What is digital?

The term digital means different things to different people. Without a clear definition the word digital will become a meaningless buzzword. Yes, digital is a vague term. In many ways the word digital is misleading. It makes one think of technology, when we should be thinking of people. In reality this focus on digital is a new focus on the customer. Something we should have always been doing.

The word digital is a necessary shorthand to encompass some complex ideas. My definition of “digital” is a convergence of many technologies and social changes that have led to a new digital reality for most businesses. It is in the convergence of social media, mobile and the web that we find a new kind of user – the connected consumer, your customer. Digital consumers are a new generation of user and they see the world in a different way. For them virtual and physical have equal relevance. When buying an item or a service they are more likely to consult their network than listen to traditional advertising. This is equal important for b2b as b2c companies.

Digital isn’t business as usual. Social media, the web at large and mobile have not caused a slight change in consumer behaviour. It has caused a revolution and many organisations are failing to adapt. That is why a digital due diligence is an important piece of insight to the classic due diligence.

What is Digital Due Diligence?

A comprehensive digital due diligence assessment includes an examination of a company’s digital and social media assets, including websites, social platforms and online communities. Technology platforms, systems and how you treat your data. Digital vendor commitments, security and privacy policies and compliance considerations. 

Why perform a digital due diligence?

Today, an assessment of your business online performance and capabilities should be a pivotal part of almost every commercial due diligence process. It’s very often overlooked. An on Digital due diligence is not just for pure online players, but also for traditional businesses with any type of online presence.

A proper Digital Due Diligence is a very different beast from a regular commercial DD: traditional KPIs do not apply, online markets behave differently, and teams require very different capabilities. To perform a proper DDD different tools and a deep understanding of digital products are required. D3 consulting has this knowledge. The report gives you a snap shot of the current digital footprint. The report shows you where you are today and what you could do tomorrow. A prioritization of short, medium and long term growth opportunities.

In this new era of M&A, the definition of due diligence is expanding well beyond conventional financial metrics to include a company’s digital strategy, capabilities, strengths, and weaknesses as well. As Mergers & Acquisitions (August 18, 2018) describes it:

“In our digital economy, every company is a technology company—which means every company lives and dies by how effectively it embraces technology and protects itself against cyber threats. That means acquirers need to take a hard look at everything digital to see if the target company has a true tech strategy in place. Digital diligence efforts should identify areas of opportunity that may drive up the value of that asset post-close through improved use of information technology. Even more important, acquirers should ascertain the degree to which a target’s IT strategy is aligned with its corporate strategy and whether it’s a core part of the organization.”

Why is digital due diligence vital in today’s market?

Understanding a company’s digital assets, the level of risk, as well as the ‘digital debt’ will help to ensure both a proper valuation of the company’s digital assets, as well as the potential risks, cost, and timeline for integrating a company’s digital presence, systems, data, and vendors. Digital business models are becoming overwhelmingly important and valuable. It’s critical to fully understand the implications of the digital world to increase the value of a company. Add D3’s digital footprint report to your diligence to secure view ability to the whole picture.