Place potatoes in a large pot; add water to cover by ~2 inches; bring to a boil; cook ~10 minutes; drain; set aside to cool.
Place bacon in a skillet over medium-high heat; fry until browned and crisp; transfer bacon to a paper towel-lined plate; crumble when cool enough to handle; leave bacon grease in skillet.
Cook onion in the bacon grease over medium heat until browned, ~7 minutes.
Add vinegar, sugar, water, salt, and pepper to skillet; bring to a boil.
Once boiling, add potatoes, and ½ of the crumbled bacon; cook until heated through, ~4 minutes.
Transfer warm potato salad to a serving dish; sprinkle remaining bacon over top; garnish with parsley.
