January 2024 | Resource

A private equity-backed CFO’s guide to crafting a data-infused finance transformation

Craft a dynamic playbook to fuel private equity value creation

A private equity-backed CFO’s guide to crafting a data-infused finance transformation

The first installment of our series explored the pivotal role that private equity-backed chief financial officers play in establishing the groundwork for value creation within the organization. This value creation extends across the entire organization, including within the finance and accounting team—forming a solid foundation for the journey ahead throughout the transaction lifecycle. 

Once that foundation is established, attention turns toward aligning the entire organization on monitoring and driving value creation. At this stage, a crucial responsibility for the CFO is the collection of a diverse range of quantitative and qualitative metrics; these metrics serve as the backbone of the organization's prioritized focus, essentially forming the finance transformation roadmap. 

The framework used to collect and synthesize internal and external KPIs becomes a critical enabler for realizing improvements that lead to value creation. Successful organizations with a value-based growth mindset consistently revisit their KPIs and seamlessly integrate them into daily, monthly, quarterly, and annual operations.

It’s also important to recognize that quantitative KPIs alone are not the only means to informing the company’s transformation roadmap. Operational insights must also be developed through qualitative analysis of both internal and external operations. 

This framework serves as a tool for portfolio companies, empowering them as they enter their private equity sponsor hold period equipped with a prioritized value creation playbook. Although this framework has maximum impact when incorporated in diligence, its adaptability allows for value realization at any juncture throughout the holding period. This article will lay a framework for gathering all types of KPIs, providing tangible examples of its use in practice, and the technologies organizations can leverage.  

Quantitative dispositioning & gathering  

As CFOs embark on their data gathering journey, it's crucial to first align with the private equity sponsor to ensure complete agreement on the key performance indicators driving the value-creation strategy. Exceptional portfolio company CFOs not only offer regular updates to their sponsors but also actively involve them in the value-creation journey, setting clear expectations to facilitate constructive feedback. 

To kickstart the quantitative data process, understanding the location and quality of available sources becomes imperative. Here's an example framework West Monroe teams have leveraged from prior engagements: 

  • Ready to Use: These KPIs exist in source systems across the organization (e.g., CRM, ERP, WMS). Examples of these include inventory balances, gross margin percentage, SG&A expenses by department, and average order value. They can be immediately utilized for value reporting and formulating a foundational set of insights. 
  • Requires improvement: The presence of a data point within the system doesn't guarantee its ability to provide insights. For example, the organization may have a customer record in CRM, but it may not be directly linked to the customer master in ERP or may have a different meaning between systems (e.g. an account in CRM = ship to address in ERP). To address this, categorize these KPIs into themes, enabling the initiation of data transformation strategies aimed at consistently enhancing data quality throughout the organization. 
  • Not available: This category provides significant insight into where an organization should be focusing their technology strategy. While searching around their organization for KPIs that are crucial to tracking value creation, it becomes evident that the data for these KPIs may not exist. It's crucial to first evaluate whether these KPIs can be tracked within the existing application architecture or if implementing new technologies is essential for their capture. 

An example for a consumer products company is production line utilization, a tangible quantitative KPI driving value creation. In cases where accessing this data within the current technology and operational setup is challenging or raises strong concerns over its validity, it highlights the need for either technological investments or process improvements to ensure clean and accessible data. This emphasis on data refinement or accessibility underscores the importance of linking transformation initiatives to value-creating KPIs, strengthening the business case for capital investment and board approval.

Next, initiate the data collection and management strategy for those identified as ready-to-use (RTU). The framework utilized for these RTU data points should prioritize an end-goal approach. This means that the infrastructure established to collect and visualize the data must consider a fully mastered list of KPIs sourced from both internal and external channels, thereby avoiding the risk of discarding work. The infrastructure should encompass the potential use of some or all the following enabling technologies:

Qualitative gathering 

As previously indicated, quantitative data alone isn't sufficient for establishing a value-focused finance transformation playbook. Equally crucial to the data collection is understanding the context behind the necessity for capturing it. Gaining a comprehensive understanding of organizational inefficiencies and areas of significant value creation requires spending time within the business to grasp its day-to-day operations. This framework should extend beyond the finance and accounting departments and encompass broader cross-functional teams. For instance, engaging with the sales organization to comprehend their pricing and product discounting strategies might uncover vital insights into challenges related to billing or revenue recognition.

The following approach is commonly adopted for qualitative data gathering by firms, informing a value-based transformation roadmap. Just as with quantitative data, where successful integration is observed during diligence, this framework holds potential for leverage throughout the life of private equity ownership.


Both qualitative and quantitative data gathering are equally critical in constructing a value creation-based transformation playbook. The methodologies utilized to collect benchmarks should be crafted for continuous utilization throughout the transaction lifecycle. They should be developed to facilitate proactive engagement with sponsors, demonstrating ongoing value attainment rather than solely responding to requests. 

Aligning the value-creation-based transformation roadmap with KPIs used for measurement ensures a seamless business case and investment summary, tying each transformation directly to value creation. Additionally, structuring data in an easily accessible format enhances communication with third-party vendors, particularly those holding valuable perspectives on specific areas of value creation. 

In the final installment of this series, we’ll present a framework to synthesize the collected data into an actionable and achievable finance transformation roadmap, which a private equity-backed CFO can leverage throughout the transaction lifecycle.

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