Four Steps to Assessing Software Value in an M&A

Mergers and AcquisitionsIf there is one time when business value is front and center in a conversation, it is during a merger or acquisition process.  The acquiring company wants to know the true value of the company it’s acquiring and the company being acquired wants to prove its value as a viable option for acquisition.  In the case of a merger, both companies have these same two concerns – what is their real value and what is the value of the company with which they are potentially merging?

In today’s organizations, technology, and more specifically, software is an aspect that needs to be carefully assessed to determine its value to the M&A deal as an asset or potential liability (i.e. requiring significant upgrades or maintenance or performing poorly).     

To begin the evaluation process, I recommend looking at the software in relation to the business functions of the target company.  Is the software unique to the company’s line of business or is it used for a business function that is common between the two organizations (i.e. HR, payroll, CRM).  Most likely, the software that is performing the same function in both companies will be of little business value to the acquiring company as they will choose to keep their existing software. 

However, a software solution that is unique to the target company could have tremendous value.  The challenge is that the acquiring company may not be familiar with the software and have a limited understanding of its value or the risk associated with that software.  In addition, if there are only a few individuals who understand how to use and maintain the software (especially with proprietary software) there is a risk that they will not remain at the company and as a result there will be no knowledgebase to maintain and/or enhance the software. 

I recommend taking four key steps during the acquisition process to determine the value of the target company’s software:

1. Software Asset Due Diligence (ADD) – determine how the target organization relies on the software.
2. Software Asset Risk Management (ARM) – assess the risk involved in transitioning to the target organization’s software.
3. Software Asset Maturity Analysis (AMA) – determine the future ROI for the acquired software.
4. Software Asset Integration Management (AIM) – analyze how to integrate the acquired software into the current environment. 

A software assessment needs to be an integral part of the M&A process – no matter what end you’re on.  It can no longer be an after-thought.  Software can provide significant value or pose a huge risk for an organization and that needs to be determined up front. 

I’m always interested in hearing from others about your experiences on how your organization has handled the software assessment process during a merger or acquisition.  What lessons have you learned?


Mike Harris
CEO

Written by Michael D. Harris at 05:00
Categories :

The Top Programming Languages

We all remember our first programming language. Mine was basic on the Commodore64. And, we all know our favorite language – I still love “C” (without the “++” or the “#.” But it’s hard to keep up to date with all the languages and particularly hard to keep their relative importance sorted in your head.

So, which languages are considered “need to know?” Luckily, Baseline has the answer, sharing 11 essential programming languages, as identified in IEEE Spectrum.

Nick Diakopoulos, a well-known computational journalist and assistant professor at the University of Maryland, created the list by weighing and combining 12 metrics from 10 sources, including IEEE Xplore, Google, and GitHub.

Check out the list to see if you agree with the ranking. We’d love to know what you’d add or remove! And, if you’re interested, IEEE has posted an online, interactive version of the list so you can adjust the weight of each metric used to create a customized ranking.

Read, “11 Essential Programming Languages,” here.


Mike Harris
CEO

Written by Michael D. Harris at 05:00
Categories :

Measuring Software Value Using a Team Health Assessment

AgilityHealthSoftware development is a team effort. Agile software development, in particular, depends on a high level of communication between team members. In order to be able to improve the business value they are delivering, it is important that the software development teams conduct regular self-assessments. By taking the time to conduct an in-depth assessment of the key areas that impact team performance and health, an organization can make modifications to their processes to enable continual improvement that can lead to increased business value. 

In Agile, teams typically rely on sprint retrospectives to analyze their performance for continuous improvement. The challenge is that these events are team- and sprint-specific and often become wasteful ceremonies in that they don’t add any new value. 

It is common for the team to reach a point where they have discussed and fixed the things they can fix and the things they can’t fix require organizational intervention, which is outside their span of control. It is easy – and probably correct – for teams in this situation to conclude that sprint retrospectives should be abandoned because, from a lean perspective, they are not adding value and so represent waste to be removed.    

Over the years, our team has leveraged the AgilityHealth℠ Radar (AHR) TeamHealth Assessment as an event to review team dynamics on a quarterly basis. This structured, facilitated event is an opportunity for a more strategic review than the sprint retrospective typically allows..

There are five vital areas that can impact the health of an Agile team: Clarity, Performance, Leadership, Culture, and Foundation. Each should be carefully evaluated to help the team identify their strengths, areas of improvements and top impediments to growth. From there, a growth plan outlining the target outcomes for the following few months can be developed.

The true value of an assessment like this comes from the open and honest conversations that take place enabling the team to evaluate their performance and outcomes and continually improve their processes for the future.    

Does your software development team regularly assess the team’s performance and make adjustments for future growth?  If so, is there a specific methodology your organization uses?


Mike Harris
CEO

Written by Michael D. Harris at 10:09
Categories :

Effective Queue Management Can Drive Software Business Value

Sticky Notes

Proper prioritization is essential to driving the business value of software. Those working in the trenches need to have a clear understanding of the end goal in order to prioritize their projects appropriately.  With all team members focusing on the same mission to maximize business value from software by optimizing the flow of business value through software development, better decisions can be made throughout the software development lifecycle.

The key element to properly prioritizing projects is effective queue management. On a daily basis, tactical decisions are made at the team level about the prioritization of tasks.  In Donald Reinertsen’s book “The Principles of Product Development Flow: Second Generation Lean Product Development,” he offers six principles for creating a value management capability for queue management at the team level:

1. Software development inventory is physically and financially invisible
2. Queues are the root cause of the majority of economic waste in software development
3. Increasing resource utilization increases queues exponentially (but variability only increases queues linearly)
4. Optimum queue size is an economic trade-off
5. Don’t control capacity utilization, control queue size
6. Use cumulative flow diagrams to monitor queues

Often decisions made by IT are not based on delivering business value, but on the difficulty of the project, the resources required or who is shouting the loudest to push their project to the top of the queue. This needs to change. IT departments need to prioritize their projects based on the business value they will deliver to the organization. Effective queue management is an essential component to making the right tactical decisions that will lead to maximizing the flow of business value in software development efforts.

What drives your decision-making process when determining what project to put in the queue next?


Mike Harris
CEO

Written by Michael D. Harris at 05:00
Categories :

Application Issues Cost Companies

There is little more frustrating than when you’re trying to accomplish something at work and you’re held up by technology. You sit, waiting for the technology to work, all the while your stress level is raising as you watch the minutes tick by – minutes when you could be checking things off of your to-do list. Sound familiar? I’d be surprised if it didn’t.

According to a recent article from Baseline, app delays are a major problem for businesses. The reality is that most business users experience frequent delays while attempting to use software apps at work. While this is certainly frustrating for the users, it’s a financial nightmare for companies, who are losing millions of dollars a year as a result of such delays.

When employees waste valuable time troubleshooting the issue or stop using these often-expensive applications altogether, that’s a problem. Unfortunately, few IT decision-makers recognize this issue – or do anything about it. Needless to say, this is a problem.

I often talk about making the value of software more obvious to the business, and the situation above is a clear path to disaster. The lesson here is to make sure that the tools your team is relying on are as useful to them as you think, so that you can truly capitalize on their value, and, most importantly, deliver the required work.

Read, “App Delays Frustrate Users, Cost Business Billions,” here.

Mike Harris
CEO

Written by Michael D. Harris at 05:00
Categories :

"It's frustrating that there are so many failed software projects when I know from personal experience that it's possible to do so much better - and we can help." 
- Mike Harris, DCG Owner

Subscribe to Our Newsletter
Join over 30,000 other subscribers. Subscribe to our newsletter today!