Background
At the recent SS&C Private Markets Club, industry leaders Jeremy Hocter, Director at Holland Mountain, and Suresh Krishnamurthy, CTO at SS&C Technologies, shared valuable insights on how firms can scale while managing operational complexity.
Below are the four key takeaways from their discussion.
1. Scaling AuM Without Increasing Operational Costs
As firms grow AuM, the challenge is to scale investment capabilities without a corresponding increase in operational overhead. Increasing complexity – through offerings like private wealth and feeder funds – requires more sophisticated management, but the solution lies in smart outsourcing. By partnering with the right service providers and designing an outsourcing model tailored to the firm’s needs, firms can grow without exponential increases in operational costs.
Key Insight:
Designing the right outsourcing model and strategic service provider selection is critical to scaling efficiently amid increasing complexity.
2. The Challenges of Shadow Accounting
Shadow accounting, once embedded in a firm’s operations, is difficult to eliminate. The biggest challenge is often timing – firms need data quickly for liquidity models and other analyses. However, with proper fund admin oversight and streamlined data access, the need for shadow accounting can be removed. While this is the future direction for the industry, many firms are not there yet.
Key Insight:
Implementing effective fund admin oversight and real-time data access is essential to move away from shadow accounting and improve operational efficiency.
3. Co-Sourcing: A Short-Term Solution or Long-Term Strategy?
Co-sourcing can provide a short-term fix, but its sustainability is often questioned. While effective for managing transitions, long-term success comes from working with an administrator whose operating model aligns with the firm’s needs. Ensuring the right controls are in place to guarantee data accuracy at the source is more effective than relying on shadow processes.
Key Insight:
Co-sourcing works well as an interim solution, but long-term efficiency is best achieved through alignment with the right service provider and robust data controls.
4. Culture: The Key to Success in Data Initiatives
Cultural change is the biggest challenge in driving successful data initiatives. Making existing processes more efficient is not enough—firms must be willing to rethink how they work. This shift needs to be led from the top. The most effective approach is to start small, with quick wins, and build momentum gradually, securing buy-in across the organization.
Key Insight:
Success in data initiatives requires a top-down cultural shift. Start with incremental changes to build trust and drive long-term transformation.
The Path Forward
The future of efficiency in private markets relies on leveraging the right technology and service provider models. Firms that can navigate cultural shifts, align with service providers, and streamline operations through effective outsourcing and data strategies will be best positioned to succeed.
ATLAS Fund Admin Oversight: Eradicating Shadow Accounting
ATLAS Fund Admin Oversight is leveraged by many leading PE firms, giving them both access to and confidence in the data managed by their fund administrators, eliminating the need for shadow bookkeeping.
Here are five benefits of our solution:
- Gain real-time access to your data held by fund administrators.
- Have full audit history functionalities.
- Automated data reconciliation, far beyond a pure data warehouse.
- Enrich the data with further attributes.
- Unlock your data and give self-service access to all who need it.
Leveraging our solution enables scaling operations effectively, allowing the addition of new funds without the need to expand the accounting team. Contact our team for an initial demo.