Why nontechnical organizations need due diligence

Banking and finance, manufacturing, healthcare, automotive, construction, entertainment, education, hospitality. The landscape of industries that historically are not driven by technology continues to shift and shrink.

As just one example, 40 years ago, automobiles leveraged purely mechanical means to get us to our destination. According to IBM’s Research Insights report, “Automotive 2030: Racing toward a digital future,” 90% of innovation for vehicles will be software-driven. It’s hard to get a solid number on how much code is in a car, but a decade ago, 100M lines was thrown around by Doug Newcomb of Wired. And it’s estimated that it’s about twice that today. So yes, the minivan that gets your kids to sporting events has many times more microprocessors and software onboard than Apollo 11 did, and even more than today’s commercial airplanes. I recently heard a Tesla referred to as “a PC with wheels.”

On the healthcare front, when my daughter was diagnosed with Type 1 diabetes, her mother and I constantly had to prick her fingers, calculate insulin, and then give injections four or more times a day. Now she has a continuous glucose monitor that measures her blood sugar levels, and a tiny tubeless pump that communicates directly with the monitor to dispense insulin as needed. Technology has had an immeasurable impact on her quality of life. She can monitor, measure, and manage her blood glucose via software on her phone that communicates with her medical devices. Providing additional comfort to her parents, the software enables us to be aware of any potential issues as well.

In addition to these lower-tech, mechanical products becoming high tech and heavily software-dependent, there are also plenty of industries with nonphysical products that have become very software dependent. Banks, insurance companies, and retailers today are all heavily software-driven, and many employ large development teams.

The fact is, technology and software impact businesses regardless of industry or product. Which is why a strategic acquirer or private equity firm acquiring a company needs to add software assessment to its due diligence playbook. And the need to account for software impact in terms of an acquisition or investment continues to grow. Black Duck® audit customers leverage our software due diligence services to gain the crucial information we provide in a variety of areas.