Tech DD Myth Busters # 3
Tech DD is a One-Time activity that is to be done only while investing in or acquiring another company.
More often than not, in my calls with investors, I get this question, "Ok Preeti, so we need to budget this one-time activity of Tech DD to identify the technology risks, right?"
Technology Due Diligence is often seen as an activity that is to be done only when there is a major event - related to valuation - like fund raising or acquisitions.
Technology due diligence is similar to your financial audits. You do not do it once in a decade while making big moves, but need to audit frequently to ensure that everything is under check and going in the right direction. It is very important to know where we are now, and where we are going.
Tech DD is not a one time activity. It is a continuous process of evaluation and improvements . There are multiple reasons as to why I say this,
- Technology evolves itself every 18 months so its important to find out how "old" is existing tech for the platform you have invested in.
- There are new tech vulnerabilities and attacks being found out almost everyday that create a threat to platform’s Information Security Architecture
- Tech teams can end up piling huge tech debt if they do not engage in periodic reviews and evaluations. (I have a separate article on LinkedIn on tech debt Link)
- If the platform achieves its targeted scale with the funding that has come in, its critical to find out whether the it's Tech is capable of sustaining this scale
- With periodic evaluation and improvements, you build a great sense of trust with customers of your platform and ensure they are retained instead of losing them to competitors
- Tech platforms that started well but ended up with issues as they grew; risk company valuations and in turn ROI on your investment made.
Considering this, we recommend performing this exercise at least once in 6 months. This helps to review your technology stack and capabilities up to date, and the team can plan for any technological up-gradation or security patching well beforehand, and avoid potential breaches, or failures considerably.
How frequently are you evaluating your portfolio for it’s relevance with modern #technology?