Cybersecurity, Cloud Top List of Private Equity Investment Areas for 2017
As you probably recall, our 2016 Private Equity CTO Survey – which we released at the end of November – highlights key IT priorities and investment areas driving private equity firms in 2017. And while we shared some high-level findings at the outset, we’d like to take the opportunity to dig a little deeper into some of the survey results over the next two weeks. Since the survey itself covered four primary areas, our next four Hedge IT articles will examine each of these areas independently and highlight some of the most interesting and thought-provoking findings.
To kick us off, let’s start by taking a look at some critical business priorities for private equity firms in 2017.
Drivers for Private Equity IT Investments
We all know and appreciate how technology can impact our day-to-day operations. For private equity firms, advances in technology have enabled their businesses to become more efficient and drive growth across the entire organization.
When asked to identify the top drivers impacting IT spend in the next 12 months, survey respondents highlighted the need for increased protection against growing cybersecurity threats, a desire to improve the investor/client experience, and the goal of improving efficiencies by refreshing outdated or legacy technology.
Larger firms (> $1BN AUM) were more likely to indicate a desire to support globalization and business expansion, which is a more probable scenario for a firm managing more assets and likely with a larger footprint.
Smaller firms (< $1BN AUM), in contrast, were more likely to select the goal of optimizing worker productivity, an indication that these firms hope to be more agile with their limited resources.
Investment Areas for 2017- Private Equity Cloud and Cybersecurity
Private equity cybersecurity is once again at the top of this list, which highlights significant investment areas for private equity firms in 2017. Given the focus on cybersecurity preparedness across the financial services industry, this should come as no surprise.
Private equity firms are also keen to investment in the private cloud, as evidenced by more than half of the survey respondents. Private equity firms of all sizes are looking to leverage the benefits of managed infrastructures, whether it be to support daily operations or host applications.
44 percent of firms also identified a propensity to focus on big data and business analytics going into 2017. The sheer amount of data PE firms are now attempting to manage has clearly become a focus area, particularly in light of increasing reporting and transparency requirements by investors and regulators.