From Barriers to breakthroughs

Unleashing GenAI
across portfolios

 

Generative AI (GenAI) drives innovation, efficiency, and operational excellence in sectors ranging from healthcare to manufacturing. For Private Equity (PE) firms, this technology holds unparalleled potential as a strategic enabler to significantly boost EBITDA, transforming portfolio company (PortCo) operations at their core. While the depth of this transformation means that full adoption will take time, early
adopters are positioned to enjoy a significant advantage by capturing value more quickly and extensively.

Despite its vast potential, adoption within PortCos has been slow, constrained by challenges such as fragmented systems, limited expertise, and a cautious approach to untested technologies. many PE firms rely on lighthouse projects to pilot new innovations, this strategy, delays broader implementation and results. The key to overcoming these barriers lies in understanding GenAI in-depth and deploy applications tailored to the unique needs of PE portfolios.

 

Pathways to success: Deploy, reshape, and invent

To integrate GenAI effectively, PE firms can consider three key approaches: deploy, reshape, and invent. Each pathway offers distinct advantages and challenges, and their suitability depends on the specific needs and constraints of PortCos.

The deploy strategy, focuses on leveraging ready-made tools from hyperscalers such as AWS, Google, and Microsoft, provides a low-risk, scalable solution. These tools allow PortCos to quickly implement proven applications without significant upfront investment.

For most PE-owned businesses, this approach represents the fastest and most practical path to bottom-line impact through GenAI.

The reshaping strategy involves adapting processes by developing tailored AI-driven solutions. This pathway enables PortCos to address specific operational challenges but requires meaningful investment in technology and capabilities, making it more resource-intensive. While reshaping can deliver transformative results, it often demands expertise and infrastructure that small-medium sized PortCos may lack.

The inventing strategy focuses on creating entirely new business models or services powered by GenAI. Although this approach offers potential for groundbreaking innovation, it carries higher risks and longer ROI-timelines. For most PE portfolios, where rapid and measurable outcomes are prioritized, inventing is rarely the prefered choice.

By focusing on deployment and selectively reshaping processes, PE firms can achieve immediate impact while laying the groundwork for broader transformation. For example, in procurement, deploying pre-built GenAI tools allows PortCos to automate RFP generation, support supplier negotiations, and centralize procurement insights across the portfolio.

Leveraging procurement as a strategic driver

Procurement is a high-impact domain where GenAI can deliver immediate value within PE portfolios, driving measurable P&L improvements by streamlining operations and addressing key challenges. GenAI automates and enhances critical processes, enabling PortCos to reduce costs and create synergies across portfolios. By aggregating procurement data and insights from multiple PortCos, PE firms can unlock cross-portfolio efficiencies that amplify the technology‘s impact. Centralized procurement intelligence allows firms to identify common suppliers, standardize purchasing terms, and leverage collective buying power, resulting in significant cost savings and operational improvements. These synergies also foster the sharing of best practices and insights, helping PortCos align their strategies and maximize the portfolio’s collective potential.

For instance, GenAI can transform the RFP process by automating the creation of the initial draft and guiding iterative improvements until it is ready to be sent to suppliers. This shifts the procurement professional’s focus from drafting materials to reviewing and refining them, significantly accelerating the timeline from idea-to-RFP, reducing it from several weeks to just days. Furthermore, GenAI guidance enables even less experienced purchasers to execute RFPs with best-practice standards, ensuring consistent quality and efficiency.

Additionally, GenAI enhances supplier negotiations by leveraging data from ERP and sourcing software to provide swift, actionable insights. It can summarize supplier performance, analyze historical spend, and outline potential risks, enabling procurement professionals to prepare for meetings with key suppliers more efficiently. This comprehensive preparation not only drives more effective negotiations but also unlocks new savings opportunities and strengthens supplier relationships.

Beyond individual PortCos, PE firms can use GenAI to centralize procurement knowledge by aggregating insights from successful cost initiatives across their portfolios. This establishes a shared repository of best practices and strategies, which each portfolio company can access and learn from to enhance its procurement functions sustainably. By fostering collaboration and leveraging advanced tools, GenAI helps turn procurement into a strategic driver of value creation.

Start small, but meaningful. Leverage existing tools, don’t invest in green-field development, but select problems that matter and make a difference for the teams.

Expanding the impact beyond procurement

While procurement provides a compelling starting point, GenAI’s benefits extend to other critical business functions. Within SG&A activities, GenAI can automate routine tasks such as invoice matching, contract management, and compliance reporting.

These efficiencies free up teams to focus on strategic priorities, improving both accuracy and execution speed.

Data harmonization is another transformative application of GenAI. Many PortCos struggle with siloed datasets that are not well maintained, which hampers effective analysis for decision making. GenAI enables an easier categorization and integration of disparate data sources, creating a unified framework for advanced analytics. This capability is particularly valuable in procurement, where clean, centralized data allows firms to identify savings opportunities, optimize supplier relationships, and align strategies across the portfolio.

 

Overcoming adoption barriers

Despite its transformative potential, deploying GenAI at scale requires addressing several common barriers. One of the most significant challenges is the scarcity of AI talent, as many PortCos lack the in-house expertise needed to implement and manage advanced technologies. Upskilling existing employees and collaborating with external AI specialists are critical to bridge this gap. To accelerate progress, Private Equity firms can establish a Center of Excellence, providing their portfolio companies with centralized access to experts, best practices, and cutting-edge knowledge. This approach ensures that PortCos can leverage specialized resources without duplicating efforts, enhancing their ability to adopt and scale GenAI effectively.

Fragmented data systems and data management also limit the effectiveness of GenAI applications. investing in centralized data platforms is an imperative to ensure that GenAI tools deliver actionable insights and drive meaningful outcomes. These foundational efforts to create the right infrastructure are necessary for GenAI to deliver its full potential.

 

A roadmap for success

To fully realize the benefits of GenAI, PE firms must take a deliberate and strategic approach. Starting with procurement, it offers a clear and high-impact entry point, where the technology can deliver immediate cost savings and operational improvements. By targeting areas such as RFP automation, supplier selection, and contract optimization, firms can achieve measurable results that build momentum for broader GenAI applications.

Scaling these efforts requires thoughtful execution. Early pilots should focus on specific pain points, establishing clear KPIs to measure success and refine approaches. Once proven, these pilots can be expanded across the portfolio, enabling firms to maximize GenAI’s impact while minimizing risk. Complementing these initiatives with investments in data management and workforce upskilling ensures that GenAI implementations are both scalable and sustainable. //

 

 

CONCLUSION: THE PATH FORWARD

Integrating GenAI into PE portfolios is not merely an opportunity – it’s a necessity. Starting with procurement enables firms to achieve significant P&L improvements while setting the stage for broader operational transformation. GenAI equips PortCos to streamline costs, enhance decision-making, and build scalable efficiencies that foster long-term value creation. The time for action is now. Early adopters of GenAI will gain a critical advantage, enabling their portfolios to navigate market complexities, optimize operations, and lead in innovation. By implementing GenAI strategically, PE firms can establish new industry benchmarks and secure a sustainable competitive edge.

 

Authors

Fredrik Fejne

Principal

Fredrik Fejne is a Senior Project Manager at the Stockholm office of Inverto and an experienced expert for Principal Investors & Private Equity (PIPE). His main focus is PE-owned clients in various sectors, focusing on due diligence, performance improvement and cost optimization.

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Lukas Garstecki

Project Manager

Is a Project Manager at Inverto in Stockholm specializing in automotive, healthcare, and process manufacturing industries. He brings expertise in digitization, project management, and advanced analytics to deliver impactful solutions for our clients.

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