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The Role Of ITFM And Vertical Software In Private Equity And M&A

Mrutyunjay (Jay) Mohapatra | Senior Vice President | Performance & Technology | AlixPartners. IT financial management (ITFM) is becoming increasingly important in M&A contexts, where deal life cycles can span months to over a year and costs often fluctuate. This is where vertical software in ITFM can offer significant value. 'Vertical software' refers to specialized platforms and tools designed for a specific industry or business function. Building on my last article, this article explores how ITFM can accelerate value creation in the private equity (PE) sector. Defining ITFM And Its Strategic Benefits ITFM is a modern discipline focused on planning, tracking and optimizing IT portfolio spending to ensure alignment with business goals. It provides transparency into where and how IT dollars are spent—across resources, vendors, staff and more—allowing organizations to make smarter, value-driven decisions. Modern ITFM shifts the focus away from pure cost control toward value delivery. It connects IT spending with strategic business outcomes, using tools like automated data ingestion, real-time dashboards, scenario modeling and accountability frameworks. These features support dynamic, continuous decision-making and help highlight areas of overspend or risk in real time. By enabling strategic trade-offs—such as reducing operational costs and reallocating budget toward growth initiatives—ITFM promotes agility and resilience. Automated benchmarking, financial reporting and forecasting replace manual, error-prone processes, creating a more adaptive and insight-driven financial approach. Moving Beyond Legacy IT Cost Models Legacy approaches to IT cost management are typically siloed, opaque and IT-centric. Spend is grouped into broad, uninformative categories with little visibility for business stakeholders. Processes are static and often outdated by the time insights become available. Manual budgeting and lack of real-time monitoring hinder agility. Investment decisions are often made in isolation, disconnected from broader business goals. These rigid methods are especially ill-suited for the dynamic needs of M&A, carve-outs, divestitures or cloud-based operations. Modern ITFM addresses these issues head-on, offering visibility, flexibility and strategic alignment. Embedding ITFM Across The Deal Life Cycle In PE, a typical deal flows as follows: • Deal generation • Due diligence • Day-one planning (also known as the 100-day plan) • Post-merger integration or carve-out • Business plan execution • Exit readiness At each phase, ITFM offers distinct advantages. During deal generation, firms scout for targets aligned with their investment thesis. With ITFM, PEs can gain early visibility into IT spend, benchmark against industry standards and assess performance metrics. In due diligence, ITFM enables a granular evaluation of IT spend, surfacing efficiency opportunities in platforms, operations, governance and delivery. For example, one target in the midst of transitioning to a SaaS model faced major shifts in shared costs and tenancy. ITFM made it easy to model scenarios and evaluate the evolving cost structure. In day-one planning, ITFM supports the creation of an IT operating model aligned with the broader business strategy. It also facilitates financial reporting, transition service agreements and interim IT governance. Acting as a single source of truth, it allows PEs to track evolving spend and priorities from day one and onward. During post-merger integration or carve-outs, ITFM helps manage rapid transitions, identify cost drivers, uncover duplication and synergy opportunities and improve vendor negotiations. For example, in a recent aerospace divestiture I was involved in, outdated manual reporting made financial visibility difficult. ITFM could have enabled a seamless shift of IT finances from the legacy entity to the newly carved-out business unit. When executing the business plan, ITFM supports strategic tech decisions, rapid cost reductions and program recovery. By linking IT spend to business outcomes, it can help augment alignment and value realization. In one case, a reinsurance transformation initiative I worked on repeatedly requested emergency funding due to unclear goals and shifting milestones. With ITFM, transformation costs can be tied to defined business outcomes from the start. At the exit stage, ITFM helps document and validate the IT component of the commercial prospectus. It maintains a traceable record of IT spend from deal origination through closing and beyond. Making ITFM Work: Practical Considerations Like DevOps in development or FinOps in cloud cost control, ITFM introduces an agile mindset to IT finance. This requires both cultural and operational shifts. Companies often begin with a proof of concept or proof of value to address pressing pain points—such as cost visibility, allocation or IT cost-to-serve metrics. For a full implementation, specialized consultancies can guide the setup, with internal teams taking over once foundational practices are established. That said, ITFM isn't a one-size-fits-all solution. It is especially valuable for fast-moving organizations with large, complex IT estates. In contrast, it may be excessive for companies with fixed budgets, fully outsourced IT or minimal IT spending overall. Final Thoughts In private equity—where speed, value creation and decisive execution are everything—ITFM can be a critical enabler of transparency and performance. From scouting deals to executing exits, it provides the structure, insight and adaptability needed to manage IT spend as a strategic asset. Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?