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The Private Equity CTO: Business Strategist, Cyber Czar

By Kaleigh Alessandro | Tuesday, January 24th, 2017

Technology innovation and evolution has had a profound effect on many jobs, perhaps most notably for a firm’s Chief Technology Officer. Once tasked with desktop support and server maintenance, these IT executives have seen their job descriptions change dramatically over the years. But that change doesn’t necessarily signal something negative.

Our Private Equity CTO Survey asked these technology experts directly how they spend their time and what they view as the new and evolving role of the private equity CTO. Their answers highlight a transformative shift from technology troubleshooter to strategic thinker.

With the advent of outsourcing and the cloud, many feared or expected the CTO role to diminish. So perhaps the most notable finding of our survey is that 93 percent of respondents believe their firm’s CTO or top IT executive is becoming more important to their business. The vast majority of private equity IT execs are becoming more focused on managing relationships with contractors, cloud and other IT service providers. This increased focus is in alignment with the trend of today’s progressive CTOs drawing on cloud technology to create agile firms that can quickly deliver the applications users require – and working hand-in-hand with outsourced providers to support the organization’s technology and operations objectives.

Most firms (85 percent) also see the CTO becoming more involved in driving the firm to meet regulatory and compliance demands. This is especially true as regulators outline data protection and cybersecurity expectations that can only be fully addressed through the use of technology. Additionally, regulators’ expectations around third-party due diligence has increased, placing more responsibility on CTOs to execute thorough risk assessments on the contractors, cloud, software and IT service providers used by the firm.

Taking the Cybersecurity Reins

As regulators call out the role of a Chief Information Security Officer (CISO) more and more, we wanted to understand what percentage of private equity firms have separated the CISO responsibility from the CTO responsibilities. An overwhelming majority of our survey respondents indicated that their CTOs/top IT execs are also in ownership of the firm’s top information security role.  

CTO Contributions Continue to Diversify

As it has remained across the various findings within this survey, cybersecurity is a top focus area for private equity CTOs. When asked what the most significant contributions their firm’s CTO has made to the firm, nearly two-thirds praised CTOs for upgrading IT and data security to prevent cyber-attacks, Controlling IT costs and converting business strategies into IT strategies are two other prominent contributions by today’s CTOs.

In 2017, there are also other areas where private equity CTOs are expected to make significant contributions, and these areas highlight a transition from tactical to more strategic focus areas. The following areas are expected to become more significant to private equity firm CTOs in the next 12 months: enabling global expansion efforts, enabling plans for client reporting and transparency initiatives, and mapping the firm’s infrastructure to align with business strategy and vision.

Each of these items ties into a firm’s strategy objectives aimed at making technology an enabler and differentiator for private equity firms.

See more findings from our Private Equity CTO Survey:

Private Equity CTO Survey

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