PE operating partners say portco AI efforts are stuck in the IT org
vasuman · x · 2026-11-07
After calls with several PE operating partners, the author summarizes why AI initiatives at portfolio companies stall: they get treated as side-of-desk IT projects rather than business priorities.
One striking example: a distributor whose inside sales team copies orders from a whiteboard into the ERP — a 100-item order takes an hour, and the first distributor to quote usually wins the work.
Seven recurring struggles:
- Hiring: business-side AI lead vs. AI-aware functional lead — both nearly impossible to hire
- Build vs. buy: too many "AI for X function" vendors, too much noise
- Contracting: funds want fund-level "captive capability" contracts instead of RFPs per use case
- Purpose: labor takeout pushes EBITDA up 5 points but doesn't lift exit multiple without an "agentic offering" narrative
- Outcome-based pricing: bogs down in negotiations — is saving an hour really worth $17?
- Execution: great sales pitch, terrible project; it comes down to who walks in the door
- Business cases: AI briefs claiming 40% automation written by people who never spoke to the function
Post ends with a soft plug for the author's firm Varick.
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