Proprietary Software diligence

Proprietary software diligence is a specific subset of technology diligence that focuses on evaluating the proprietary software assets and associated intellectual property (IP) of a company. Diligence is conducted as part of mergers and acquisitions (M&A), investment decisions, or partnerships involving companies that develop or utilize proprietary software as a core component of their business. 

Product risk and opportunities with a focus on revenue, user experience, scalability, security, and convenience while optimizing upfront and ongoing costs.

The primary objectives of proprietary software diligence include:

  • Custom Developed Solutions

    Understand market demand, market trends, and technological advancements.

  • Digital Strategy

    Align product initiatives with broader organizational goals, market dynamics, and technology trends.

  • Product Roadmap

    Ensure product development efforts align with business goals, and customer needs and guide the strategic direction.​

  • Pricing

    Evaluate the perceived value of the product, revenue generation potential, and marketing positioning.

  • Availability

    Ensure the product is always accessible and reliable for users.​

  • Workflow/Integration

    Integrating the product seamlessly into existing workflows and systems to enhance usability, efficiency, and value.​

  • Security

    Paramount to any strategy, involves protecting user and sensitive data and maintaining regulatory compliance.

  • Open-Source

    Review key factors related to the permissive use of open-source for commercial purposes.​

  • Business Continuity

    Ability and prepare for and mitigate potential disruptions or disasters that could impact product availability, performance, or data integrity.

Proprietary software diligence will include:​

Technology risks and opportunities with a focus on digital strategy, support and technical debt.

  • Product Roadmap

    Strategic plan that outlines the vision, direction, and timeline for the development and evolution of a product over time. It serves as a communication tool to align stakeholders, including product managers, developers, designers, marketers, and executives, around the goals and priorities for the product.

  • Architecture

    Fundamental organization of a software system, encompassing its structure, components, relationships, and principles that guide its design and evolution. It provides a high-level abstraction of the system, focusing on key architectural decisions and design elements that influence its behavior, performance, scalability, security, and maintainability.

  • Experience Design (XD)

    Creating meaningful and cohesive experiences for users across various touchpoints, such as digital interfaces, physical spaces, products, and services. It involves understanding user needs, behaviors, and emotions to design interactions that are intuitive, enjoyable, and effective.

  • Integration

    Process of combining different software systems, components, or applications to function together as a unified whole. Integration enables different software systems to communicate, share data, and work together seamlessly to achieve common goals or deliver specific functionalities. It plays a crucial role in modern software development, where complex systems often rely on multiple components, services, and platforms to operate effectively.​

  • Automation

    Use of technology and tools to automate repetitive tasks, processes, or workflows in software development, testing, deployment, and maintenance. Automation aims to improve efficiency, reduce manual effort, minimize errors, and accelerate the delivery of software products and services.​

  • DevOps

    Set of practices, principles, and cultural philosophies aimed at improving collaboration and communication between software development (Dev) and IT operations (Ops) teams throughout the software development lifecycle. The primary goal of DevOps is to enable organizations to deliver high-quality software products more rapidly, reliably, and efficiently.

  • Lean Agility

    Approach that combines principles from both Lean methodology and Agile methodology to optimize processes, increase efficiency, and enhance adaptability in organizations.

  • Engineering

    Systematic and disciplined approach to developing, designing, testing, and maintaining software systems. It involves applying engineering principles, techniques, and best practices to manage the complexities of software development effectively. Software engineering encompasses various activities throughout the software development lifecycle to ensure the creation of high-quality, reliable, and maintainable software products.

  • Release & Support

    Crucial aspects of the software development lifecycle that involve delivering software products to end-users, maintaining them, and providing ongoing support to ensure their functionality, performance, and security. These processes encompass various activities aimed at releasing new software versions, addressing issues, and assisting users with technical inquiries or problems.

Proprietary Software diligence Insights:

best practices for divestiture transactions

Assess Customer Base and Market Position:
Analyze the customer base, market share, and competitive positioning of the proprietary software in its target market segments. Understand the software's value proposition, differentiation factors, pricing strategy, and customer satisfaction levels. Evaluate customer contracts, renewal rates, and revenue projections to assess the software's revenue potential and growth prospects.

best practices for divestiture transactions

Assess Intellectual Property Rights:
Verify ownership of the proprietary software and assess the strength of intellectual property rights (IPR) protection, including copyrights, patents, trademarks, and trade secrets. Evaluate any licensing agreements, assignment agreements, or third-party dependencies that may impact ownership or usage rights, including open-source.

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Digital Transformation Readiness:
Evaluate readiness for digital transformation initiatives, such as adopting emerging technologies, implementing agile methodologies, and embracing DevOps practices. Assess their organizational culture, leadership support, and change management capabilities.

Consider Regulatory Compliance Requirements:

Consider Regulatory Compliance Requirements:
Assess the proprietary software's compliance with applicable regulatory requirements, industry standards, and data protection regulations. Evaluate any compliance certifications, audit reports, or regulatory filings demonstrating adherence to relevant standards or regulations.​

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Identify Product Roadmap and Development Plans:
Understand the product roadmap, feature enhancements, and future development plans for the proprietary software. Evaluate innovation strategy, R&D investments, and competitive differentiation plans to assess its ability to sustain and grow the software's market position.

Evaluate Software Performance and Scalability:

Evaluate Software Performance and Scalability:
Assess the performance, scalability, and reliability of the proprietary software under various usage scenarios and workload conditions. Identify any performance bottlenecks, scalability limitations, or infrastructure requirements that may impact its usability or market competitiveness.

best practices for divestiture transactions

Evaluate Code Quality and Security:
Conduct a thorough review of the software source code to assess its quality, maintainability, scalability, and security. Identify any coding standards violations, architectural flaws, security vulnerabilities, or potential intellectual property infringements. Consider engaging technical experts or third-party auditors for a comprehensive code review.

These insights from Azure Coast Proprietary Software Diligence assist leaders in making informed decisions, mitigate risks, and maximize the value of the transaction.

Contact us today to learn more about how we can support your success.