You may have heard of Blockchain for cryptocurrency, but did you know this technology also…
Technology is an integral part of business today and having good software is key to running a successful business. However, many people are unsure about their current software provider, systems vendor, or are just unsure about technology in general. In these situations, an expert evaluation of software and technology is recommended. This is where due diligence services come in.
Bringing in an outside company to perform due diligence services is an important process. If you are unsure about the stability of your current platform, want a second opinion of a new product, or need an expert evaluation on the software in an acquisition, your business needs due diligence services. Here is how this process unfolds for each situation along with a set of best practices for how to address it.
1. Stability of the Current Platform
Many people are unsure of their current software platform and how stable it is for growth. Often times the platform is 10 or more years old. As a business grows and changes over time, it is important to ensure the software can support growth.
When decision makers find their company in this situation, they often bring in a team for due diligence services. A review of the existing platforms and underlying structure is important to check to see if the foundation will hold. This evaluation process should help answer the important questions such as… How is the current capacity? How old is the system? Can it provide what your customers need?
If you are unsure about how your current software operates, due diligence services can answer many questions for you. This will make a big difference in the future growth and success of your company. It can also help you avoid potential future problems by ensuring there is a solid foundation.
2. Second Opinion on New Product
Good technology and software are significant investments for a business. Because of this, it is important to ensure new products fit your business perfectly. Another occasion for a business to need due diligence services is when another company has built something for the business and they want a second opinion to review how well the work has been done. This evaluation, for example, can help determine if the current software company was successful in producing the new product. Additionally, a second opinion from an expert can test the capability of the new product.
A company may want to hire this service out before a big release of a new product or to test an update of a product before it is released. Discovering a bug or capacity problem before it is in the hands of many of your customers is ideal. Often times someone may simply want an expert opinion to see if the project is on the right track. A second set of eyes can help determine the quality and strength of the product, evaluate if the system can support future growth, as well as identify if the proper platforms are in place.
3. Due Diligence on a Software Company Acquisition
A company may need due diligence on software for an acquisition. When one company is going to purchase another, a review of existing platforms is an important part of the acquisition. The software is part of the purchase process of the company, and can be a key factor in the acquisition.
Due diligence on the company’s software and technology can ensure that it is it what the seller says it is. An evaluation can determine if the systems support current business and if they will continue to support the business moving forward. An outside expert opinion about the software can save many headaches down the road and help make the transition process smoother.
An Example…Due Diligence for an ERP System
One example of due diligence services is on ERP systems. An initial evaluation can determine if the existing ERP system will support future growth, or if it needs to be updated, or completely replaced. Finding an ERP system that works best for a given business takes a considerable amount of time and effort. Key decision makers in a business often want to outsource this process.
The due diligence service evaluates the full process of researching systems, potential vendors, and the requirements of the ERP. This process is used to determine all sorts of information about the existing and future systems, including…
- Age of the system
- Types of underlying technology in use
- Employee comfort level with the system
- What it does well
- Evaluation of challenges and successes
The Bottom Line…
The end goal of all due diligence services is to provide an evaluation of technology. There are several different reasons why this is done, and many methods for how to provide due diligence for each need. These three examples are the most common reasons companies will hire help for due diligence services.
Learn more about due diligence services for software for your company.