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ROI of a private capital markets system implementation project

To successfully predict and measure the ROI of a system implementation project in the private capital markets, firms need to take a bigger picture view of the benefits (both real and potential), rather than looking at a strict cost-saving approach.

The Reality

ROI is perhaps the key metric for evaluating a typical system implementation project.

“If we spend X to automate a process, or systemise an operation, then we should expect to save Y.”

Yet successfully forecasting a project ROI, then measuring it, in the real world of a typical private capital markets firm can be extremely challenging. This is particularly true of the type of projects we are often engaged on, where value is realised or unlocked in a multitude of ways that may be:

  1. Specific to the Firm in Question.
  2. Difficult to Quantify in Hard Financial Terms.
  3. Critical to the On-Going Operations of the Firm.

However it is vital for a project to receive buy-in internally and the budget required, that ROI can be demonstrated. So how do we go about this in the real-world?

Specific to the Firm in Question

Every organisation operating in the private capital markets is unique. From the small GPs and Family Offices where roles are fluid and individuals have to wear many hats on a given day, to the multi-billion funds with dedicated departments, systems and processes.

What unites them all is a unique approach to:

  • How they operate.
  • The technology stack they rely on.
  • The needs of their stakeholders.

The net result is that a technology project may solve a huge problem in one firm, that simply doesn’t exist in another.

For example, a client may have undertaken a system selection exercise and determined that in all respects but one (say a report that underpins a crucial process), a particular system is the perfect fit compared to the competition. Approaching it|venture to develop a custom solution that provides this missing report solves the problem and delivers what the firm needs. But the extra cost of developing it simply places the firm in the same position it was already in before the new system implementation.

So in strict ROI terms, the custom functionality project doesn’t deliver value over and above the status quo. However, the decision makers should look at the bigger picture. The firm’s operations are built on this report and the chosen system ticks every other box compared to the competition.

So here the ROI of building the required functionality should be measured against:

  • The cost/impact of not implementing the new system and continuing with the current approach.
  • The cost of purchasing and adapting a different system (which has been discounted for other reasons in the selection process).
  • The cost and effort of adapting the firm’s operations to remove the need for this report to be generated.

Difficult to Quantify in Hard Financial Terms

The perceived reality of many IT projects is that the automation of a process should result in cost savings from a reduction in headcount or a similarly direct cost saving. While there are examples where this can still be true in some firms, the reality for most of the private capital markets is that many projects won’t deliver this type of clear cut cost saving.

This comes down to the reality that most roles in the industry require the completion of and exposure to repetitive, error-prone and time-consuming tasks that form part of a person’s role, but which are not their core duty. In these cases it therefore becomes a matter of freeing up time to utilise on tasks that generate more value internally.

  • Deal Sourcing – using technology to allow deal teams to spend another hour of their day identifying targets, instead of searching for information or completing admin tasks, realises thousands on a cost per hour basis, while bringing the potential of many multiples of the spend if an opportunity is identified that would have been missed.
  • IR – with competition levels growing exponentially, offering a higher level of data accuracy and availability has become a USP that firms can leverage to secure investment, build relationships and ensure the long-term success of their fund.
  • Analysis – leveraging technology to streamline the preparation of your existing analysis is one thing, but the value creation potential is limitless when you enable your staff to generate more sophisticated analysis using data you currently cannot unlock.

Critical to the On-Going Operations of the Firm

Firms are having to satisfy an ever-greater list of demands and again this can be felt at many levels throughout the industry. From the small fund that runs on spreadsheets, to the fund admin that relies on on-prem solutions, via investors who need ESG data to satisfy their own mandates.

In these situations, the reality of measuring ROI is again restricted, as in many examples, the project may simply be viewed as a cost which previously didn’t exist.

However once again, the strict interpretation fails to take account of the reality of the firm’s operations. In each of the examples above, a failure to invest at this stage may impact the viability of the business moving forward.

So here, the question becomes less about how much money the project will save the business and more about how the project will allow the firm to continue to operate successfully and thrive into the future.


It is vital that when entering into a project, participants think outside the traditional measures of ROI when determining its viability and positive impact on the business. Through careful application of the above thought processes an array of benefits, both in real financial and opportunity terms can be identified, which forward thinking businesses can leverage to future-proof the success of their business.

If you would like to discuss how it|venture can address the challenges you or your business is facing, please get in touch with our team by emailing info@itventure.com.


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