Dynamo Users Talk Automation at Dynamo University 2019

Dynamo Users Talk Automation at Dynamo University 2019
Rachel Lurie

Over 130 Dynamo users convened in early June to learn about product updates, discuss their specific use cases, and share industry insights. Across panels and sessions, the growing presence of automation and artificial intelligence (AI) loomed. In 2017, 451 Research predicted that tools that automate repetitive business tasks based on rules and logic would need to merge with intelligent machine learning to create a hybrid automation offering. Two years later, we are starting to see that shift happening in real time.

Our VP of Strategy Bob Goldbaum led a panel, Intelligent Automation, where some of our power users shared their thoughts on the current state of automation, the future of AI, and where the human factor fits in.

The two versions of AI the discussion focused around were broad AI and, more extensively, narrow AI. As defined by Euan Beer from Kamehemeha Schools, broad AI encompasses the use of bots programmed with true human thought. While bots like Google Assistant have passed Turing tests and had shockingly human conversations, this avenue is still largely untapped in the alternative investments space.

Narrow AI, as Euan described, makes up the current mechanisms behind business automation tools. Built on a series of “if, then” statements, and layers of rules, logic, and algorithms, narrow AI provides the tools for building out automated workflows for repetitive tasks. As an LP, Euan considers narrow AI to be an important component when evaluating fund managers: “Business automation as a tool is going to be beneficial to the future of your portfolio.”

Layers of Automation:

Basic CRM functionality has achieved the first step: automating filing processes, paperwork, and email management. One of our panelists from a GP firm follows this mantra: “If something is repeatable, automate it.” From his perspective, the power of machines completing basic manual tasks removes the threat of human error. In an industry with delicate financial data points, any chance to mitigate risk must be seriously considered.

A second layer of automation that is often overlooked is task management. Beth Gilje from the University of Pennsylvania Endowment Office noted the value of push notifications to alert team members when documents are uploaded, or updates are made to an account. When that data is brought directly to end users, changes are less likely to fall through the cracks than when users must search for them manually. With business automation technology, software can be programmed to do almost all the work. A simple automated workflow might have the system deliver a notification, open the email, click the link, and log in with pre-determined credentials without human aid.

Enhancing Reporting with AI:

With tens, hundreds, or sometimes thousands of investors demanding specific data in varied formats, remaining compliant and transparent with each investor presents a significant time sink. As a small firm, one of our GP clients combats this challenge by requesting specific data from its LPs, agreeing on a reporting format, and building out automated dashboards to display the information.

This process is also repeated on the deal side. Where team members were previously allocating 7+ hours weekly to generating needed reports for Monday Morning Meetings, the deal team now has dashboards that update automatically. This saves time, and also keeps data clean- without manual entry and updating of data points across different files and reports, there are fewer errors. For those rare few, extensive quality assurance processes catch them. Many business automation tools even have QA steps built-in, further limiting potential for human error.

How does AI impact LPs’ decisions to invest with GPs?

A note for GPs: technology is no longer a luxury, it’s a must. Beth shared that when conducting ODD for new fund managers, her team looks for firms with an existing technology environment that is both provided and supported by the company, and that has a high adoption rate among employees.

Within the technology framework, firms should have a comprehensive cybersecurity program, including restricted permissions settings for individuals across the organization.

Euan’s team also looks for a uniform, well-managed investor portal, which allows investors secure access to performance data, ad hoc reporting, and updated company documents. In Beth’s experience, technological advancements in data rooms, investor portals, and reporting automation have allowed the ball to shift back to LPs in terms of demanding more specific and transparent data.

It is worth noting that for now, machine learning and broad AI don’t seem to be driving factors. But, as technology advances and standards change, an appetite for more advanced automation is likely to continue building.

The Human Element:

While it is easy to marvel at where we are, Beth notes the adage, “If you give a mouse a cookie, it’ll want a glass of milk.” Our panel collectively predicted that the more we automate, the more we will want to automate in the future. This begs the question: where does the human element fit in?

A pervasive question across many of our Dynamo University sessions was how to convince old-fashioned investors to participate in automated reporting and information management. There is a clear trend in older, more conventional investors’ reluctance to move away from their preferred, manual methods. Demonstrating that automating repetitive tasks frees up time and mental space to complete other tasks without hiring more staff is key to bridging that gap.

In a rules-based system, there are bound to be outliers that don’t quite fit into defined boxes. For these cases, Euan Beer believes, “AI can do most of the heavy lifting, but we still need human intelligence. Without it, we lose the knowledge factor.”

Closing out the discussion, our VP of Strategy Bob Goldbaum shared, “Dynamo has long been ready to help you automate.” If your firm is ready to save time and improve accuracy by automating manual business processes, then Dynamo Software could be the right fit for you. Schedule a demo to see how Dynamo can streamline your firm-wide investment operations.