picking up where my previous post left off, i like to start the technical due diligence conversation off with an overview of the intended company’s technology team staffing decisions, because this ultimately ties into every other technology decision in my experience. the easiest way to start the conversation is via an organizational chart, which should include all full-time equivalents (fte) including freelancers, part-time/temps, consultants and any outsourced groups performing a service that could if staffed as such be performed by internal employees. something commonly missed here is a statement of any open and/or desired resources, so i make sure to ask that they identify these sorts of openings, especially if the funding will be used to satisfy these gaps in staffing. the key to staffing structures is to make sure they’re balanced properly to “own” the company's key differentiators and perceived intellectual property while outsourcing the mundane commoditized technology areas to specialists in those areas of focus. in today’s market it’s becoming easier to identify and outsource commodity areas related to staffing decisions. if your hiring full-time staff in the wrong areas it will be immediately identifiable. an example would be a web company hiring numerous fte system administrative resources when managed care hosting is a commodity in today’s market, now granted some businesses are so specialized that they aren’t comfortable turning over system management to an outside entity so under that scenario i recommend the cto be prepared to justify the logic behind their staff makeup. also very early stage companies probably won’t be able to afford managed care, but they should be looking at smart, low cost ways to fulfill their needs without building up staff in non-critical areas. it really comes down to being able to expose the logical reasons for staffing vs outsourcing decisions. for an investment i normally stop here, but if it’s an acquisition I would then go into compensation of all staffing and if it’s a merger i would then get into the always fun discussion of redundant staff reductions. its also important to understand the structure of the staff, so i get into how are these roles organized and how do these organizations or departments interact. for example is there a development team and a quality assurance team, and what process do they follow when launching a new version full of enhancements versus dealing with bug related issues. or how is change control handled. i always like to use the phrase “take me through how you go from concept to production”, i find this is a very easy way to expose the workflow behind most topics. finally, staffing decisions do tend to tie in closely to core platform technology decisions, so i try to hold off on forming my opinions on staffing decisions a company has made until i’ve heard more of their technology story.
here is the staffing section outline that i tend to follow (1.2 & 1.3 are my acquisition versions):
1. technical staffing
1.1. organizational chart (or staffing list)
1.1.1. please include all fte names & roles
1.1.2. include any contracted resources & outsourced roles
1.1.3. describe relevant groupings of roles such as development, operations and i.t.
1.1.4. provide a logical workflow of how groupings interact
1.2. salary information, tenure and basic background for all technology staff including compensation history for previous 3 full years and any changes anticipated for current year
1.3. contracted costs for previous 3 full years and anticipated for current year
1.4. please list any unfunded yet desired staffing or contracted roles with an explanation of reasoning behind desire
that’s it on staffing; again i try to keep it conversational and go into depth via additional questioning as needed. anything you think i missed? next post i’ll get into actual technology areas that i focus on ;)