Johan Lönnberg of Comtrade Digital Services explains how the digital transformation is changing the IT due diligence process.
The world of IT is undergoing immense change. In the last few years, a global booming tech startup scene and the corporate push towards digital transformation have rendered IT departments one of the most crucial elements in any organisation.
From acting as a support function, to optimising processes and production, IT has become the central – and sometimes, the only – customer interface. With such a universal change comes the need for a complete revamp of companies’ approach to IT due diligence.
Usually, three main areas are considered in IT due diligence: market readiness (products, platforms and services), organisational setup (software development process) and the current state of IT delivery and operations.
While these are still crucial to the due diligence process, the way they should be approached has changed, while other factors are also necessary to consider.
Firstly, a company must consider the readiness and maturity of its go-to-market strategy in terms of digital transformation and comparison to competition. Organisations must ensure that the services they offer are best-in-class.
Standard ‘out-of-the-box’ applications and solutions are seldom different to those adopted by competitors. Therefore, to lead the innovation trail, businesses must assume a hands-on approach: implementing tailored solutions through internal R&D teams.
The demand for customer ownership requires a new approach to development, while open innovation partnerships should be considered in order to bring all customer-facing services closer to the internal organisation.
The second block of due diligence looks at the gap between traditional ways of doing business and the rising role of IT. For instance, does a company’s culture actively encourage teamwork and co-operation between the sales and marketing department and the IT delivery team? What is the average speed at which new releases and services are introduced?
Once that gap has been bridged, organisations must ensure that quality is built into their DNA. IT services must be designed with user experience in mind.
The mastery and implementation of brand new IT technologies is now an integral part of the sales and marketing engine
Research shows that more than 80% of users will not tolerate a faulty or confusing mobile application and will abandon it after just one or two failed attempts. Getting it right first time is therefore a must.
Finally, regular due diligence is required on the financial side of IT operations. How is IT run today and where are the opportunities to modernise, virtualise and consolidate IT operations? If parts of the operations have been outsourced, it is necessary to evaluate the costs, as well as the pros and cons for continuing with an outsourced model.
Digitally transformed companies have drastically improved communications between sales and marketing and their IT departments. The mastery and implementation of brand new IT technologies is now an integral part of the sales and marketing engine.
Because of this, company culture and companies’ communication practices must also be considered in due diligence.
Traditional business strategy consultancy firms usually lack the practical, hands-on approach that is required. Instead, they present their findings based on theoretical experience and best practices learned from other consultants.
Meanwhile, IT outsourcing consultants are experienced in business process optimisation, but lack individual business understanding and the innovation needed for end-user experience.
Common for both consultancy offerings is that their teams and processes are based on industry verticals, which might lead to conflicts of interest instead of collaboration.
The value added by large consultancy companies has recently been challenged by private equity companies. Instead, they recommend the creation of internal, hands-on technical teams or the engagement senior IT experts from the industry.
The reasoning for this is that only experts with real hands-on project and technical experience can make valid judgements about whether or not the implemented technologies are relevant or if they need to be modified in line with changes in technology.
Enlisting the help of such an expert guarantees accuracy as the company has experience in similar projects and knows what it takes to be successful in terms of teams, resources and time.