The paradox of progress: How managed services multiply the value of AI for private markets operations

The era of AI in private markets is here, and as hesitant exploration gives way to active implementation, early positive results are accelerating the adoption curve. With AI taking on a growing share of middle- and back-office operations, it may seem as though the natural corollary is a reduced reliance on managed services. But early adopters are discovering that this resource is the key to unlocking the true value of AI.

The realities of AI in private markets

Large language models (LLMs) are a transformative force for industries where unstructured data is prevalent. But these models are fed by the kinds of massive, structured data sets that have not historically been available within private markets. The levels of illiquidity, opacity, and complexity that characterize this industry can't support a fully automated, straight-through workflow today, and given its fundamental characteristics, it's unlikely to do so any time soon.

A lack of standardization creates additional complications, as the diversity of asset classes, fund strategies, regions, and reporting preferences results in the need for bespoke applications of AI technology. Managed services are addressing these unique factors in private markets operations by pairing artificial and human intelligence in new ways.

Supplemental capacity

Separately, AI and managed services can lift a significant burden from private markets operations teams, but when these resources are delivered holistically, the impact is far greater. In short, the combination of AI and subject matter expertise is a force multiplier.

An example of this blended model can be found in our approach to financial spreading within iLEVEL. AI does a superlative job of extracting data from financial statements, but the technology is less adept at reading, interpreting, and applying the textual information in the notes attached to specific line items. Our iLEVEL Services team relies on iLEVEL's integrated AI to spread financials and then uses human intelligence to edit the data based on the nuances captured in textual information.

Strategic guidance

There are myriad ways to apply AI across the front, middle, and back offices, and the technology's rapid evolution has created a constant state of flux. GPs and LPs in our networks tell us that they often feel overwhelmed and paralyzed by the choice between an array of AI solutions. Our dual-domain experts, who understand AI and the private markets, are helping clients determine the solutions that are contextually appropriate and capable of driving maximum value to the organization. 

This strategic element of the service engagement has become critically important, and the 300 full-time employees who staff our iLEVEL Services team are now not only operations experts but trained AI practitioners who beta test iLEVEL's AI elements (such as Automated Data Ingestion and Document Search) and collaborate regularly with the data science team. Our service models are specifically designed to help clients navigate their options and identify AI initiatives that will help the organization achieve its objectives.

Bespoke engagements

With the advent of AI, managed services have transitioned from "one size fits all" to "choose your own adventure."

Originally, iLEVEL Services were structured as end-to-end offerings based on industry best practices. But as AI has gained ground in our clients' operations, we have launched project-based services designed to help GPs build targeted AI capabilities that address specific workflow challenges. These services include change management and bespoke engagements for designing data workflows that leverage AI and services in ways that make the most sense given their unique context, internal capacity, and technology resources.

Services evolve for an AI-first future

AI will exert a greater influence on workflows for private markets, but this won't diminish the importance of managed services for this segment. If anything, it has made them more relevant than ever. Today, close to 40% of all clients using iLEVEL—from first-time funds to long-established, global firms—also use our managed services.

But the shape those services take and the goals they support have changed. GPs now rely on our iLEVEL Services team to help them analyze the workflow granularly, deploy high-ROI AI solutions, and fill the gaps where these solutions require human supplementation and oversight.

AI is a fast-developing technology. The goalposts are constantly shifting and navigating this changing terrain decisively and sustainably requires human as well as artificial intelligence. Through integrated technology and service delivery, we are ensuring our clients in private markets can address their unique challenges and extract maximum value from AI.