Digital Transformation Basics from Private Equity

Member News

PE firms' primary goal is to scale their portfolio companies fast. Digital transformation is a fundamental requirement for rapid business growth. The investment lifecycle for Private Equity is typically three to five years from initial review to value creation and exit.

Consultant IT Director Ken Hampton works with PE firms to improve their portfolio companies with technology. He specialises in uncovering opportunities and risks through digital reviews and in-depth IT assessment.

Opportunities for technology-enabled growth 

A typical review will assess the business’s digital and IT strategy, change delivery and IT governance. How far do business systems and processes meet the current need, and are they scalable for future growth requirements?

The primary way PE firms create value is by maximising revenue growth and optimising spend. Digital technologies can enable new products, services and routes to market, they can streamline processes and improve efficiency.

Data is a pillar of the digital review – how far is the company leveraging business insight to drive improvements?

Managing risks with suppliers, infrastructure and cyber attacks 

Digital reviews assess whether a company is cyber secure and GDPR compliant. Is the business sufficiently protected from continuity risks and are systems and infrastructure resilient?

IT suppliers and vendors are key links and must be adequately managed with the right contractual protections. IT policies, IT operations, software development and user support will all come under the spotlight of a digital review.

The five basics of digital transformation

Ken's led IT assessments and digital reviews with prominent UK businesses in logistics and distribution, construction, manufacturing and B2B services. Although the specifics vary significantly there are consistent outcomes across all industries.

  1. Put some structure around how you manage IT and determine IT priorities. You won’t get far if your leadership is pulling in different directions. You need an IT steering committee attended by an engaged senior management team, and group-wide priorities based on business need and determined by that steering committee. 

  2. Next focus on getting your core business systems in better shape. Make sure they support all your key business processes. This will help to drive out internal efficiencies, ensure consistency of approach and provide a wealth of exploitable data. 

  3. At the same time do your security housekeeping: multi-factor authentication (MFA), single sign-on (SSO) authentication, Cyber Essentials Plus (CE+) certification, Microsoft Intune and Active Directory for identity management.
    Once these things are in shape you can start to drive real business change by focusing on two main areas:
  4. Servicing your customers better with digital technologies – this is the heart of digital transformation.
  5. Using your new, consistent and valuable data for insight to your business, your clients and products.

As they say, it's a journey not a destination and there is always work to be done. If you're intererested to find out more, take a look at the Director's Guide to leading digital transformation.