Due Diligence (DD) is the process commonly used to investigate an organization before making decisions about investments or entering into contracts.
Due Diligence as a critical evaluation process
The Due Diligence process evaluates all views of a company (including customers, assets, financial records, etc.) making sure it was in possession of all the facts about that organization.
The output of the Due Diligence process will be all the relevant information to that decision makers need and also important additional information about hidden costs that will be involved in that particular operation.
Due Diligence in Outsourcing managed services
With regards to Outsourcing of managed services, the Due Diligence brings the Outsourcer to maximize its knowledge of the Customers’s business in order to understand what it is getting itself into.
This process is very important because Customer demands “common sense” in the Service Management organization, making decision always with a deep understanding of its business.Then the Due Diligence checks these Customer’s business goals verifying the service assets that will be used to provide a Service.
COBIT can be a reference to perform this point (as a check-list). It’s a prudent exercise because the outsourcer is dependent on those service assets to meet SLA requirements so not just the number and configuration is important, but environmental considerations, support arrangements, locations, accessibility, etc. are also important.
Usually the information checked involves Service Arquitectures, Software, Hardware, Contracts (clasified by short, medium or long term), licensing issues and actually all the IT budget and assets, including required investments that our Customer postponed due to the nature of the process they were in.
When asking for information in Due Diligence we must be very specific
Experience has shown us that too much information will give us no information, so it is very important to know:
- What management process it is involved/concerns that information.
- Who needs this information.
- Why is relevant that information.
- Where it will be loaded and updated that information (into a Service Management tool).
- How will we maintain accessible and updated that information (define an owner and a process).
Acceptance, maintaining and returning the Service information
This last point (How) is very important, because we can not demand the same information several times!!
It is usual to give for acceptance the Due Diligence to the Customer, because this is also a “picture” (or snapshot) of the starting point of the service delivery.
Also it is usual to give it back to the Customer a new version updated at the end of the business relationship, when the contract ends, as part of the service returning phase.
What is your advice about the best way to do Due Diligence?