuations is another critical outcome, according to 52% of respondents, rising to 65% among real estate funds. This topic generated a significant amount of comments from respondents, including this remark from the CFO of a France-based multi-asset fund, with an average target fund size exceeding €1 billion: “We cannot move ahead without a data strategy because it helps establish accurate valuations. We sort data effectively and use datasets that are most relevant.”

Enhanced collaboration is also considered critical in the context of data strategies, with 51% of respondents selecting this option. As the partner of a US-based multi-asset fund with an average target fund size between €500 million and €1 billion puts it, “With a data strategy, there is less ambiguity about the role of team members during a deal. They know what data they must manage and the protocols that need to be followed to manage that data.”

"We cannot move ahead without a data strategy because it helps establish accurate valuations. We sort data effectively and use data sets that are most relevant.”

CFO of a France-based multi-asset fund with an average target fund size over €1 billion

Reporting on ESG data remains an issue

ESG reporting scores relatively poorly—in large part because consistent metrics, reliable data and standardised reporting frameworks remain elusive.

“Most ESG information is quite vague,” confirms the chief strategy officer of a US-based multi-asset fund with an average target fund size between €500 million and €1 billion. “This does not help in creating proper reporting systems. Evaluating existing or future reporting measures is tough.”

For some firms, poor ESG reporting is forcing them to become increasingly innovative in how they source the data itself: “ESG data is horrible, but we have come up with a solution that may fix things,” explains Christopher Conradi, chief digital officer of FSN Capital. “We are investigating going into the finance system and looking at invoices to see what lines are in them. Looking at both incoming and outgoing invoices, we can see what companies are buying and selling. You get a good sense of environmental ESG factors in this way.”

What do fund managers consider the most critical outcome of a data strategy for investments and deals?

SOURCE: Aztec Group & Acuris Report – Differentiation Through Data (Nov. 2022)

MEASURING PORTFOLIO / PROJECT PERFORMANCE

MORE ACCURATE VALUATION

ENHANCED COLLABORATION

QUICKER DUE DILIGENCE

REAL-TIME ANALYSIS

SHORTER TIME TO CLOSE

ESG REPORTING