Private Equity Insights

Q2 2023

The big picture: This year continues to be a tricky one for forecasts.

  • We continue to wait for clear indications of a recession or, as more are now predicting, there will be a soft landing followed by continued growth.
  • While job creation continues at a healthy pace, many organisations are seeking opportunities to manage or lower costs.

It is, without question, a year of uncertainty.

In our latest issue of Private Equity Insights, we share key takeaways from our global survey of technology executives and leaders, who weighed in on innovation initiatives, application modernisation, technical debt and more. We also highlight our latest thinking on cost optimisation opportunities, supply chain management transformation, ESG regulatory compliance, and perhaps the hottest topic in business today, generative AI and ChatGPT.

Driving tech transformation: Innovation is the name of the game in today’s global market. Recognising the new reality, CIOs, CTOs and other technology leaders are exploring new ways to fuel innovation throughout their organisations. However, there are many roadblocks on this path.

By the numbers: Technical debt is hampering a business’s ability to innovate and grow. Organisations spend nearly one-third of their IT budgets and invest a fifth of their resources in technical debt management.

Why it matters: Companies that pursue modernisation to reduce technical debt find that innovation is a key methodology to get the most out of the process.

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This year, both business and technology worlds alike have been abuzz about ChatGPT, and more than a few leaders are wondering what this AI advancement means for their organisations.

Let’s explore ChatGPT, generative AI in general, how leaders might expect the generative AI story to change over the coming months and how businesses can stay prepared for what’s new now – and what may come next.

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An economic waiting game: While it feels like we’ve spent the past 18 months waiting for a recession to kick in, it remains vital to prepare for the next downturn.

Why it matters: The elongated lead-up to the next recession doesn’t mean private equity and portfolio company leaders can afford to press the pause button. It’s never too early to prepare for the next downturn.

Three strategies can help CFOs position their organisations to strengthen their resiliency: Think cost optimisation versus sweeping reductions; don’t forget the war for talent; and lead with transparency

The bottom line: Cultivating and sustaining organisational resilience prior to and during a recession is a challenge, but it’s well worth the effort. CFOs should deploy all of the tools and techniques they have at their disposal to manage margins with an eye toward preserving financial health.

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Excess inventory does not suffice as insurance for supply chain disruptions. Private equity and portfolio company leaders view major supply chain complications as strategic risks.

Why it matters: A pervasive and lengthy under-investment in innovation has created supply chain models that:

  • Focus too much on past performance
  • Operate on too little data
  • Feature logistics networks that are too rigid
  • Foster insufficient trust among trading partners

A better approach: New supply chain orchestration solutions allow organisations to activate agility- and resilience-enabling capabilities.

Yes, but: To flourish, these solutions need the right data. Once larger data sets have been normalised, optimised and subjected to new workflows and controls, organisations track orders and customers in real-time.

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The ESG landscape: In recent years, increasing pressure from a variety of stakeholders have combined to drive companies toward more sustainable practices in their business operations and greater transparency.

The real game-changer, however, has been the recent global ESG reporting regulations, which require a level of reporting far above the voluntary disclosures many portfolio companies have been issuing to their stakeholder groups.

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