Why PE Portcos Are Paralyzed by Technology Decisions
Every portco CFO has a horror story about a failed implementation. The $2M ERP that went six months over timeline. The system that went live and immediately broke the month-end close. The integration project that consumed two years and two finance VPs before the sponsor quietly shelved it.
Those horror stories are now costing more than the failures ever did.
The companies that lived through a bad implementation — or watched a peer blow up trying — have developed a collective aversion to technology investment that looks like prudence but functions like paralysis. They know they need better systems. They also know they could lose everything trying to get there. So they stay put, running on processes that were never built for the business they’re trying to operate today.
Suzanne Yoon, founder of Kinzie Capital Partners, put it plainly: “How many bankruptcies did we hear of because an implementation went bad? The fear of making technology investments — you can lose your shirt.”
Staying put is also how you lose your shirt. It’s just slower.
The Invisible Cost of Not Deciding
The portco running on a patchwork of spreadsheets and aging systems doesn’t feel the pain in one moment. It accumulates. A month-end close that takes three weeks instead of one. A sales team manually re-entering leads from email into a CRM that doesn’t talk to the billing system. An operations manager who can only answer performance questions by pulling a report, cleaning it, and sending it up the chain — where it arrives three days later, already stale.
None of this shows up on the income statement as “technology paralysis.” It shows up as overtime, headcount, error rates, slow decisions, and missed opportunities. And if you’ve worked inside one of these businesses, you know it accumulates faster than anyone admits in a board meeting.
The spreadsheet-as-workaround is a pattern that surfaces consistently across PE-backed businesses. If you’ve seen a 20-page monthly report that technically contains everything but communicates nothing, you know the feeling — when volume substitutes for visibility, the underlying problem isn’t the spreadsheet. It’s the absence of a system that makes the spreadsheet unnecessary.
What makes this harder is that the cost of paralysis is diffuse and invisible, while the cost of a bad implementation is concentrated and memorable. The CFO who can recount in detail the $2M ERP disaster from 2019 cannot point to a single invoice that reads “cost of not upgrading: $800K per year.” The fear has a face. The status quo doesn’t.
The Person Before the System
Here’s where most technology conversations go wrong inside portcos: they start with the tool.
Which ERP should we buy? Should we move to Salesforce or stay on HubSpot? Do we need a BI platform or can we just clean up the reporting we already have? These are reasonable questions. They’re just not the right first question.
Jessica Ginsberg at LFM Capital works with portcos on operational improvement, and she puts the sequencing clearly: “You can have the best ERP system. You can have the most automated facility, but if you don’t have the right person at the top, it doesn’t matter.”
The person at the top — in this context — is whoever owns the implementation. Not the vendor. Not the outside consultant. The internal leader who understands the business well enough to translate operational reality into system requirements, who has the authority to make the hard calls when the vendor pushes back, and who will still be there in 18 months to drive adoption.
Most portco technology failures don’t fail because of the software. They fail because the implementation was handed off to IT while operations kept running, or because the project champion left mid-stream, or because no one had the authority to tell the team “the old process is gone now — this is how we work.” The technology became a parallel system running alongside the spreadsheets instead of replacing them.
Before you pick a system, pick your person.
Your Data Comes Before Your Technology
Assuming you have the right leader in place, there’s a second prerequisite most portcos skip: the data audit.
Kevin McAllister at Access Holdings, who works extensively on portco operations, is direct: clean, organized data is the prerequisite for getting value out of any technology — ERP or AI. If the data is bad going in, neither one fixes it.
This matters more than it sounds. A portco that migrates into a new ERP without first cleaning its data doesn’t end up with better data in a modern system. It ends up with the same bad data, now locked inside a system with more complexity and a steeper learning curve. The garbage-in-garbage-out problem doesn’t disappear at go-live — it amplifies.
The data readiness question is also diagnostic. Getting your data organized before you pick your system forces decisions that vendors don’t want you to make upfront: What data do we actually have? What does it mean? Who owns it? Where are the gaps? Answering these questions before you’re in contract negotiations tells you more about your real technology needs than any demo.
A portco that can cleanly articulate its data landscape going into a vendor conversation is in a fundamentally different negotiating position than one that’s still figuring it out in discovery.
A Phased Approach That Reduces Risk
The reason big technology projects fail isn’t usually the technology. It’s scope.
A portco that tries to implement a full ERP, upgrade its CRM, and stand up a BI platform simultaneously has created a project with three failure modes instead of one. When something breaks — and something always breaks — the team can’t isolate the cause. The implementation becomes hand-to-hand combat with the business instead of an upgrade to it.
The better approach stages the investment:
Step one: Audit what you have. Map the current state before buying anything. What systems exist? What processes depend on them? Where is the manual work concentrated? A two-week audit tells you more than six months of vendor pitches. You’re looking for the single process that, if automated, creates the most downstream relief.
Step two: Pick the highest-pain process. Not the largest system. Not the most visible one. The one where bad data, slow handoffs, and manual entry compound the most damage — for most portcos, some version of the order-to-cash cycle or the financial close.
Step three: Implement one system well before expanding. Full adoption. Clean data migration. Documented process changes. A clear before/after the team can point to. This builds organizational confidence — proof that the company can absorb a technology change without catastrophe. That’s the foundation the next project builds on.
This isn’t slow. It’s risk-managed. A portco that successfully implements one system in 90 days is in a better position to tackle the next one than a portco that spent 18 months trying to do everything at once.
The New System Becoming Another Data Collection Exercise
There’s one more trap that deserves attention, because it happens even when the implementation goes technically well.
Scott Phillips, a managing director at ORIX Capital’s portfolio operations group, identified it precisely: “There is a tendency to collect data for data’s sake, and then you really look at it and you go, okay, but what does it tell me?”
New systems generate data. That’s the pitch. What the pitch doesn’t cover is that data without a defined use case is still noise — it’s just organized noise. A portco that implements a new ERP and immediately starts pulling reports but hasn’t defined what decisions those reports should inform has traded one set of visibility problems for a more expensive version of the same problem.
The antidote is to define the questions before you go live. What are the three decisions this system needs to inform? Who will make those decisions, and how often? What does “the report tells me we need to act” actually look like? If you can’t answer those questions in a pre-implementation meeting, the system will generate dashboards that get ignored.
Once your measurement infrastructure is built, the point is to use it. Systems that collect but don’t inform create the same learned helplessness that got portcos onto spreadsheets in the first place — the data exists, it just doesn’t tell you anything.
The Stakes Aren’t Symmetrical
Companies that work through the fear and implement technology thoughtfully don’t just save time. They build the operational platform that makes the next phase of value creation possible.
Capital and operations are table stakes in PE. Technology is the compounding layer — the multiplier on everything you’ve already built, without proportional headcount growth. In 2026, that compounding layer increasingly runs through AI. The portcos that have done the underlying systems and data work are positioned to use it. The ones that haven’t don’t have the inputs AI needs to function. The portcos that get this right can scale into larger, more complex businesses without the friction cost rising in lockstep.
The portcos that don’t — that keep deferring because of the horror stories — end up being acquired by competitors who did. Or they get to the exit process and discover that a buyer’s operational due diligence has surfaced what everyone inside already knew: the infrastructure can’t support where the business needs to go.
The fear of a bad implementation is rational. The horror stories are real. But the cost of inaction compounds just as surely as the cost of a failed project — it just does it quietly, for years, until the reckoning arrives.
The question isn’t whether your portco can afford to invest in technology. It’s whether it can afford not to.
Alex Escoriaza helps PE-backed companies evaluate and implement operational systems without the catastrophic failures. If your portco is stuck in technology paralysis — or in the aftermath of a bad implementation — reach out.