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Andy McQuarrie, Executive Director, joined IHS Markit in 2020 and is responsible for our Expert Services offering for private markets, which is designed to help our clients operate efficiently and compete more effectively.

Tell us about your background and how it informs your work with private market investors.

Before I joined IHS Markit, I spent 25 years with a highly respected, technology-centric investment manager/family office. When I joined the firm the personal computer had just been introduced, and the term "fintech" had yet to enter the lexicon. My job was to stay ahead of the latest innovations, and to find and adapt technology to solve myriad challenges. Working initially with two HP 3000 mainframes, we implemented more than 25 different systems—both large and small—during my tenure. As the firm grew, so did our technology platform. We ended up with a technology stack, which to be honest, started to work against us because managing multiple platforms didn't make sense. There wasn't one solution that solved all our information problems. Like so many other investment firms, the grail we were seeking was a consolidated system with a single access point. New innovations and a passion for leveraging technology helped us revolutionize the firm's operations, giving it a significant strategic advantage.

What was one of the biggest mistakes you made during that time?

I think the biggest mistake we made was trying to track data that we couldn't obtain in a consistent way. If you can't reliably source accurate data and get it into your system efficiently, you're going down the wrong path. I learned that the hard way.

Why is it so hard to get tech and data operations right?

I think your operations and data collection have to be as disciplined as your investment process. You have to know what data you need, have a clearly defined way to collect and validate it, and you have to do that consistently over time. While the public markets are standardized, global private markets are not. There is a lot of flexibility in how you use and manage data. Without the discipline and the buy-in of your firm's leadership, it won't go well. All the components need to work when you're designing your organization's systems and operations. If you don't do it right, the technology's not going to work as you expected.

In your view, what are the biggest technology pain points private market participants face?

Many of the challenges our clients face today are the same ones I faced daily before I joined IHS Markit. The first is a resource management issue. You're constantly trying to figure out who's going to do the job. How are you going to manage it, and how do you do so efficiently? What can you scale without adding staff? This is especially difficult for PE firms because the key focus is on the investment team talent. Most firms don't want to be in the software business or manage a large technology team.

The second challenge is access to expertise. Can you engage with one of your technology partners, or is it better to bring on an IT expert who understands the ins and outs of your business? Finally, what is your firm's technology strategy? How do you evolve your technology stack so that it continually adds value? Your organization is growing and needs to scale; you have more investments, your leadership changes, the investment team changes, your strategy changes. You need to have a proactive way to modify your technology and align it with your evolving organization. Without a commitment to your technology plan, you will constantly lose ground.

What exactly is "Expert Services"?

Our Expert Services practice is an outgrowth of IHS Markit's continuous support model with an "a la carte" menu of services that provides flexibility as clients' needs change. We recognize that we built a Ferrari (iLEVEL Software) and gave you the keys. With the right training and pit crew, you can adapt our robust engine to almost anything you need. Expert Services is part consulting, part support and implementation to promote industry best practices. Our objectives are to help you streamline processes, increase utilization and adoption, and gain a deeper understanding of private market segments and complexities.

We can also help firms with capacity challenges: we recently got a call from a client who had lost their operations manager, and we were able to jump in quickly and help manage their instance of iLEVEL. We are happy to be able to be a partner in situations like that.

How do you solve some of the biggest challenges for private market participants?

We listen to our clients. That's not a platitude, it's how we operate and how we continually improve. We start our engagement with a Best Practice Review, which is a complimentary, collaborative set of conversations to assess the firm's current data and technology environment. We focus on the three areas discussed above: resources, expertise, and strategy, and we put our most experienced professionals to work thinking about that firm's specific problems.

At the end of the process, we share our observations and make recommendations about how they can leverage the system more productively. Together we develop a roadmap and an action plan that might encompass a number of initiatives, such as outsourcing certain aspects of their operation, creating more robust reporting, driving software adoption for certain areas of their workflows, implementing an ESG data strategy, or managing the investment data collection process.

What's your view on the trajectory of private markets technology for the future?

I foresee a number of trends that will shape private markets technology. I expect more firms to outsource their operations and data processing. More fund managers are realizing they want to focus exclusively on investing rather than supporting the costly and labor-intensive effort of keeping up with technological change.

There also will be advances in data technology and system integration in the future, as investors increasingly demand "investment grade reporting." Eventually, the industry will have to stop dealing with so much paper, and data flows will have to achieve the level of access and transparency that public markets offer. Everyone is looking for an information advantage; those who figure out how to manage all the data they have at their fingertips today will be best positioned to compete in the future.

Interested in having a Best Practice Review or engaging with the Expert Services team?

Read more about our solutions for private markets and contact us to speak to an expert.

S&P Global provides industry-leading data, software and technology platforms and managed services to tackle some of the most difficult challenges in financial markets. We help our customers better understand complicated markets, reduce risk, operate more efficiently and comply with financial regulation.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.