Portfolio company digital transformation that delivers topline growth

Digital transformation – not least from artificial intelligence – offers the prospect of transformational topline growth at portfolio companies (portcos). However, with fast-moving developments and high levels of disruption, delivering revenue results can only come from answering key questions on digital strategy from AI application and product focus to scalability. 

In the joint AlixPartners and IPEM 2024 Pan-European Private Equity Survey, 54% of operating partners identified growth in revenue and margin as a top priority. Given the tight capital controls that firms face, digital can be a key enabler to drive returns across portfolios.  

Following our exploration of leveraging technology for M&A value creation, we’re looking at what those key questions are to enable digital in the pursuit of revenue and margin growth, and what we’ve learnt from addressing them.  

Key questions, answered 

Do you have a realistic, measurable tech roadmap?

Your portco technology roadmap – mapping out the digital and technology strategy – should be regularly reviewed and shouldn’t be overloaded with too many priorities. Our Disruption Index showed that almost half of companies say they struggle with technology projects as there are too many priorities to juggle.  

A realistic, returns-based roadmap should:  

• Diagnose how well the existing systems, technologies, digital capabilities and processes align with the business objectives and whether they are designed to scale with growth.  
• Identify capability gaps and areas for improvement especially where digital tools and platforms can be leveraged to enhance customer engagement, drive productivity and enter new markets. 
• Feature business and technology KPIs, such as increased customer acquisition and retention, faster time to market for new products and increased transaction volume-handling capacity.  
• Prioritize and sequence initiatives based on materiality – such as revenue and cost impact, competitive differentiation, criticality, and investment cost. 

A digital strategy and transformation program we mapped-out at a live entertainments company unlocked +15% of growth opportunities. 

How can data drive increased portco revenue through AI? 

In our 2025 Disruption Index, 62% of business leaders said they expected significant changes to their business model over the next year due to disruptive forces – with 80% of executives at least somewhat optimistic about the impact of AI on their business. 

Delivering technology projects that leverage Generative AI – in a strategic, focused way – can unlock double-digit growth, billions in additional sales, greater margins and a faster go-to-market, but key elements need to be in place:  

• Data that can be leveraged to support existing products and services, whether customer or internal. 
• Use cases that can improve insight generation, from customer analytics to supplier segmentation, or have the potential to automate routine tasks, such as code modernization, application testing or data entry. 
• An understanding of data maturity from reviewing portco data architecture and landscape so key development areas can be identified for the AI use cases. 

A leading construction equipment provider we worked with was targeting margin improvement through data analytics, data visualization and AI-based scenario analysis. We identified £70M in operating profit opportunities through customer and pricing analytics, IT process automation, and logistics route and fleet optimization. 

Can the technology platform shift to a new business model? 

Longer company hold times is an ongoing challenge for PE firms. In our Ninth Annual PE Leadership Survey, 44% of PE firms identified “finding sustained growth models” as a way of tackling this challenge, but this often means needing to repivot digital and technology product offerings.  

Creating effective models for sustained growth includes conducting a market analysis to understand changing customer preferences, unmet needs, and market disruptors.  

At a ~€35B electrical solutions company, a new digital sales and delivery model informed by this level of analysis yielded ~€1B in customer sales, utilizing a new omnichannel platform. We’ve successfully realized ~£200M of efficiency gains and 50% uplifts in time-to-market through effective IT transformation in different settings.  

The ability to move to new business and tech delivery models can reinvent the business value proposition and may include exploring models like Software-as-a-Service or subscriptions. 

Does portco technology give you the product focus and agility needed?

Rapid technological change and disruption calls for improved speed to market, minimized system incidents and responsive service. These can be delivered at portcos with agile-based product-centric operating models, focused on these areas:  

• Ensure product roadmaps are focused on the right priorities through collaborative and iterative product planning  
• Assign product managers or leads to value streams or key business areas to align product development teams with roadmap priorities 
• Optimize the product manager to development engineers ratio – reducing co-ordination overheads  
• Leverage external partnerships for right sourcing and the agility to scale up and down 
• Measure team productivity and ways of working effectiveness, using metrics like DORA (DevOps Research and Assessment) 
• Establish a learning culture to continually drive performance improvements based on internal and external benchmarks, such as Gartner and Computer Economics 

Can it drive scalability for topline growth?

A modular architecture approach to digital strategy offers greater scalability, cost efficiency, and flexibility.  

This can be achieved through building applications as a suite of small or microservices, using application programming interfaces (API) as a foundational element, exploiting the features of cloud data storage, and separating data storage and management from the user interface.  

A modular approach can better leverage nascent AI developments, rapidly launch new products, scale at marginal cost and rapidly adapt to future market needs. 

We worked with this approach at a major payments company to modernize their enterprise architecture. The five-year program delivered new products to market 50% faster, improved testing quality by 60%, and reduced security risks by 30%. 

Getting digital right is critical for competitive differentiation, operational excellence, and sustainable growth at portfolio companies. PE firms can outperform the market and deliver superior returns to their investors by addressing the key technology questions that enable digital transformation to drive topline growth.