Due Dilligence for IT

As digitalization is creating new business models the ability of a company’s internal IT to lead the transformation is vital to the future success of your company to acquire or divest. Easily understood but how will you know?

We will discuss a few areas that you need to consider in this article. Starting with two examples of things to consider prior to acquisition, one as preparation for divesting, then finalizing with the examples for a portfolio company. Every situation is unique, hence experience and an extensive tool box would be needed to help mitigate your risks.

When acquiring – IT fit for purpose? 
When business and IT is in aligned when developing the IT-Roadmap and Investment strategy you have a strong foundation to start with. To build on this foundation, business leaders and IT need to have close interlock and ability to change together over time.  If IT is flexible and cost conscious, they become a business enabler instead of an inhibitor. Ability for IT to execute is key. A close look into the IT-project portfolio would give you an indicator of the reality.  Is there a trend of delays (or even terminated) projects? Are IT projects exceeding budgets frequently?  If so you would need to understand the root cause.  Resources shortages may be due to technology that requires skills that are hard to find on the market.  If so which investments would replatforming of core applications and infrastructure drive?  You better know because these projects typically span multiple years and consumes significant resources, impacting your ability to invest in other areas
By using the Actensa Governance Assessment you will quickly gain an understanding of the efficiency of the co-operation between your business and IT. How well can business express and prioritize between their needs?  Furthermore our project portfolio review will help you understand if the money you are spending on IT will pay off.  But also if there are inhibitors to change of generic art that you would need to plan for in your investment case.  By assessing the need for application modernization the potential of cost take-out using IT-consolidation techniques will contribute to quicker return of investment.  By leveraging the Actensa Application Portfolio Assessment you will gain better understanding into how well the target company is suited for the change that needs to happen to drive a successful exit.     
When acquiring – Consolidation potential?
The IT industry has a tendency of transforming itself at a speed that most organisations struggle to cope with.  Some hype never takes off while other technologies are slow to start but when momentum is gained the benefits can be extraordinary.  Prior to making IT investment decisions it is often hard to know which technology, product and services will deliver the biggest business benefit. Therefore it is key to make a thorough analysis of which technologies are adopted and how well they will be supported and maintained over the years. Not to forget:  how will your people strategy support your technology and business strategy, are there available skills and resources in the market for continued development? What are your current core competencies, will you skill up or outsource? 
The Actensa IT-gap assessment will help you understand if there is an IT debt that needs to be built into your investment case. And also access the accuracy of documentation of critical IT – systems.   Given our experience we can help you understand the need for upgrade or replacement of critical IT-infrastructure components.  We are also able to help you assessing the competences and capacity in the IT-organisation to make you understand potential needs for recruitment and whether the required skills are available on the market at all. Should there be a need to outsource part of or IT in whole we have extensive experience from those processes.  Outsoucing can be a powerful tool to ease the burden on the balance sheet during the first critical years of the investment.   
When divesting – Integration by spaghetti?
Over the years, as systems develop with new functionality requiring integration with both internal and external systems, it is easy to lose control.  The ability to get tightly connected systems to run independently from each other can´t be taken for given. The impact of poorly designed and executed integration platforms cannot be underestimated. In some situations it may even prevent a company from divesting part of their business due to risk or cost of IT systems separation.  
Actensa has the ability help you understand the implication when separating core systems.  Furthermore, we are capable of letting you know whether the integration platforms are fit for purpose in the target environment.  Should there be a need to replace the platform or rebuild it, we are in position to help you drive that project.
Portfolio Company – Regulatory compliance and security?
Adherence to industry and legal regulation is a business pre-requisite.  Failure to comply will cost you, not only in monetary terms through sanctions but also in shareholder value through loss of public image.  Detection of none compliance and the ability to provide evidence of such are heavily dependent on systems and tools.  But tools without the adequate roles and organization, the smart and skilled people, are worthless.  Hence you need to assess that the mandatory roles are there and that they have the right skills and mandate to be a safe guard against threats that could jeopardize your business, or even the existence …. of your company. 
We have experience from assisting our clients in external audits, meaning we are able to identify gaps against applicable regulations.   Our experience in Operational Risk reduction will help establishing the proper levels of safeguards by guiding in the assessment of risk.  Risk appetite should always be balanced in accordance with consequence of occurrence.      
The Actensa value statement
Given a history of working at leading companies in the IT industry such as; Accenture, IBM and DELL / EMC. We have worked cross all industries to help our clients maximize their IT investment to grow their business.   
  • We are able to help you understand where the potential, as well as the weaknesses of your target company resides. 
  • We use proven and tested tools and methodologies to provide you facts to support your decision to pursue or not.
  • We are able to articulate our findings and recommendations in a easy to understand and digestible report for senior stakeholders. 
  • We are quick to ramp up and start delivering value, and will do our utmost to ensure your investment will pay-off.