Key Focus Points on Technology Due Diligence to Reduce Risks
Key focus points on technology due diligence to reduce risks includes assessing technology and related aspects of a company. This comprises products, software, roadmap, product differentiators, systems, and practices. Beneficial when acquiring companies, M&A, and initial public offerings, a lack of tech due diligence can lead to drastic risks.
Chris Audet, research director for Gartner’s Legal & Compliance practice, views it this way: “Legal and compliance leaders have relied on a point-in-time approach to third-party risk management, emphasizing exhaustive upfront due diligence and recertification for risk mitigation.”
Furthermore, Gartner’s research shows an iterative approach to third-party risk management as the new imperative for meeting business demands for speed and stakeholder demands for risk mitigation.
Briefly, the risks associated with a lack of technology due diligence include:
Third-Party Software Usage
Reputation and Prior Experience
The Size of Transactions
Availability of Resources
General Risks Associated with the Platform, Products, Goods, or Services
The following are the key focus points to reduce risks:
1. Be clear on your acquisition strategy: hold, transform, grow, integrate, or remediate
2. Check if the delivery schedule of the product road map is reliable
3. Analyze whether technology can handle user growth over the years
4. Evaluate if the tech team has the plan to maintain its velocity while scaling
5. Assess if the key technology best practices and processes are in place
6. Review the audit reports of vital technology compliance
7. Decide if a new CTO needs to be hired
Once all these key elements are assessed and sorted out, there is no reason that smart investments or M&A decisions will not take place. Moreover, every time you put your team through a tech DD process, ask yourselves the following questions:
Do you have a detailed understanding of the critical exposures your company may have to cybersecurity threats?
Does your company have a strategy to protect critical processes and intellectual property?
The above-mentioned key elements are meant as information to ease your organizational processes. However, if you would like a more detailed overview, do not hesitate to reach out to me at firstname.lastname@example.org.
I have years of experience building Technology and providing Technology Due Diligence as a CTO, and I am available for fruitful discussions.