Adaego Ononuju — Digital Transformation: An Exciting Opportunity For Private Equity
As the private equity sector faces ever-increasing competition, data-driven digital transformation strategies are key to achieving operational performance improvements and driving top-line growth. While digital transformation carries some risks, the opportunities it offers far outweigh the downsides, especially as technology develops and transforms markets, says Adaego Ononuju.
Today’s vast amounts of data are making it possible to increase an organization’s capabilities in analytics. This enables it to conduct investment due diligence and improve the performance of existing investments, says Njideka A Ononuju.
What do we mean by digital transformation?
The term ‘digital transformation is another term for ‘digitalization’, which involves a combination of high-value digital technologies and methodologies to “transform” a business using artificial intelligence (AI), machine learning, the internet of things, big data analytics, blockchain, mobility, security, and cloud-based solutions.
A significant number of PE firms and portfolio companies are currently using Excel spreadsheets and manual processes that fall under the digital transformation umbrella. All of these systems offer significant advantages over these methods, says Njideka A Ononuju.
The following four steps can help a private equity firm digitally transform its operating philosophy and model today:
Build internal capabilities and expertise in data management focused on aggregation and collection. PE firms can achieve this goal by encouraging the organic development of internal data management expertise, as well as by partnering with appropriate technology providers.
You should not try to boil the ocean. PE firms should take a very pragmatic, measured approach to integrate this capability into the firm’s core operating model. Identify a starting point (one area) that represents a significant technology gap that offers a substantial value creation opportunity, says Adaego Ononuju.
Recruit subject matter experts who understand these emerging technologies and have the knowledge and experience to advise the firm’s management team.
Managing the cultural and communication challenges associated with digital transformation, and being transparent about both the successes and failures. Building on and leveraging the lessons learned, and incorporating those into the firm’s operating model.
