TPI, an Information Services Group company and the leading independent sourcing data and advisory firm in the world, said today that private equity firms are moving to standardized IT service delivery and utility computing models in their portfolio companies.
Operating partners, who are charged with delivering value in Private Equity firms' investments, are increasingly looking to standardization to achieve lower operating expenses, greater efficiency and economies of scale, the firm noted. Utility computing, in which IT buyers "pay by the drink," is one of the more popular options.
"Operating partners seeking to drive operational improvement have a wide range of options before and after closing an investment," said Sam Vail, Partner & Managing Director, Private Equity and M&A, TPI. "We're seeing PE operating professionals and portfolio companies collaborating to focus on IT initiatives that result in standardized service delivery."
Vail, who leads the firm's Private Equity and M&A vertical, will discuss standard service delivery and other operational value improvement strategies as part of a panel discussion during the first annual Private Equity International Operating Partners Forum, to be held October 13-14 in New York.
"Private equity operating professionals face the challenge of creating and realizing operating value improvement throughout their investment portfolios," Vail said. "But assembling a laundry list of initiatives isn't enough. TPI can help operating professionals identify, prioritize, and execute on the specific opportunities that will yield the highest return."
Recent analyses by Compass, an ISG company and the premier independent global provider of business and information technology benchmarking, performance improvement, data and analytics services, show that traditional IT improvement initiatives can produce incremental savings when services are optimized within the existing delivery model. However, transitioning to standardized IT service delivery and a utility model can establish a new and higher operational standard, drive dramatic additional savings to invest in innovation and enable businesses to fully leverage the benefits of cloud computing.
The improvements possible with standardized IT service delivery reflect both increased delivery efficiency from service providers as well as better consumption management by buyers, according to Compass. Key to achieving these improvements are clearly defined pricing and consumption mechanisms that motivate both the buy side and the sell side to squeeze out the inefficiencies that drive high costs in traditional environments.
"Private equity firms are recognizing the need to measure and assess each back office business function, especially IT, early in the investment process," Vail says. "This baseline of the cost and service levels of a new investment's IT environment serves as a critical element of due diligence, as it defines the current state of the operation as well as the potential value of transitioning to a standard delivery model."
TPI, an Information Services Group company, is the founder and innovator of the sourcing advisory industry and the leading independent sourcing data and advisory firm in the world. TPI advisors are expert at a broad range of business support functions and related research methodologies. Drawing on their deep functional domain expertise and extensive practical experience, they collaborate with organizations across all major industries to help them advance their business operations through the best combination of business process improvement, shared services, outsourcing and offshoring. For additional information, visit www.tpi.net.
Compass, an Information Services Group company, is the premier independent global provider of business and information technology benchmarking, performance improvement, data and analytics services. Compass Benchmarking and Analytical Services and Compass Fact-Based Consulting® get to the root cause of cost efficiency, productivity and service quality gaps. This deep understanding of clients' performance provides an unrivalled ability to evaluate the current state and quantify improvement opportunities, understand the market price of services and identify future options, and ensure rapid and sustainable performance improvement. Founded in 1980, Compass revolutionized the identification of the root causes of problems within businesses with its pioneering approach to performance improvement. For additional information, visit www.compassmc.com.
About Information Services Group
Information Services Group (ISG) III -5.41% , founded in 2006, is a leading technology insights, market intelligence and advisory services company. ISG has three go-to-market brands: TPI, the leading independent sourcing data and advisory firm in the world; Compass, the premier independent global provider of business and information technology benchmarking, performance improvement, data and analytics services; and STA Consulting, a premier independent information technology advisor serving the public sector. The company has nearly 700 employees and operates in 21 countries. Based in Stamford, Conn., ISG has a proven leadership team with global experience in information-based services and a track record of creating significant value for shareowners, clients and employees. For additional information, visit www.informationsg.com.