Digitisation is well underway. What are the key challenges private equity firms will have in the coming years when defining their digital strategies? We conducted a series of interviews with private equity professionals to gain a better insight into this topic.
The main challenge is not related to the technology that could be implemented and deployed within each portfolio company but it is identifying the right talent that can successfully drive that digital transformation.
Another challenge when it comes to recruiting the best digital talent is identifying candidates with digital DNA combined with a commercial ability to improve the customer experience and the top line growth. Segments such as sales and marketing are the most sensitive to the digital impact. For this reason, PE Firms are realigning their recruitment strategies and creating digital business units and digital portfolio teams.
Digital talent trends:
As a result of these key factors, we have noticed the following trends:
– A rapid change in the recruitment of talent in PE due to the digital disruption: Partners are shifting their recruitment focus from M&A professionals to management consultants with digital experience, tech professionals and tech entrepreneurs.
– There is more mobility in the PE job sector: the recruitment process is shorter because the number of contractors have increased vs. the number of fixed term positions.
– Digital professionals join portfolio companies’ IT teams to add value: they train existing staff, share expertise and scale the digital exposure.
One of the changes we will see in the PE job market over the next years is that professionals such as Top Tier IT/ Digital Consulting Firms will move to Private Equity to take lead roles as Chief Digital Officers, Chief Technology Officers and Heads of Data Science. The CDO’s are expected to form a new generation of digital teams – a talent pool with a mix of a tech background and cross-sector business acumen.
Digital team objectives:
- Working in parallel with the investment team to assess the potential of new technologies especially during the deal sourcing.
- Working closely with board members of portfolio companies to define and implement the digital strategy – identifying focus areas to improve and developing new business models to stay ahead of competition.
For this reason, by 2020 the recruitment of digital professionals will consistently increase in the PE job market due to the need for bridging the digital skills gap.
“When you think about digitising portfolio companies, do not let yourself be carried away by buzzwords. Think about how that technology can actually add value.” – Senior Associate at a leading technology focused private equity firm.
Aldo Binmadhi, Director, Private Equity
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