With around 750 employees and a global presence -- 31 offices in 13 countries --
3i Group is far from a typical private equity/venture capital firm. Most companies in the space have gone the boutique route, maxing out at 50 to 60 professionals, and very few have pursued international expansion. London-based 3i wasn't complaining about its growth, but staffers started to worry that its size could potentially hamper its success.
The firm has always valued its close relationships with clients, and didn't want its growth to jeopardize that in any way. "We needed to operate as a one-room company," says Rod Perry, director of Technology and Human Resources. "Our competitors can literally shout across the room -- 'hey, Joe, do you know anybody at so-and-so?' We had to find something that could bridge the distances between offices."
To communicate quickly and informally, 3i had set up a chat room on its intranet. While that system fostered spontaneity, few people had the time to monitor it on a regular basis. Additionally, the mechanism in place to capture and preserve information was slow and inflexible. As a result, 3i occasionally found itself lagging behind smaller competitors who, owing to their more intimate work environment, had an easier time capitalizing on relationship intelligence.
In 2002, 3i selected Interface Software, which operates alongside of FrontRange Solutions, salesforce.com and Siebel Systems, to integrate its customer data. "Our network of clients, contacts, and relationships is critically important to our business," says Colin Smith, 3i's group operations manager. "3i professionals need to keep track of the network's collective relationships -- who knows whom, key players, business contacts, and partners on a real-time basis."
Now, employees have access to customer data in real time. However, beyond that, 3i is able to make the personal connections it values in its relationships with clients. Employees across all divisions of the company can discern which of their peers knows a certain individual, as well as the nature of the association. Agents can also uncover connections between 3i professionals as well as outside third parties, to find out if two people may have sat on the same board of directors or attended the same business school, for example. Users can also set up notifications when information about a person of interest is updated within the system.
Given the value of relationship information in the VC world ("knowledge isn't only power for us, it's money," Perry notes), selling 3i's top execs on the solution proved relatively easy. "I didn't try to sell an ROI story -- I used fear," he recalls with a laugh. "I told them that we'd lose our competitive advantage and become just a great big bureaucratic mess."
The implementation took 12 months, though 3i saw results quickly. The company had its eyes on a German chemical engineering business, expecting that it might put one of its Spanish subsidiaries up for sale. Looking for an in, 3i scanned the database to see if anyone might know somebody at the selling company. Turns out that a Milan-based staffer knew a higher-up at the German firm, so he made the call and the introduction; 3i went ahead and made the deal.
While Perry doesn't disclose exact numbers for this particular transaction, he notes that most of 3i's transactions have enterprise values of $75 to $750 million, with profits often soaring into the $50 to $400 million range. "If one deal can be worth $50 million, that puts the ROI question into a different context," he jokes.
Most important, Perry stresses that the goal is to prevent customers from seeing any negative changes in their relationship with the firm. Even with new technology and processes across the 31 offices, customers should feel like they have had the same close relationship as if it were a boutique operation. And so far, the "stealth transition" is doing wonders.