Although attention to costs isn’t new for some firms, during the long boom the industry as a whole was more focused on enabling growth. Today, while managers may be starting from different points, most have clear opportunities to improve efficiency. Some steps—such as centralizing, relocating, and perhaps outsourcing company-wide functions—are familiar but still underused in alternativeasset management．其他步骤需要作为一个先行者,尤其是lly inartificial intelligence(AI), with its potential for major productivity improvements across a firm.

As with all transformative initiatives, moving ahead requires committed leadership and careful planning using a proven change management playbook. But the work is worth doing: along with wider profit margins, the result will be an infrastructure that is better prepared to support further growth when the cycle turns.

Peer Comparisons

The first step is building a detailed view of the cost structure that supports the firm’s activities in both the front and the back office. Costs need to be viewed on both an absolute basis and, crucially, relative to the firm’s peers. Comparing theorganization竞争对手的类似资料会给客y insights about how the organic expansion of recent years has shaped its cost structure and how it could be improved. The industry context can help the firm’s leaders adjust the company vision as needed and build the case for it among employees.

With the initial cost analysis in hand, a manager can consider which levers are available for improvement and evaluate their suitability for itsbusiness modeland culture. Our research finds that six best practices across the industry stand out: centralizing support functions, leveraging lower-cost locations, outsourcing support functions, deploying support staff more effectively, sizing investment teams in line with potential returns, and harnessing AI tools.

Centralizing Support Functions.Few firms need to be sold on the benefits of centralized support functions. Centralization brings global consistency and economies of scale and sets the stage for further efficiencies. Even so, some managers are more siloed than they should be, often because they’ve added new geographies or asset classes in recent years. Companies such as Blackstone, by contrast, have achieved 80% to 90% centralization in fund operations and information technology while keeping functions like portfolio operations and value creation strategically decentralized.

Leveraging Lower-Cost Locations.Most first- and second-tier firms operate in multiple regions, giving them choices about where to base centralized support functions. Costs, especially for personnel, already play a role in these decisions, and they take on additional importance during a down cycle. Lower-cost locations can be within one of the organization’s major markets (as when a New York firm puts its technology hub in Atlanta) or further afield (if it locates back-office facilities in Manila or Gurgaon). Sometimes a lower-cost location is home to a full range of firm activities—as is the case for Partners Group’s US headquarters near Denver—but more often it is chosen to control costs in one or more functions.

The lower-cost location lever is especially useful in fund operations and technology, as demonstrated by three prominent managers (Blackstone, KKR, and Partners Group) for which relevant data is available. (See Exhibit 2.) Not coincidentally, these functions are the ones most characterized by routine processes that can be standardized, making it easier to perform them across time zones, languages, and cultures.

Deploying Support Staff More Effectively．There is wide variety in how non-investment employees are concentrated across functions at leading firms(See Exhibit 3.) This is driven partly by differing business models and strategies but also by untapped efficiencies. Efficiency seekers should therefore view the data not as a call to bring their firms in line with the medians but rather as a tool for exploring whether their own areas of concentration match their goals.

A big push in cloud migration, for example, could be a sound reason for a temporary concentration in technology, whereas a low concentration in tech could reflect an overreliance on manual processes. Once the cloud migration is complete, the tech headcount is reduced. Managers that invested in a migration to cloud services and process automation in earlier stages of their growth now employ technology teams that are typically about half the size of those at their fourth-quartile peers.

Sizing Investment Teams in Line with Potential Returns.There are also significant differences in the size and seniority of the investment teams at leading alternative asset managers. (See Exhibit 4.) Here too there are firm-specific reasons for the variety, but also cost savings to be had in making sure that the firm is getting the best return on its outlays for investment talent.