95% of Firms Struggle to Integrate Data Across Systems, Hindering Private Market Growth

The ability to turn insight into action is what moves a fund forward, not just data on its own. In private markets today, this shift is being supported by connected reporting and dynamic waterfall modeling, which are emerging as key enablers of operational resilience and investor confidence. They're helping to drive this shift forward.

Private markets are accelerating, with regulatory expectations tightening across jurisdictions and fund structures becoming more complex, including evergreen and semi-liquid vehicles. Environmental, social, and governance (ESG) reporting adds another layer of pressure. The share of ESG assets is projected to rise from 14.4% in 2021 to 21.5% by 2026. This level of growth demands reporting that's consistent, auditable, and defensible, not rebuilt manually every cycle. It won't be easy to achieve this level of reporting, but it's necessary.

Compliance complexity is already constraining organizations, with 77% of organizations saying they've been negatively impacted by compliance complexity, according to PwC's Global Compliance Survey 2025. On the ground, manual processes are struggling to keep pace. Reporting teams operate across disconnected systems, and waterfall calculations are often managed in spreadsheets that become difficult to scale as fund structures grow more complex. They can't keep up with the demands of regulatory expectations.

For years, reporting was largely a documentation exercise, with templates populated after the fact and reconciliations following the month-end close. Connected reporting and waterfall platforms are changing this dynamic in two important ways. First, reporting becomes traceable and governed, allowing for faster, more consistent, and easier-to-defend reporting under regulatory scrutiny. This makes it easier for firms to comply with regulations. Second, waterfall modeling is shifting toward a more scenario-based approach, enabling managers to test assumptions, model potential outcomes, and adjust as investor composition evolves.

They can make more informed decisions with this approach.

Many technology initiatives fall short because underlying fragmentation remains unaddressed. Integration is one way organizations are working to reduce this fragmentation, connecting reporting and waterfall tools with fund accounting systems, investor portals, and compliance workflows. However, integration remains difficult for most firms, with 95% of respondents struggling to integrate data across systems, according to Salesforce's MuleSoft Connectivity Benchmark Report. They're finding it tough to integrate their systems.

Risk leaders see the value of addressing this, with 68% of respondents believing the integration and interconnection of risk management systems, domains, and processes had a significant positive impact on the effectiveness of risk-related decision-making, according to KPMG's Future of Risk report. The firms doing this well aren't necessarily those with the most sophisticated technology, but those with the clearest strategies. They're the ones that are really benefiting from integration.

This evolution is cultural as much as technical, with reporting teams becoming stewards of data quality and control rather than report producers. Artificial intelligence will likely widen the gap between firms with connected data foundations and those without, with the potential impact of AI equivalent to 25 to 40 percent of their cost base, according to McKinsey's analysis on the economics of asset management. It's going to have a significant impact on the industry.

To translate strategy into execution, firms should start by mapping reporting inputs and ownership, standardizing definitions and metrics, and making approvals, lineage, and evidence storage visible and repeatable. They should also document distribution rules and edge cases, creating a small library of standard scenarios, ensuring every run produces outputs that are clear and explainable to investors and auditors alike. This will help them to improve their reporting.

The starting point is not new software, but connecting what already exists, identifying the most manual handoffs between fund accounting, reporting, compliance, and investor teams to remove significant friction. As private markets move toward a model where transparency is continuous rather than periodic, a strategic approach to connected reporting and dynamic waterfall modeling can help make this model workable at scale. It's a model that's becoming more common.

"The firms doing this well are not necessarily those with the most sophisticated technology, but those with the clearest strategies," highlighting the importance of a strategic approach to connected reporting and dynamic waterfall modeling in private markets. They're the ones that are really succeeding.

Private markets face a significant challenge in integrating data across systems, but with the right approach, they can turn this challenge into an opportunity for growth and increased operational resilience. By focusing on connected reporting and dynamic waterfall modeling, firms can improve their ability to make informed decisions and stay ahead in a rapidly evolving market. They won't be left behind if they adapt.

As the demand for ESG reporting continues to grow, firms must prioritize data integration and standardization to meet regulatory expectations and investor demands. With the right technology and strategic approach, private markets can navigate the complexities of compliance and reporting, unlocking new opportunities for growth and success. They can't afford to ignore these demands.

The ability to integrate data across systems is crucial for private markets to achieve operational resilience and investor confidence. By adopting a strategic approach to connected reporting and dynamic waterfall modeling, firms can overcome the challenges of compliance complexity and unlock new opportunities for growth and success. This approach is essential for their future success. Firms that don't adopt this approach won't be as successful as those that do.