Application Inventory – Due Diligence


 

Application Inventory Strategy

Acquire business application information during the due diligence phase.  Adopt a strategy that will identify the most critical applications in advance of the acquisition and focus the available task resources on critical business applications first.  Where the target company lacks application information, immediately allocate skilled M&A IT resources to reverse engineer applications.

 

Key business applications are often undocumented or misunderstood by the target company.  

 

A company with mature information technology internal controls will have documented detailed application interface inventories.  Business application stakeholders and lead information technology personnel for each application will be documented.     However, many IT departments do not have mature internal controls and systems documentations, in particular startup companies or smaller enterprise organizations.

 

In most merger and acquisition programs, expect minimal application inventory documentation.  Review the target company business continuity plan first for information.  However, expect outdated and inaccurate application information.  Key applications may missing from the documentation.  Additionally, there is often no technical description of the application interfaces or technology owners.  Business owners are often outdated or inaccurate.  Be prepared to assign experienced M&A system engineers to reverse engineer applications.   In addition, be prepared to assign skilled M&A systems analysts to interview business units to identify ALL key applications and to interview software developers to identify application programming interfaces.  And, expect a low level of cooperation and urgency from the acquired company development team. 

 

Expect significant application data gaps and identify the risks early on, during the due diligence process if possible.  Some development departments operate independently from the operations departments creating additional gaps in integration knowledge.  Allocate sufficient time to perform application programming interface discovery.  External contract engineers can be utilized as needed to reverse engineer applications and provide interface inventories. 

 

Allocate adequate discovery time during due diligence to close the application knowledge gaps.  The following resources should be allocated as part of the overall IT M&A program:

 

·         Allocate 75% of your time to collect application interface data.

·         Fill in the blanks by reverse engineering core applications.

·         Run a trial cutover on low priority servers and desktops to identify gaps.

·         Allocate 25% of your time to resolve application issues during conversion.

  

By following this strategy, you will focus the integration teams on key applications having the greatest impact on the business and you will increase your rate of successful IT M&A program outcomes. 

 

 https://joetighe.wordpress.com

 

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