Architects of Advantage: Mastering Investment Strategy through Building, Buying or Outsourcing

September 20, 2023

Editor's Note: This post is the third in a four-part series titled "Unleashing the Power of Data: A Comprehensive Guide to Building Your Private Markets Data Strategy" that explores the importance of having a data strategy framework for private markets and why it is a topic of growing interest, published by Lionpoint’s Front & Middle Office team.

Previous posts outlined the importance of formulating a target operating model, choosing a system, and assessing data frameworks. In this post, we will dive into the elements of executing a data strategy program, highlight the benefits of implementing a data strategy, identify common complexities of an implementation, and detail best-practice implementation elements and methodologies.

Amidst a data-driven landscape, the mastery of turning insights into invaluable assets stands as a cornerstone skill in the realm of private investments. Navigating the domain of reporting and visualization tools, the decisions around building, purchasing, or outsourcing takes on a role akin to architectural craftmanship. As companies face budget constraints, combining financial wisdom and investment excellence is ushering in a new era of innovative reporting strategies.  

Building Reporting and Visualization Tool: Pioneering Precision 

Companies undertaking the development of in-house reporting tools for private investments face a multitude of considerations during the inception and evolution of their product. Lionpoint Group identifies four pivotal pillars that underpin success in this endeavor, mirroring the foundational support a structural engineer offers to architects. We extend our expertise to aid firms in crafting their tool with the same assurance and precision. 

  1. Technical Expertise: Crafting a bespoke solution demands a proficient team of developers and database administrators, along with requisite technical infrastructure.  
  2. Vision and Requirements: A clear vision, detailed functionalities, user experience expectations, and seamless system integration are pivotal to success. 
  3. Budget Consideration: While potentially costlier upfront, building allows tailored control and long-term customization. Budgetary allocation should encompass both initial development and future enhancements. 
  4. Data Integration: Centralized, real-time data integration is pivotal. An internally built tool must seamlessly mesh with data sources for accurate insights. 

Buying an off the shelf Reporting and Visualization Tool or Plug and Play: Tailored Convenience 

Navigating the realm of purchasing a reporting tool may appear formidable, yet guided by Lionpoint’s strategic affiliations within the private investment domain, this process transforms into a seamless and effortless transition. With our established relationships, the decision-making journey gains clarity, ensuring not only a smooth transition but also an optimized investment in your reporting capabilities. 

  • Tailored Fit: Off-the-shelf solutions offer tailored capabilities. Thorough evaluation ensures alignment with specific investment needs. 
  • Vendor Analysis: Reputation, reviews, support services, and relevant experience of vendors need meticulous assessment. 
  • Scalability and Flexibility: An adaptable tool that integrates smoothly with existing systems is key to accommodating changing requirements. 
  • Total Cost of Ownership: While initial costs are paramount, long-term expenses such as licensing, maintenance, and upgrades must factor into the decision. 

Outsourcing Reporting and Visualization Tool: Expertise Unleashed 

Among the three options, outsourcing might not be the first choice that comes to mind. However, it offers valuable benefits for clients. By partnering with experts, businesses can quickly set up tailored solutions, ensure data security, and access specialized knowledge. In the realm of investment strategy, outsourcing has the potential to spark innovation and drive growth. 

  • Cost Savings and Expertise: Outsourcing minimizes upfront expenses and provides access to specialists in private market reporting, guaranteeing high-quality outputs. 
  • Rapid Implementation: Outsourcing partners offer pre-built customizable solutions for rapid implementation and scalability. 
  • Data Security and Compliance: Reputable providers bolster data security and compliance measures, ensuring regulatory adherence and risk mitigation. 
  • Integration Challenges: While offering expertise, outsourcing may introduce integration complexities and potentially diminish control over updates. 

The Downward Pressure on Costs: A New Paradigm Emerges 

As investment firms navigate the intricate decision-making process of choosing a reporting and visualization tool strategy, a new trend is emerging. Companies are increasingly feeling downward pressure on costs, prompting a strategic reevaluation of how resources are allocated. Balancing the quest for high-quality insights with cost-effectiveness has become a paramount consideration. This new economic landscape is compelling investment firms to explore innovative ways to maximize returns while optimizing expenditure. 

In this dynamic climate, the choice between building, buying, or outsourcing reporting and visualization tools is not merely a technical decision—it’s a strategic move that shapes an investment firm’s agility, growth trajectory, and competitive edge. Each path holds unique promises and challenges, and as the private investment landscape continues to evolve, so will the strategies that drive its success.