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Private Equity Strategies

Data Snapshot: Private Equity CTOs Add Outsourcing, Increased Security To Priority Lists

Thursday, March 02, 2017

By: Bailey McCann, Private Equity Strategies

The role of the private equity CTO has changed significantly. New technology along with a growing list of cybersecurity threats have placed more demands on the IT department than ever before. According to a new survey of private equity CTOs from Eze Castle Integration, these demands have led to an evolution in the role of the CTO away from simply maintaining hardware and workflows and into making the CTO an integral part of information security and compliance support.

For 2017, respondents to the survey said that their key priorities were cybersecurity, improving customer experience and updating older technologies. Outsourcing some business functions and technology infrastructure to cloud services providers and others also made the list in a big way, with firms looking to outsource a variety of operations.

None of this comes as a surprise to Eze Castle’s Chief Strategy Officer, Mark Coriaty. He says that private equity CTOs have been looking to companies like Eze Castle for those new technologies as well as guidance on how best to implement them.

“Outsourcing has grown significantly over the past three years. Firms are looking for guidance, advice and managed services capabilities,”Coriaty tells Private Equity Strategies. “Private equity firms, specifically, are looking closely at how they manage and maintain data securely. Many firms lack a centralized data source. We can provide a private cloud that allows for centralization and data management.” He adds that Eze Castle also works with CTOs on a consulting basis to help them learn about best practices for information security and maintaining compliance.

The figure below outlines what CTOs are likely to outsource over the next year:


In addition to outsourcing, private equity firms are also looking for ways to implement cloud services. Cloud technology can allow firms to scale up in size rapidly, while maintaining security. Working with a cloud services provider also eliminates the need for sprawling and complex networks of hardware.

According to Coriaty, most private equity firms are working in a private cloud environment, but some have started to consider a partially public cloud -- also known as a hybrid cloud - when they work with counterparties to ensure consistent security throughout processes. Over the long-term Coriaty expects that firms will continue to explore ways that they can outsource basic business operations in order to cut costs and free up investment staff to focus on deal making.

Even as CTOs split some of their duties with third party technology providers, the role of the CTO is likely to become more important and demanding over time. Data in the report shows that the CTO is taking on a more strategic position within private equity firms and will be asked to contribute more heavily across in the organization. See the figure below for how the role of the CTO is expected to evolve over the next year. More information on these trends is available in the full report here.


 
This article was published in Opalesque's Private Equity Strategies our monthly research update on the global private equity landscape including all sectors and market caps.
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