Management consultants based in Sydney and Hong Kong
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Financial Services Private Equity Salesforce

Customising Salesforce for Fund Managers

Salesforce is the CRM platform of choice for most of the world’s biggest financial services institutions and can be an invaluable tool to fund managers seeking to streamline fundraising, more effectively manage their portfolios, and gain a competitive advantage over competing funds.

Exactly how fund managers can best leverage the platform, however, can be a complicated decision.

What is the problem with using Salesforce out-of-the-box for fund management?

The most common problem with using Salesforce for fund management is that fund managers often overpay for licenses. The Salesforce Sales Cloud is built for organisations that have traditional sales and customer support workflows such as handling leads, opportunities, and support cases, which were simply not designed with functionality for Private Equity fund managers or Venture Capital fund managers in mind. So although Salesforce is a very flexible platform, using Salesforce out-of-the-box often results in users throwing away sales- and support-related functionality that they are paying for and starting from scratch with custom objects. If a client is committed to implementing Salesforce on their own, the use of platform licenses instead of full Sales Cloud or Support Cloud licenses is an efficient and cost-effective option since platform licenses are less expensive and do not include functionality that Private Equity or Venture Capital fund managers usually discard anyway.

The Salesforce Private Equity/Venture Capital template

Salesforce provides an option for Alternative Asset Managers who want to use Salesforce with functionality geared toward their industry: the Salesforce Private Equity/Venture Capital template. This template is more useful than Salesforce out-of-the-box for fund management but unfortunately, the Private Equity/Venture Capital template is not a product that grows or evolves; Salesforce has not demonstrated commitment to evolving or supporting the product so users of the template are often on their own for enhancements, support, and maintenance. Ultimately, the template serves as a good example of what can be done with customisation but lacks the support from Salesforce to serve fund managers effectively.

The hazards of using Salesforce to build your own database

Because Salesforce is such a flexible platform, it is certainly possible to build a database and data structure that represents the workflows that are inherent in fundraising, LP administration, investor management, deal tracking, and portfolio management. Salesforce comes with an extensive set of tools that allow users to build database tables to store information in a way that is relevant and beneficial to fund managers. Additionally, workflow capabilities can automate processes and more advanced users can further customise their system with Apex code and Visualforce that can produce outputs that are more dynamic than you would get with Salesforce out-of-the-box.

The primary hurdle in self-implementing Salesforce for fund management is deciding how to organise the data. Before you start building out your system, it is important to have a very good sense of how you will model your business and how you would build tables in the database to represent that model. For example, some organisations might be investing out of separate pools of capital and some might have just a single pool of capital; some organisations might make single investments and some might participate in follow-on investments, and some organisations will want to consider previous fundraising events or rounds for valuations round over round. So the process of building a database becomes an exercise in modelling the data structures that represent the business.

This is certainly not impossible for fund managers to do on their own. Building a truly extensible relational model, however, requires insight into how databases operate and require some foresight into what you ultimately want to see from the data in terms of user interface and reporting.

Self-implementing also brings up the classic “Build vs. Buy” IT spending decision. Salesforce is obviously an incredibly flexible platform and does not require extensive technical know-how to build virtually any database model you want. So given an unlimited amount of time and interest, it is absolutely possible to build a very useful fund management tool within Salesforce.

There are many questions that fund managers need to answer before deciding to build their own system. These questions include who is going to support the system, who is going to maintain it, how is it going to continue to grow and evolve. There is also the question of what happens once the employee who supports and maintains the system ultimately leaves the organisation. A system with inexpensive licenses and an inexpensive implementation has the potential to get very expensive later in the solution’s lifecycle if there are no clear-cut plans established for how the system will be supported and maintained.

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