E&Y CFO Survey: The new back office

March 20 2017

According to E&Y’s survey of private equity CFOs, firms are looking to technology,
better talent management and outside expertise to upgrade their operations. 

Ernst & Young’s 2017 Global Private Equity Survey finds CFOs looking to run leaner, more effective teams to meet today’s investor and regulatory demands. The study found their key operating objectives to include improving data management, developing personnel, automating operations, improving systems and outsourcing. 

Building upon last year’s momentum, the survey further indicated a growing interest in outsourcing accounting and administration to a qualified third party.  CFOs are recognizing the benefits to outsourcing these functions, as it can lead to greater operating efficiencies, less risk and enhance the ability to meet growing LP informational demands.  79% of CFOs are still relying extensively on Excel spreadsheets, driving many to consider a third party administrator.

CFOs are also focused on improving their in-house teams. Most are looking for ways to increase their staff’s productivity, with 79% citing the desire to improve team efficiency as a major workforce priority. 33% want to increase staff retention in the next two years, up from only 17% in previous years. Interestingly, when asked what would make their firms competitive in the future, 51% cited the need to retain talent, a higher figure than automation or data management. 

And what are their plans for keeping those staffers happy? 99% of CFOs expect to do so with professional growth opportunities, which haven’t always been present on the operational side of the private equity firms. In terms of benefits, 68% of respondents offer paid parental leave and 63% offer the chance to work remotely. But only 20% offer a reduction of overtime hours. 

Firms are also tapping outside help to meet today’s challenges. 80% are outsourcing or planning to outsource some function to a third party. Tax is by far the most common task to outsource, with 68% using a third party, followed by accounting at 61% and technology at 53%. CFOs credit outsourcing as a way to increase capacity (79%), provide industry expertise (68%) and offer better technology (66%). 

It should be noted, 79% of CFOs indicated that substandard service was a possible constraint on outsourcing, followed by an inability of the third party to manage complexity (68%) and staff turnover (59%). It is abundantly clear from the survey that CFOs demand an administrator demonstrates the highest levels of performance, the ability to understand the most complex funds, and a high retention rate of key service members.