IT Due Diligence Checklist and Tech Audit with VDR

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IT Due Diligence Checklist

During M&A, due diligence is necessary for both parties to fully understand what they are getting into. IT due diligence is another key area to be addressed before any merger deal is sealed. This process is anything but easy, so it’s common to miss important areas of IT infrastructure without a handy checklist. 

A merger and acquisition due diligence checklist on information technology saves time and ensures nothing is left to chance in the technical due diligence process. 

What is IT or technology due diligence?

Due diligence in IT involves the in-depth analysis and evaluation of the technological infrastructure, products, systems, and hardware of a company prior to striking a merger and acquisition deal. M&A involves the inheritance or sharing of technological resources and assets. 

Consequently, it becomes imperative to properly evaluate what you’ll be inheriting or sharing to avoid surprises in the long run. When a deal is sealed and endorsed by a legal authority, backing out is never easy. You’ll have to deal with the negligence of technical due diligence for a while.

Information technology due diligence checklist 

IT due diligence forms the major part of technology due diligence, so it’s basically the same since it involves the investigation and evaluation of IT infrastructure. This IT due diligence checklist is going to help you cover all the important areas of information technology due diligence. So while you are on-site to investigate the IT infrastructure, this checklist should come in handy. 

Here’s your checklist.

Hardware 

While doing your IT due diligence, look out for the quality of hardware available. Software is important, but the hardware can also help determine the capacity and ability of the operational IT infrastructure. 

Look out for:

  • Number and quality of mainframe computers
  • Desktop computers 
  • Servers
  • Laptops 
  • Accessories and gadgets 
  • Any other hardware you can add to this list relative to the ones you have

Software

After hardware, do a software inventory check to have a deeper look. With all the sophisticated hardware and accessories, it would be nothing for the software to be outdated and not up to standard. So, you should check for:

  • Email software 
  • Software license agreement 
  • Storage management  
  • Open-source software 
  • Content management systems 
  • Operating systems and other software in use

Cybersecurity

Now, this is another important area to check in your technology due diligence checklist. What cybersecurity systems are in place to combat cyber theft, threats, and challenges? There have to be systems in place to check for this, and you can weigh the porous nature of the tech infrastructure from this vetting process to know if it’s worth merging. 

Some of the things you need to check include:

  • Data encryption programs 
  • Intruder detection software 
  • Cybersecurity insurance Network firewall structure 
  • Activity logs 
  • Damage control plan 
  • Remote working policy 
  • Background checks for employees

Client support systems

In checking this aspect of the information technology assets, you need to find out how their software is being used to assist customers to get things done easily. You need to check:

  • How new clients are integrated into the already existing system
  • What the response rate is for technical support
  • How customers receive the technical support they need

And find out from the staff what measures are in place to support clients.

Internet systems in play 

While you’ve ascertained the software and hardware in play, you need to find out what internet systems are used to run them. This goes further into the communication used as well and we are talking about their telecom systems in place. Check for:

  • Internet service providers 
  • Backup storage systems 
  • A proper overview of the internal communication framework
  • Hosting services

IT products and services

Now you have to check for the products and services offered by the company. You need to check for those created by the company for internal and external purposes as well. In looking out for these, you need to check for:

  • Products being created by the company 
  • Software the company has delivered to customers 
  • Software that the company is still using 
  • Demo of all the software in use

How virtual data rooms can help with IT due diligence

Virtual data rooms come with some IT due diligence templates that can help conduct information technology audits for companies seeking to do M&A. These templates serve as a guide to all that is needed for the software due diligence checklist and help to ensure nothing is left out in the process. They come with project management abilities, collaboration tools, and special software for managing the entire lifecycle of an M&A process.

References

  1. Borad, Sanjay. 2021. “IT Due Diligence – Meaning, Scope, Checklist”. Efinancemanagement efinancemanagement.com
  2. The Hartman Team. 2019. “IT Due Diligence Checklist”. Hartman Executive Advisors hartmanadvisors.com
  3. “What is IT due diligence and why should you conduct it?”. 2021. Implement Consulting Group implementconsultinggroup.com

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