Preparation is vital when it comes to making the IT Due Diligence process run smoothly. And while the assessment is objective and focuses on the business’ technological capability, there are ways to make the process run smoother to avoid potential delays and issues.
Let’s look at the five guiding principles for a successful IT due diligence process.
1. Start preparing early
As mentioned, it’s essential to prepare properly. Begin preparing for the due diligence process early and leave yourself with enough time to fix any issues that might come up during the preparation. The assessment process typically involves a combination of workshops and documentation review, so make sure that you’ve got everything to hand in case you’re asked for it. Think about issues or topics that might need more explanation and invest the time in getting organised.
2. Focus on quality over quantity
It’s a common misconception that due diligence requires documentation for every imaginable thing to do with your technology and team. In fact, especially for SMEs and young businesses, it’s quite normal not to have piles and piles of documents. What matters most is the quality and content of your documents.
The team assessing your business, and your technology, will be interested in the narrative of your technology function. What are your priorities? What changes are you expecting? What risks are present, and how can those be mitigated?
Effective due diligence focuses on the why, not just the what or how. Be prepared to explain why particular choices have been made and articulate how technology supports and intertwines with your wider organisational strategy. Show your working out.
3. Be open and honest
Experienced IT due diligence experts can see through attempts to hide problems, and it never looks good on the company doing the hiding. It’s always better to be honest, acknowledge issues, and explain the reasoning behind decisions or plans.
A key objective of any assessment is making sure that management knows the risks it faces. With this in mind, a big focus of any due diligence assessment will be exploring whether appropriate strategies to mitigate the most significant risks are in place. A deal rarely falls through due to issues that can be resolved with reasonable time and effort: investors want to know how issues will be owned and addressed.
There is no such thing as a “perfect business.” There’s no one rulebook that sets strict best practices for technology. By providing honest answers, the team providing due diligence can review potential risks in context with the big picture.
4. Be available
IT due diligence projects are most painful when key stakeholders aren’t available. It’s critical to give the consultants doing the assessment enough of your time. So, block out time and access to the relevant internal people. While this ensures that knowledge is transferred as efficiently as possible, it also allows businesses to explain the narrative of their tech story and plan. That narrative will form the core of your due diligence assessment.
5. Bring the team up to speed
An IT Due Diligence Assessment is the type of exam where you get extra credit for showing your working out.
When it comes to IT due diligence, you get out what you put in. To keep the assessment running smoothly, it’s good practice to choose a team of key people who will be the main representatives of the business. Part of their preparation should include going over the technology strategy, revisiting previous decisions and planning for different future scenarios. As the team is preparing to answer questions, gather internal documents that helped you reach conclusions.