Tech Q&A: assessing a portfolio company

Wayne Filin-Matthews
Crosslake Technologies
Wayne Filin-Matthews is head of software strategy at Crosslake Technologies. He has over three decades experience in the IT industry and a proven track record in maturing architecture practices across the IT life cycle.

What are the most important areas to cover in technical due diligence?

Wayne Filin-Matthews: It is critical to understand the capabilities of the architecture and whether it supports the business strategy and investment thesis. Shortcomings can take many years and millions of dollars to resolve, negatively impacting ROI. To reduce this risk the critical questions to ask during diligence are: Does the architecture scale up to support expected growth? Are there integration points (APIs) that allow for easy integration with future acquisitions and third-party products?

The level of customization and effort to upgrade customers to newer versions is another crucial issue, as is the cost to maintain the product and whether you can effectively add new functionality: how up to date are the technologies used and how easy is the platform to replicate? You’ll also want to consider the risk of disruption from new technologies and business models and, of course, issues related to cybersecurity and data protection.

The ultimate issue is whether the business can grow effectively without significant infrastructure investments and how reliable the overall system is: how does it rate in terms of resilience, security, performance, capacity and scalability, and how is it monitored?

What’s the best approach to modernising legacy systems?

Wayne Filin-Matthews: There really is no ‘silver bullet’ here. Technology leaders involved in modernising technologies and applications need first to evaluate legacy systems, looking at both the business and IT drivers behind the upgrade. Choose an approach with the highest effect and value while also considering the cost and risk.

On the demand side, the main drivers are business fit, where new requirements cannot be met by the current application, and business value, where the current system lags in terms of data and the support it offers. There is also the question of agility, where the system is unable to keep up with the pace of external changes and therefore has both costs and associated risks.

Supply side drivers include cost and complexity. Is the cost of operating and changing the current application simply too high in relation to its value? Is the sheer complexity an issue for users? Risk is also a key consideration and can be a compelling reason for upgrading the architecture.