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INTRODUCTION. Technology Due Diligence is an objective assessment of the quality, durability, viability, and reliability of technology company software, services, methods, and personnel, and the satisfaction and intentions of their customers.Each evaluation is customized to meet the needs and budgets of the client, the project, and the investment situation. We provide a complete range of evaluation services, from an early assessment brief to a comprehensive, in-depth investigation and analysis. Each results in the analysis of a company’s technology-related strengths, challenges, opportunities, and critical success factors, as well as a set of concrete recommendations. Results are delivered in report and/or presentation form.
Do Diligence® Partners prides itself on delivering the highest quality information while meeting the tight time constraints imposed on technology investment decisions.
TECHNOLOGY DUE DILIGENCE SERVICE DEFINED. Successful software and services companies solve business problems for their customers better than their competitors, and continuously upgrade those solutions to meet the changing needs of their marketplace. They produce timely, high quality solutions, and service and support their customers effectively to ensure high value and strong return on investment. Their marketing and sales organizations ensure that the marketplace is aware of their solutions and understands the benefits and urgency of using them.
The Do Diligence® Technology Due Diligence service addresses the technology-related components of the commercial software development and delivery business process. We evaluate the software’s architecture, design, and implementation to ensure that it meets critical standards necessary for commercial success concerning usability, maintainability, reliability, availability, scalability, performance, security, portability, extensibility, and internationalization. Using as our yardstick our extensive commercial software development and delivery experience, we evaluate the subject company processes used to identify market needs, design, develop, deliver, support, and maintain products and services, and the experience and expertise of the management and staff involved responsible for bringing software to market. Whenever appropriate, we discuss our findings with subject company personnel and our clients to confirm our analysis. The findings can be documented in a report, a presentation, or both.
BENEFITS. Key benefits of a Do Diligence® Partners' Technology Due Diligence service include:
- Improved success rates
- Reduced technology-related risks
- Strengthened negotiating positions that can translate into more favorable valuations
- Objective, unbiased analyses by industry experts
- Comprehensive knowledge of the target company's technology assets
- Better understanding of intellectual property issues and opportunities
- Reduced time to meet investment goals resulting from a focus on key technology-related issues
Do Diligence® clients avoid costly mistakes or justify lower valuations, and respond to more investment opportunities in a given period of time as a result of our ability to provide precise technology investment information in the tightest possible time frames.
CLIENTS. Users of Technology Due Diligence services are:
- technology companies contemplating acquisitions or partnerships
- venture capitalists and individual investors
- software companies reviewing product portfolios
- corporations assessing and redefining mission-critical applications.
EVALUATION CATEGORIES. We focus attention on key technology issues by answering questions like those posed below. Do Diligence® Partners maintains extensive checklists to help assess current status and to identify critical indicators of probable success and risk.
Software
How well is the software designed? Will the architecture and implementation support business needs for usability, reliability, maintainability, security, performance, integration, and scalability? What key software features have not yet been implemented? How critical are they to the success of the software? How well does the design support implementation of these key features? How reliable is the software?
E-commerce
How well is the e-commerce application software designed and implemented? Does it accurately reflect the needs of its users? Does it adequately consider all required functionality, including security, performance, accounting, and delivery of the intended services? How well does the hardware and network infrastructure support the needs of the business?
Services
Is each service well defined in terms of objectives, target clients, and deliverables? Have the services been completed and any resulting software, infrastructure, e-commerce site, or other product been fully implemented? Have services projects been completed on time and within budget? When they were not, what was the reason? How well are projects managed, staffed, and coordinated with the client? What unresolved issues are outstanding?
Infrastructure
What physical and systems-based security measures are implemented? What security measures are planned? What procedures are in place to react to security breaches and to revise security measures over time? Are disaster recovery procedures implemented and tested? To what level? What hardware and systems software are in place to ensure the necessary levels of reliability, availability, security, scalability, and performance? What contingency plans are in place to support drastic increases in demand? How well does operations support the business? Are the necessary systems management processes in place to deal effectively with customer support, change and configuration management, problem management, and asset management?
Personnel
What experience and expertise does management bring to the table? How well does the experience and expertise of the Chief Technology Officer, Chief Information Officer, Development VP or Development Manager match the needs of the position? How many key managers are full-time employees? How many key staff members are full-time employees? How well do the qualifications of key staff members match the needs of their positions? How effectively is the company protected against key employee attrition?
Methods
How well do implemented design, development, quality assurance and testing, configuration and change management, maintenance, documentation, packaging, and customer support processes meet the needs of the business? How effectively will existing processes meet the challenge of growth in the customer base, and product and service offerings? Are there effective project management and control methods in place?
Patents
Will the subject technology infringe any existing patents or patent applications? Do components used in the technology infringe existing patents or patent applications? Are there opportunities for patenting algorithms, technologies, or processes to ensure ongoing viability of the company and even provide a future revenue stream from patent royalties?
Culture
What are the predominant characteristics of the corporate culture? How will those characteristics help or hinder the success of the company? Will the corporate culture be a strength or weakness when hiring management and staff in the future? How well does the culture permeate the organization? What are the barriers to extending the existing corporate culture to a much larger organization?
Customers
How well does the company's software or services meet customer needs? What specific problems have been experienced? How has the subject company dealt with these problems? What improvements are needed to products, services, and support? Will customers continue to do business with the company? If not, why not? Have customers fully deployed the company's solution? What kind of relationship does each customer have with the company? Are they stakeholders in the company? Are they test sites? Do they have a cross-marketing or cross-licensing agreement? What are customer intentions for continued use of the product?
Partners What is the nature of the relationship between each partner and the subject company? Is the partnership formalized with a legal agreement? What are the terms of such agreements? Is the subject company restricted by legal agreement to using only products from a partner's company? What restrictions does the partnership impose on the subject company's ability to design, develop, market or support its products or services? How well do the partner's products and services complement the subject company's business?
FINDINGS. Findings highlight key strengths, risks, and success factors for each of the selected evaluation categories. A criticality factor is applied to each, focusing attention on those areas that will most heavily impact the success of the investment. Finally, Critical Success Recommendations define the step-by-step actions Do Diligence® Partners suggest to ensure the future success of the technology and the business. Recommendations are predicated on client-defines investment goals.
REPORTS. Depending upon the nature of the engagement and the available time, clients choose one, two, or all three report types. Written reports, while the most time consuming and costly, provide the most detail evaluation and offer guidance long into the future. Clients use these reports to help manage the growth and development of the subject company and the future design and evolution of its technologies, products, and services. Presentations provide the important evaluation points at a higher level, and can be delivered more quickly and usually at less cost. Clients often select both a written report and presentation to maximize the value of the evaluation. Evaluation Reviews, often by conference call, provide basic information and clarification of key points, and are especially useful in helping to support early interest or justify further analysis.
CUSTOMIZATION. Each engagement is customized to meet the client's needs, budget, and the investment circumstances. Factors typically considered by clients when planning evaluations with Do Diligence® Partners include:
- The size of the investment
- Client experience and expertise with technology due diligence
- Client experience with the target company, software, or service
- Maturity of the target company, software, or service
- Size of the target company, its products, and services portfolios
- Size and complexity of the software applications
- Stage of a deal
- Time constraints
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