Due Diligence for the Information Systems component of a Merger and Acquisition is not an easy task to perform well unless you have a substantial, well-rounded technical background & understand the concepts of risk management and material importance. Not an easy job description to fill - and yet this is a job that is essential to the success of a company’s future - regardless if the company is the potential buyer or the seller. Often time the role is assigned to a professional that is less than qualified for a variety of reasons - which I will outline in a future post. For now I want to help the professional who got the assignment.
1. Request Business Operations and IT organization charts - with job descriptions and salaries. The Business chart should only need to go 2 or 3 levels of hierarchy to get an understanding of the corporate decision making practices and the interaction with the IT group. The IT chart needs to be detailed - all positions (filled & opened, consultants, part-time)
2. Request an overview of the application and environment topology. Provide an outline to help structure the overview and one that you can continue to refer to- for further detail. This framework will help establish terminology (always different between groups) and keep everyone involved (the bankers, the funding organizations, the executives and you) organized, focused - and documented. A key component of the framework should be the financials associated with IT annual costs and projected capital expenditures.
3. Request individual interviews with the leaders/managers within the IT group concentrating on their area of responsibility but getting answers on a core group of questions involving customer/business interactions. Typically these are related to vendor, project and change management practices and policies.
4. Request individual or group interviews with business functional area leaders. The goal of these interviews is to understand production support issues, business application goals that may have an impact on current or future revenue projections. These interviews will also serve to identify “gaps” between the business perceptions and IT perceptions of the information systems and the organization. Always interesting.
5. Prepare initial findings and identify potential major risks - on a preliminary basis. Next steps need to be prepared which will be dependent on your own talents and skills. You may determine that you need a subject matter expert to further evaluate the risk - i.e. typical areas: Network topology/redundancy, disaster recovery, vendor licenses.
Please contact me for further information around framework, inital findings and getting prepared for the interviews - Best of luck