Why upgrading versions of your PE software stack doesn’t have to be risky or costly

January 28, 2021
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Software upgrades that force admins and GPs to play version “catch up” are less than ideal for everyone, including LPs. Instead, upgrades that provide valuable new functionality and that can be implemented seamlessly and effortlessly will set the standard in private capital technology, writes Andre Boreas, Director – Product Management at Allvue.

Technology upgrades need to be well-considered

System upgrades are a fact of life for any technology provider and their clients. New functionality, security enhancements, updated technology, and performance improvements are all continuous initiatives vendors will (or should) need to address to improve their solutions over time. How they go about it and at what cost, though, can be very different across technology providers, with significant ramifications for fund managers, LPs and Admins alike.

First of all, what’s a software update vs upgrade? A software update includes bug fixes, security patches and other small improvements. A software upgrade changes the version of a software. Upgrades are bigger, and more complex, and can often involve fundamental changes in how a client interacts with the software. Moving from a desktop, locally-installed version of the software to a cloud, web-based environment is an example. Updates, from both the vendor and clients’ point of view are not to be taken lightly.

There are risks associated with major updates, especially if not planned carefully. Risks for clients can include:

For fund managers that depend on their fund accounting software and portal technologies, with strict deadlines for LP reporting, significant downtime is just not an option. Getting K-1s out or initiating a capital call are just two examples of fund accounting fundamentals where significant downtime can cause major disruptions to both fund manager and LP alike.

Will the upgrade benefit your vendor more than you?

Over time, some vendors end up running multiple versions across their client base (including older, legacy software) which stretches the vendor’s resources in terms of support and maintenance. Upgrades from “sunsetting” older versions often ensue, putting clients in the unenviable position of having to plan for any of the aforementioned risks and costs associated with an upcoming major upgrade. The real pain for clients, though, is when an upgrade doesn’t involve any real improvements or enhancements from the client’s point of view. In some instances, a forced upgrade only gets you back to the starting line. Often, this happens when vendors have neglected to properly invest in their platform, whether it be technology, human capital, or interest. For vendors that offer multiple lines of business outside of their private capital solutions, this is not uncommon.

Too often, engineering and customer support become stretched too thin, with implementations, new functionality, and proper system updates and upgrades suffering as a result. (This is one of the reasons why Allvue’s Private Equity-specific technology is built hand-in-hand with Microsoft’s Enterprise solutions. It allows us to leverage Microsoft’s multi-billion dollar R&D spend into our own solutions along with our own significant investments). For fund administrators managing multiple instances across a wide variety of GPs, forced upgrades can be particularly painful, as the risks and costs (without any real functional benefits) are less than ideal.

Best practices require a consistent approach

Major upgrades do not have to be painful, though. Best practices for technology providers should involve a consistent approach to both system updates as well as upgrades, where client feedback is incorporated into new features and enhancements, and all clients are running the latest version available.

What does the gold standard for service and support looks like in 2021, then?

Optimization will redefine private capital technology

System upgrades for the sake of playing “versioning catchup” are less than ideal for fund managers and LPs alike. For Admins that service hundreds of GPs and thousands of LPs, the stakes are considerable – both functionally and reputationally. Indeed, an Admin’s technology and associated support and services should be a selling point, not a point of concern.

Allvue, for its part, has an enviable track record of successful system upgrades and, most notably, at no extra cost to our clients. We work hand-in-hand with our partner, Microsoft, to ensure that system upgrades have been thoroughly tested, incorporate meaningful functionality, and that clients experience minimal downtime. For 2021 and beyond, what your fund accounting, investor portal and portfolio monitoring tools should do, how they’re implemented and supported, and what improvements are being made will redefine what the bar is for Private Capital technology.

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