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The AMA Handbook of Due Diligence by Andrew J. Sherman, William M. Crilly

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SECTION 15
COMPUTER, COMMUNICATIONS AND INFORMATION SYSTEMS
Intr
oduction
The corporate functions associated with computer, communication and information systems are being integrated
at an ever increasing pace. Consequently, it is appropriate to combine the discussion of these three systems.
Organization, Resumes
And Compensation Levels - Forms 15-01 Through 15-03
As noted above, technological advances are bringing about a merger of these three functions. Therefore, it is
important to visualize how the three functions relate to one another in terms of reporting structure, the degree
of professionalism of the respective staffs and their compensation levels.
In-House Computer
Applications - Form 15-04
This form identifies some of the more common corporate computer applications.
Use Of Outside Computer
Services - Form 15-05
Form 15-05 provides for the listing of outside computer services currently being utilized by the entity.
Knowledge of the type and extent of these services will assist in determining the potential cost savings that can
be realized by either moving these services in-house or transferring additional work to outside service bureaus.
WHAT TO LOOK FOR
To what extent has the computer penetrated the entity’s operations?
Are the hardware, operating systems and software comparable, or is there a mixture of types
that will make it difficult to network the various units?
To what extent has the software been customized?
In a potential merger situation - how comparable are the two firms’ form computer applications?
WHAT TO LOOK FOR
Has a degree of integration already taken place?
If not yet integrated:
Do the managers of these activities have approximately the same organizational rank?
Do they represent comparable degrees of professionalism within their own discipline?
Are their compensation levels approximately equal?
In a potential acquisition situation - how easy will it be to merge these activities?
DUE DILIGENCE HANDBOOK 15-01
391

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