The CTO’s Guide to Navigating Investment Data Management Technology Selection & Implementation

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Assunta Gaglione-Austin, technology leader and former co-CTO of KKR provides a guide for private market CTO’s navigating investment data management technology solutions. She covers everything from casting vision, to how to select the right technology partner, and how to execute a successful implementation. To read the transcript of this episode, head over to our website at www.gomercatus.com/podcasts/ and be sure to sign up for our Mercatus Digest newsletter to stay up to date on the latest insights and updates in the private markets. Click that follow button and leave us a review on iTunes, we’d love to hear from you.

Transcript:

Kali Jakobi:
Hello, and welcome to Data Disruption. This show is a deep dive into data problems and solutions and innovations disrupting the private markets. I’m your host, Kali Jakobi.

Kali Jakobi:
Hi everyone and welcome back to this episode of Data Disruption by Mercatus. I’m your host, Kali Jakobi, And today I’m joined by technology leader and former co-CTO of KKR, Assunta Gaglione-Austin. Assunta, thank you so much for joining me today.

Assunta Gaglione-Austin:
Good morning, Kali. Great to be here.

Kali Jakobi:
So today we’re going to be talking about data technology implementation, specifically from the CTO’s perspective. Now, Assunta, I know you have an incredibly decorated background centered around data technology, but for our listeners, could you tell us a little bit about your journey and why you’re so excited to chat about data technology today?

Assunta Gaglione-Austin:
Sure, happy to. I’d say that I originally got interested in the private markets and the data problem, let’s call it that, about 10 years ago when everything in every group and every department of the firm that I worked for did everything in spreadsheets, and there’s got to be a better way. As a technologist, you know you can lead these people to a better way, and over 10 years got to see both the problems and a set of solutions and how they evolved over time. And it’s honestly one of the favorite parts of my job.

Kali Jakobi:
That’s when everything changes, is when someone recognizes there’s got to be a better way. Today we’re going to be really talking about why a solid data platform is essential, and the challenges that you mentioned already plaguing the investment executives when it comes to successful implementation. So let’s start just at the basis here. Why is having a solid data platform so crucial to an asset manager’s success?

Assunta Gaglione-Austin:
Sure. It’s foundational. You’ll hear me use that word. And if others use it too, absolutely truth. It’s like a house. If you don’t have a solid foundation, it doesn’t matter how lovely your windows and your rugs and your paint color are. And so, there are so many constituencies in this space that need data, actionable data for decision-making. And what ends up happening is there are lots of smart people who are really fast workers and very bright, and they all attack the problem in different ways at the same time. And then you end up with pockets of really good information everywhere, both inside the firm and outside, because you’ve got GPs and LPs that are two sides of the same coin, and they’re both doing the same thing, aggregating information across companies over time, trying to assess whether or not they should or how they should invest, or how much. So many questions that all these different groups have. And it all is fed on data. So if the data’s not good, what is everybody doing? So it’s foundational.

Kali Jakobi:
I like how you said that if the data is not good, then what’s the point really in these decisions? So I know that there’s kind of a conversation happening constantly that is plaguing executives on, okay, are we going to build this in-house? Are we going to invest in a technology program? How do we go around evaluating different technology platforms? Maybe we can do it ourselves. We have such unique needs. Talk about that for me. How do you know what’s right for your business? And then what does that process really look like?

Assunta Gaglione-Austin:
Okay. So this one might be a long answer because I think I am uniquely placed to talk about this because 10 or 12 years ago, myself and a small group, we built a platform in-house because, again, we thought we could do it better. There were so many nuances, et cetera. Built a platform to aggregate portfolio company information and to report on it. So that group did it all, soup to nuts. It onboarded portfolio companies. It created the platform, the data model. It collected the information and became data governors. It produced the reporting. It explained it all to people that didn’t understand what a certain number meant, et cetera, et cetera. And if I had to do it all again, having that wonderful experience in solving a lot of problems for a lot of different groups within the firm and outside the firm, if I had to do it over again, I would buy it.

Assunta Gaglione-Austin:
Maybe not all of it, because there’s some bits, like the end state reporting and the aggregation of some things. But you need a platform where somebody’s waking up every morning. Not you, or rather in my case, not me. I’m not the one waking up every morning trying to figure out how to collect it, and the mechanics of collecting it and aggregating it. I want the team at my firm to spend time using and consuming the information for decision-making. So if you’re going to do anything on a build perspective, do it there. But for God’s sake, buy something that a group of people is waking up every morning, perfecting on your behalf.

Assunta Gaglione-Austin:
And if they’re a partner in that and not just, “Here, here’s some software. Pay me once a year or once a month.” If you have a partner in that process, oh my God, you’ve got the best of both worlds. You’re putting your team’s fire power. And by your team, I mean your tech team and your business teams. You’re putting their fire power on the stuff that makes the most sense, the analytics, the impact driven analyses. And then you’ve got your partner who’s minding store, who’s making sure your platform evolves with you, and with your peers, because you’ll find that your peers have similar problems and they might opine. And if everyone’s on a similar platform, it’s getting enriched over time, and they take care of that while you’re taking care of the good stuff. And that is solving problems within your firm, getting the analysis right for your deal teams, your capital raising people, your product people, your LPs, your customers. That’s where you should be spending your time.

Kali Jakobi:
In a lot of ways, you are a pioneer in this space to have built this yourself with a team, and then to understand the value to invest in a technology partner. I really like how you said partner, not vendor. In your opinion, you really honed in on the importance of a partner, what are the qualities of a partner that you see versus a technology vendor? You mentioned pay me once a year, very off hands kind of deal. But for a true technology partner to come alongside your business, what are those things that are must haves, the boxes that they have to check in order to be a successful technology partner with a firm?

Assunta Gaglione-Austin:
That’s an excellent followup question because it’s important that you highlight vendor versus partner because, as a CTO, you’re dealing with a lot of vendors in so many different domains. So it’s refreshing, a breath of fresh air when you actually have somebody that is a partner, which I would define as someone who really either understands your space, or is willing to do what it takes to understand the space with you, is very open and willing to share in a respectful way what they’re seeing in the industry, in your peer group, or even importantly, not in your peer group, things that you could borrow from another domain.

Assunta Gaglione-Austin:
A partner is one that can often bring together these groups on a periodic basis to talk to each other. It’s so hard, even with all the technology we have. We’re doing zoom meetings, we don’t have to travel as much, but even so it’s hard to get a group of people together. Have an agenda. Let’s talk about this. Let’s freestyle something else as it comes up. Somebody to help moderate that and make it happen, truly valuable. And one that actually is often offering solutions so that it’s ideation, it’s, “Hey, have you thought about this?” “Oh, well, no.” “Well, maybe you should talk to someone on my team or maybe someone on my team should talk to you,” and you suddenly are more than the sum of your parts. To me, that’s a partner.

Kali Jakobi:
I love that answer so much. Especially, it highlights the relationship aspect. It highlights the need to have collaboration across both teams. I want to backtrack just for a second, because I thought of something else when you were talking, because you have the unique perspective of you’ve seen what it’s like to have reporting and all of these things siloed and different Excel sheets, like you said, then you built the technology in-house, and now you’re clearly an advocate for buying technology. Just on the spot here, what was the time to get an answer when you needed a report, when you needed specific analytics, when you adjust an Excel to when you built your technology in-house, to what your now expectation is for a turnaround time, could you just ballpark numbers of timeline for that for me?

Assunta Gaglione-Austin:
Yeah, I could give you so many stories here, and the famous answer to that is it depends. And what do I mean by that? So over time, the question of something as simple as how many portfolio companies do we have? And if you ask that of a deal person, you’ll get a number, and it might include things that they’ve signed, but haven’t closed. You talk to another person in legal or in finance, and they’ve got a much bigger number because it includes the stuff that there’s a residual interest, or there’s some partial divestiture, and so the numbers are different.

Assunta Gaglione-Austin:
So everyone should have that number in a firm. They should just know that, but everyone’s got a different number and they’re all right based on their definition. So that’s why I say it depends because if it’s a straightforward answer, if you’re doing it right and your platform is helping you, and you’ve got the right governance in place and checks and balances and all that, you should be able to get that answer within rolling up your chair to a proper user interface in seconds or a day.

Assunta Gaglione-Austin:
But if your definitions are fuzzy or squishy across a firm, that’s when you get into the spreadsheet gymnastics and, “Oh, I’ll get back to you in a week.” And it’s because there were a group of people who were trying to meet a slightly different definition and, “Oh, that information isn’t PAT-ready. Let me go and get it. Let me have another person or another team check it.” And then you’re doing all that sort of spreadsheet gymnastics.

Assunta Gaglione-Austin:
So I don’t know if I answered the question, but that’s a window into if you do it right, and you get the whole… It’s not just a technology problem here. It’s a group of people, and they’re all very bright and have their own points of view. Getting them to focus on what’s important, what’s the definition of what’s important and make that ridiculously easy to get. In fact, the word we used to use was delightful. It should be a delight to get that information because everybody knows single source of truth. The machine I’m rolling up my chair to get the answer will be wonderfully easy and I can trust it. It’s when you kind of go off the rails and different groups have definitions and they’re nuanced and you have to explain them that it gets really hard as an organization to scale.

Kali Jakobi:
I love how you said to trust it. Trusting your data is the main point. Not just ease of access, but is it right? Is it accurate? Is it trustworthy? When talking about implementation, you have now seen good implementation versus bad implementation. You yourself implemented a technology platform that you built. So could you give us some examples of how important is the implementation process? What are the key things that you need to have in order to make it successful? And maybe throw in a story of when you’ve seen that implementation because I’m sure some of our listeners are like, “Wow. Yeah, I’ve gone through that before, and I don’t want to go through that again.”

Assunta Gaglione-Austin:
It’s funny you asked that because my answer is probably going to resonate and echo because it’s remarkable how predictable a good implementation is and a bad implementation. Nothing earth-shatteringly new here, but so many examples over my time, both at KKR and at other firms, where a good implementation is one that starts small, is one that has a defined scope that a lot of different people agree to. So the hardest part is getting that community of different constituencies to agree on something. But once you’ve done that, and as a CTO, that’s your primary job. It’s not necessarily the tech. It’s getting people, leading people to agree on something to start with, with a vision of where it’s going to go thereafter. If you can do that, you’ve got the foundation for a great implementation. But you need so many hard and soft skills to do that.

Assunta Gaglione-Austin:
A bad implementation is one where you don’t kind of take that 360 view. You walk into it going, “We’re going to build a global galactic thing that’s going to do it all. And we’re going to go into a lot of detail right at the beginning, and we’re going to make everybody happy,” and you are just going to crumble under the weight of it all. So don’t take on too much, too fast. Don’t promise too much too soon. These are things that are a death now to any implementation, certainly one around data. Stories that I heard in my peer group, in private markets in global asset managers, is getting a group of people to agree on a single report that everybody would buy into and know that the data underlying it was the single source of truth, no other place to go but those numbers, it took them a year to agree on which 50 data points they wanted, and the definition of those 50.

Assunta Gaglione-Austin:
And when I first heard that story, I’m like, “No, are you kidding me?” But then as we went into our own journey, you realize, “Wow, a year wasn’t so bad,” because you need to start small. And what is small? Different people are going to have a different definition of how many and how much. And then to define each one of those data points. Everybody’s got a different EBITDA, right? So you got to agree on which EBITDA are you going to include. So that’s the story there where you really do need to galvanize a group of people, let them know where the vision is that they’re going to get to and go to in the future, but start them small and iterate, iterate, iterate.

Kali Jakobi:
That’s a great example. And I love your perspective from having to lead people to a decision, lead people to a consensus. From the partner, the technology partner side of things, as you all are having your own internal grapples with these conversations and these debates, and like you said, it takes a lot of time, what are things that as you’re assessing technology partners, you’re looking to see come alongside that? Are you looking for people to show you the vision? Are you looking for people to listen to the vision that you think that maybe your team is on? What is that push and pull? Where do partners come in and say, “No, we understand this. We are the thought leaders. Let us help you”? without stepping on those toes of, “We don’t want to think that we know your business better than you do.”

Assunta Gaglione-Austin:
No, it’s a fine line. You’re right. I would say, Kali, that this is the hard part of being in this space. You need to be visionary as a leader and as a platform provider and being in that partner role. But at the same time, you can’t know everything. You can have that vision. You can look out three to five years and you could go for that. But in the reality of things is, every six months or so, there’s something new that nobody knew about before and you need to be able to pivot. And so, having a platform, the first thing I look for is, how did they design it? What’s the data model? Is it configurable and granular enough to support what I have today and what I don’t know yet for tomorrow? Because that’s the limiting thing that I found over and over again, with different vendors. And I’ll use vendors very specifically based on how you and I spoke before.

Assunta Gaglione-Austin:
The true platform partner is going to have that very configurable, very granular level on which me or any other organization can build. Build on today, when we first start our initial small scope, and then as we grow and change and get more complex, three to five years down the line. You don’t want to get into a relationship with a platform provider or partner every couple of years. It’s ridiculously hard to get comfortable in that relationship, and it’s really hard to get out of it, right? You want to make sure that the process of working with that partner in this data space is like planning a wedding. You want it to go smoothly as you can. You know that there are going to be problems. You want to make sure that you can work them out together and that the day goes very, very smoothly. And that’ll be what I compare to day one or that go live.

Assunta Gaglione-Austin:
But that’s just the beginning. You’ve got a whole marriage to work on. And so, understanding, do you share common beliefs, common values, that very configurable, granular set? When you speak tech, you need to understand that you got that data model, and those components and those APIs, so that you can change over time, that will provide you that hopefully happy long-term marriage.

Kali Jakobi:
Like you said, it’s an investment of time. It’s an investment in relationships. It’s an investment of your team and your company. But can’t ignore the elephant in the room that this is also a large investment and financially. So there’s a cost associated with vendors. There’s a cost associated with partners. And it tends to be, you kind of get what you pay for in this space, but sometimes there’s a lot of nuances around what is this really worth? What is the foundation of my business, of our decision-making worth? I want to ask you though, what is the cost of poor data management? I can give you a list of numbers for the cost of a technology platform, or you could give me the breakdown cost of what it costs you all to build an in-house platform. But what is the risk and the cost of your business, both financially and internally of not having a data management platform in place?

Assunta Gaglione-Austin:
Yeah, it’s real. There’s so many places that it could bite you in the rear end. So there’s obviously time. So you’ll have all these very, very smart people running around in that scenario I gave before, keeping sides, spreadsheets of data, updating them every month and every quarter, and using those. That’s a waste of time. These are typically very highly paid individuals, lots of brain power that they should be putting on a different problem, not updating a spreadsheet on the side.

Assunta Gaglione-Austin:
Then there’s the risk of numbers being different from one period to another. I can’t tell you how many times I’ve heard stories, and this wasn’t necessarily at my firm, but in our space where a number was presented and someone looks at it. It’s going to go on a slide at a client meeting or it’s going to be used in some sort of material. And somebody way down the line at the end of it, at a senior level, it looks at the number and goes, “That’s not right.” And then, there’s this massive effort to figure how that number came to be and why it might be different than that same number from a quarter ago or the year before, which for people in the know who are hearing this, they’re like, “Oh my God.” Their heads exploding because tracing that number back. Wow. And then so much sort of egg on the face of all the people if that number truly ends up being indefensible. Lot of time wasted on that.

Assunta Gaglione-Austin:
And then, there’s that feeling of, if that number’s wrong, well then is every number that we’ve ever decided on wrong? And then you get that death spiral, what are we really doing here? Are we making decisions on good data or not? You can’t put a price on that. That’s horrible and not the business anybody wants to be in. So there are countless others. There’s that associated reputational risk. There’s the time risk. There’s the efficiency risk. There’s the, do I trust my data and my decision-making risk, which can all be mitigated by just saying, “Okay, everybody, let’s all sing from the same hymn book. Let’s all put a people process, a technology platform, around our data because the truth is in the data.”

Kali Jakobi:
Instead of racking up risk, you can actually have clear data, which I feel like is a lot of what executives are struggling with right now with, how do I do that? How do I start, maybe even. As we wrap up here today, Assunta, what would be a piece of advice that you would give to any CTOs embarking on this data technology journey today?

Assunta Gaglione-Austin:
I think it’s an investment upfront in a CTO’s time, in a technology leader’s time, understanding what people really need. It’s trying to listen to what they’re telling you and what they’re not telling you, because they might not have an easy way of expressing what it is that they really need. But a technology leader in this role has that unique ability to have heard what all these different constituencies inside and outside the firm really are looking for and be that glue, be that leader that pulls it all together and says, “I’ve heard what you’ve said. I’ve listened and I synthesized this into, here’s what the vision is.” That’s the hardest part, and that’s the thing that takes time. You can’t just parachute in and say, “Hey, this year, we’re going to kick off a XYZ project.” It’s one that you build over time that consensus because, as you said before, it’s an investment in time and money and energy and you’re going to want as many people on board as you can to make it successful.

Kali Jakobi:
Well, Assunta, thank you so much for joining today. Anyone listening right now is feeling like this is just the tip of the iceberg, and you need to know more and you want to have further conversation, Assunta, where can people contact you directly?

Assunta Gaglione-Austin:
Oh, thank you for that. Yeah, they can reach out on LinkedIn. I’m there. Assunta Gaglione-Austin. And I want to say thanks again, Kali, for having me on today. This has been great.

Kali Jakobi:
Thanks for listening to this episode of Data Disruption by Mercatus. If you liked what you heard, share and leave us a review. It helps others discover the show and I thank you for it. And if you’d like additional insights related to this conversation, go to our website at gomercatus.com/resources.

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