Technical advisors: how to take your renewables due diligence online
May 22, 2022 | Felicity Jones
We recap why technical advisors are taking their renewables work online, and assess the implementation options.
It’s no secret that most major technical advisors have big digitalization plans for their services. The evidence is readily available in the public domain: you see it in annual reports, CEO speeches, and ‘Head of Digital/Data’ roles.
And one of the most obvious targets for innovation is due diligence. In fact, the general consensus is that in a few years time, online due diligence will be the market norm.
And we’re not just talking about using a dataroom to store renewables project documents. We’re talking advisors adopting systemic digital solutions for delivering the due diligence itself. Offering their clients a holistic online customer experience and delivering downstream benefits to asset management. Systematically capturing and accessing institutional knowledge.
Some drivers of this strategic push are well-publicised:
- Investors and lenders increasingly expect it.
- Time is money. Speed confers competitive advantage.
- Inhouse expertise and data is valuable - advisors want to harness this more fully.
And there are also a couple of drivers that people share in private, but not publicly:
- Burnout, staff retention and ‘DD fatigue’ mean that advisors need a better environment in which to do their work.
- Copying others! Renewables advisors from other disciplines (financial, legal etc) are taking steps to take their DD online. And in other sectors (e.g. home conveyancing), it’s already mainstream.
The question is, how to implement online due diligence? Broadly speaking, technical advisors have three options.
1. Develop inhouse
This means scoping, developing, owning and maintaining a proprietary solution, either through inhouse software engineers, or else through contracting a software development agency.
This is a good option if you’re up for developing a bespoke solution tailored to your inhouse processes and branding. It demonstrates leadership to your clients.
Most advisors are put off by budget: upfront costs of hundreds of thousands and ongoing maintenance costs of at least £100k/yr just to stand still. And that’s for a basic solution, rather than a market-leading one. This cost puts inhouse development out of reach for most.
But the bigger challenge in our view is creating something that actually works, delivering the promised benefits. Client-facing product development is complex. We’ve heard plenty of horror stories of major inhouse investment in client-facing platforms, which are ultimately canned as unusable.
2. License and adapt existing non-sector specific tools
We’re starting to see datarooms and legaltech providers develop solutions that go beyond document storage - in future, who knows, these might be available to technical advisors too.
The pros here would be avoiding major, risky upfront expenditure, and testing out something without long-term commitment. You could work with a big trusted brand and integrate with their dataroom functionality.
The main challenge is finding a solution that fits technical advisor workflows for due diligence reporting. We’ve certainly not heard of any!
Datarooms tend to target project vendors and owners as their customers, and sometimes investors, rather than technical advisors. They also tend to prioritise big corporate deals, over renewables assets transactions. And legaltech solutions? They’re targeting legal advisors and legal workflows (with a pricetag to match!).
3. Adopt tailored SaaS solution: LiveDiligence
The third option is adopting a tailored software-as-a-service (SaaS) solution, paying a monthly license fee for usage. This is where we come in.
The advantages here are affordability and ready-to-go deployment. You can work with a tried-and-tested, purpose-built platform that already has buy-in from investors and lenders. You can test it for a couple of months for a nominal cost, without any of the risk and major expenditure of developing something inhouse. And you can explore white-labelling, ensuring company branding benefits.
The number one biggest barrier we’ve seen technical advisors face is securing team availability for a trial. The storage, EV, hydrogen and renewables markets are all booming: the temptation is always to rush from deal to deal, rather than take a step back and focus on client needs at a more fundamental, strategic level.
Secondly, as with any online solution, data security is paramount. We’d be able to talk through our two-factor authentication, data encryption, multiple geo-redundant backups, active threat monitoring and security testing.
Happy to chat
Hope some of the above is helpful. If you’d like to discuss your options further, don’t hesitate to get in touch.