Understanding the inner workings of a business's applications is essential in an era when a company's software and its products are often synonymous. Technical due diligence (TDD) is a multi-part process incorporating expert assessment and comprehensive, in-depth inspection through which leaders receive insights into their organizations' technological maturity.

Are solutions living up to their potential? Is the scope of the system in line with the business's intentions for it? Has the backend been built with best practices in mind? To be comprehensive, reviews should touch on everything from databases to user interfaces to the delivery pipeline — this all goes into the TDD process.

While there's no bad time to understand the organization's technical status, TDD is especially important at pivotal moments for the company. This could be a period of growth or the run-up to receiving an investment. Bringing in experts to truly get to the bottom of systems' current status adds certainty and lets leaders make decisions about their companies' future with confidence.

When is it time for technical due diligence?

TDD may take place whenever a company needs to take an especially close look at its own systems and processes in advance of a major change. This may mean during a merger or acquisition, alongside other forms of due diligence, but when considering TDD as a stand-alone process, it's often associated with two specific events:

• A major capital investment: If you're an investor planning to fund a technology-driven company, you will naturally have questions about whether the company is ready for growth and how quickly it can scale. TDD is an important piece of the puzzle when assessing a company's future trajectory.
  
  You can see whether the organization you're planning to invest in has strengths or liabilities within its digital products, while assessing its readiness to serve an expanding audience in the years ahead. On seeing the results of TDD, you can determine whether your money will be going to a business that is ready to expand its services using your funds, or one with significant technical gaps left to close.
  
  
• A period of intensive growth: As the leader of a company experiencing a period of quick expansion, you need to make sure your solutions are resilient and ready for whatever comes next. TDD can reveal the strengths and limitations of current infrastructure and point the way to a viable next stage for your organization and its digital products.
  
  Before you grow further, it's worth checking to make sure your expansion thus far has been built on a sound technical foundation. If there are risks or vulnerabilities that could compromise your trajectory, you need to know about them as quickly as possible. TDD can highlight issues to resolve, which will help you make a resolution plan. A detailed TDD report can suggest potential solutions for any weaknesses.

In either scenario — an investor seeking context or a leader searching for strategic ideas — the process of TDD is remarkably similar. A team of third-party experts will delve into the systems, not disrupting everyday operations as they uncover the current status and future prospects of the company's technology. Differences in the resulting report will reflect the specific objectives of the TDD.

What goes into a technical due diligence review?

To be truly comprehensive, a TDD review has to address multiple aspects of a company's technology. Assessors may break their reviews down into areas, including the following six used by Transcenda's team of experts:

• System functionality: A system's utility can reasonably be described by the question, "Does it do what its users need it to do?" That is, in part, what this part of the TDD process addresses. Inspectors determine whether the technology creates or resolves pain points or users.
  
  System functionality is also a measure of how well the solution holds up on measures such as scalability, everyday performance and security. While these issues are also assessed elsewhere in the TDD process, they receive an overview here, without delving too deeply into their technical basis.

• Database health: Data is the lifeblood of a digital organization. This part of the assessment process exists to determine the quality and resilience of a business's approach to data. If the company has cut corners in the treatment of its data, that will become clear.
  
  Subjects for evaluation include a business's data model, as well as its plans for scalability and its backup and recovery processes. To receive a high mark in this aspect of TDD, a company needs to employ data processes that promote both efficient access and a high degree of integrity.
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• System design and future potential: Both potential investors and companies' own leaders are keenly interested in whether technology is set up for smooth growth. By specifically verifying the system's potential for expansion, TDD experts can answer relevant questions.
  
  Assessing future potential means checking the system's architecture documentation, vetting the choice of technology tools and confirming the approach the business has taken to performance and scaling. By studying the system's design, assessors can warn about limitations affecting its growth.
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• Infrastructure and operations: A reliable, easy-to-manage system will score well on this part of the TDD scorecard. This phase is designed to determine whether the system will serve users in a predictable, dependable way from day to day.
  
  Points to address include the company's use of infrastructure as code (IaC), as well as its configuration management practices and approach to using cloud services. Monitoring and incident response are also critical considerations, to ensure problems don't destabilize the system.
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• Engineering practices: As opposed to the user-facing experience of working with a company's software, this focus area is based on the backend processes that keep the systems running. Assessors determine whether the system is supported by high-quality operations that ensure ease of maintenance, tracking and continuous improvement.
  
  Assessing the quality of a system's engineering means checking the approach to code review, alongside the business's continuous integration and continuous deployment (CI/CD) pipelines, test automation and documentation.
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• Security, compliance and team: This aspect of TDD scoring is critical to a company's overall prospects because of the serious impact presented by security flaws. Experts will check to make sure the company has complied with relevant regulations and built a secure system.
  
  In addition to technology tools, system security comes down to employees' practices and skills. As part of TDD, it's important to make sure teams are structured in intelligent ways and every employee understands their role in the overall management of the business's solutions.

The results of the multi-part review are presented as a detailed document, with information broken down by functional area. This clear reporting on the system's usability, technical foundations and future gives readers clear signals about how to act on what they've learned.

Performing TDD takes time — how much depends on the nature of the system and the size of the company in question. While the average time required is roughly two months, an assessment could take as little as six weeks for a straightforward scenario, or require several additional weeks to deal with a larger, more sprawling system.

What can you do with the results of a technical due diligence check?

With a TDD report in hand, investors and business leaders have a guide to their next steps. The document doesn't just list the state of the system and grade it, there are also recommendations about how to move forward.

When the analysis identifies gaps in practices, suboptimal tech tools, security risk factors or other limitations, these warnings come with remediation suggestions. The path forward following the delivery of this information will differ depending on the reason for the TDD process:

• Investors may be most interested in projections about how ready the system is for scaling. If you fall into this reader category, your key takeaways will revolve around the company's timeline for scaling and expanding its presence within its market. By reading the status of the technology product as it stands, you can infer the market potential of the business.

• Business leaders can use a TDD report to detect and correct risk factors affecting their operations. If you've commissioned a report about your organization, you can quickly identify and act on any discovered gaps in security, compliance or processes. Anywhere your software is brittle or inflexible, you can make well-informed changes to stay on track for growth.

No matter why you've commissioned the TDD report, having such a detailed overview of the organization's present and future software prospects can act as a valuable compass for a tech-driven business.

Ready to investigate technical due diligence further?

Working with an expert consultation organization like Transcenda, whose team members have experience working with all kinds of tech companies, is the ideal approach to TDD. Our professionals can put their history to work, drawing on extensive knowledge to get to the bottom of tech needs.

As a specific best practice, our consultants only take on cases where they know their background is relevant — in every engagement; we aim to provide top-quality TDD results. Whether you're considering an acquisition or pondering the next steps for your business, our experts will provide insights that matter to you.

‍Contact Transcenda to learn more about the next steps for starting TDD.