The object of the exercise, Clark said, is “to create fund level value by increasing the value of the portfolio companies.” Battleship-scale management software can be a powerful way to drive efficiency in a company, but the expense of the technology, plus the complexity of the implementation, can scare prospective users away from enterprise resource planning databases and other corporate applications.
This is where remote computing comes in. By relying on a hosted version of the enterprise resource planning software, portfolio companies can avoid much of the licensing and implementation expense, while still accessing the efficiencies that management applications can provide.
Cincinnati-based itelligence works exclusively with the German ERP developer SAP AG, which offers a range of applications for business intelligence, mobility, and business analytics. SAP established a private equity team three years ago, and itelligence Inc, the U.S. arm of the German consultant itelligence AG, launched its private equity practice at the same time, Clark said, adding that he doesn’t know of a competitor offering private equity ERP services.
“Certainly, SAP doesn’t apply to all companies out there,” said Clark, who is vice president, business development, advisory & private equity services. Implementation of an ERP system, even a hosted version, can still be a major undertaking. The ideal itelligence engagement would be a carveout situation, he said, where the target company already uses SAP as part of a larger enterprise, and the consultant can help manage the technology transfer.
Clark said he could not provide the names of firms using his company’s services because of confidentiality agreements with the customers. He did say, “the firms we tend to engage with are those that are generally more operationally focused.”
While SAP tends to focus its efforts on large corporate users, Clark said, “we tend to focus more on mid-market firms. That’s the difference between what we offer with our tools and what they offer with their tools.”
itelligence is developing a suite of shared services, such as integrating SAP databases with online procurement service Ariba Inc, which SAP acquired in October 2012, Clark said. “We are trying to develop closer strategic relationships with a handful of firms.”
While itelligence envisions a world where a fund manager could keep tabs on many — or even all — of its portfolio companies through shared databases, Clark acknowledged that such integration would be difficult to accomplish.
Clark said: “Private equity firms like not to dictate to the management of their portfolio companies, and managers of portfolio companies like not being dictated to.”