The tech tab

Keeping a private equity firm's internal technology infrastructure in ship shape requires, as with most things, time and resources. One special challenge of managing the technology needs at a private equity firm stems from the fact that individual partners often have diverse viewpoints on how to allocate these resources.

Those responsible for tech budgets often find it challenging to gain consensus from the partners on backing a particular project. ?A lot of my projects are driven by what [the partners] see at other firms,? according to one source responsible for IT at a venture firm. ?It's a bit of a keeping-upwith-the-Jones scenario.?

Where it can become frustrating, say sources in the industry, is that while their systems are recognized by other professionals in the tech world as being very solid, many times the GPs take for granted the capacity and reliability of the firm's IT systems. Then, all too often, when it comes time to take action to keep up the system's quality, partners balk.

Delivering the message
IT managers recommend taking a conservative and well documented approach to submitting proposals for upgrades and maintenance.

?I'm careful to only recommend what we need,? says Deborah Cooper, VP of administration at Chicago-based private equity firm Frontenac Company. Identifying precisely what those needs are involves sitting down with her IT support staff and pulling together two lists – the ?musthaves? and the ?wants,? then sifting through and deciding the priorities to be accomplished in the next year, then ultimately submitting a written proposal to the firmwide budgeting process.

?You have to take it slow, explain why this is the best way of doing it, and what the cons are if you don't do it,? says Cooper. In order to fully develop the recommendations and justifications within the budget proposal, starting the process as early as possible is important, she adds.

IT managers should stay in the loop about the activities of the firm and how IT might better support those activities. Stuart Appley, who serves as chief information officer for Walden International, says he keeps his ears open, and when he hears a GP mention an IT concern, he jots it down on a list of notes that he keeps. ?As projects come to a close, I go through them, consolidate, categorize, and see what the biggest complaints are,? he says. ?I take the top 10 to 15 and [decide] which ones would make the biggest return on investment. Once I decide that, there's my next group of projects.?

IT managers should stay in the loop about the activities of the firm and how IT might better support those activities.

Another in-house IT manager says he sits in for a few minutes at the monthly partners meeting, where he gives a quick overview of the state of the firm's IT infrastructure and and shares ideas on how to make improvements. Face-to-face interactions are important; otherwise, it can be difficult to track down the partners via email or voicemail.

However, the IT manager warns that when proposing a project, seeking too much feedback from the partners can complicate and lengthen the process. A better alternative, he says, is to have a clear plan laid out for them to vote yes or no. ?They nod, you walk out, and you go do it,? he says.

While the yearly budgeting process can help set out some guidelines and goals for the following year, the actual IT expenditure may end up being quite different. At many firms, when the GPs see something they need, they will most likely get their way, whether or not that particular IT project is mentioned in the budget. For many in-house IT managers, these types of trickle-down mandates are just another fact of life.