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Software Escrow Supplier Due Dilligence

December 20, 2012

It is vital that an organization perform due diligence when choosing an escrow provider to ensure they receive quality of service and value for money.  An escrow provider should be an independent third party with no ties to software vendors or owners.  If a commercial relationship exists between an escrow provider and the software owner then independence cannot be guaranteed.

There are three main components to all software escrow agreement;

  1. Legal protection
  2. Technical expertise
  3. Secure storage

Many software escrow providers employ paralegals with extensive escrow experience but very limited commercial or business knowledge, these providers also rely on the skills of very junior technically qualified graduates to manage critical applications and solutions. When a software escrow provider employs low skilled employees it runs the risk of exposing its clients to significant risk, this risk is magnified for software supplier/vendors or authors.  When the escrow agent has completed the active escrow part of the service it should then store the deposited material within an environment that is designed specifically for source code and electronic material, not in a bank vault or general storage facility.

When choosing an escrow provider you should consider the legal expertise and the technical experience of your chosen supplier. In today’s market the most effective method of delivering the highest standard of software escrow agreement is to use 3rd party expertise to ensure that impartiality is maintained at all times.

Before you choose a software escrow supplier you should perform due diligence to ensure that they have the legal experience and technical expertise to deliver a critical component of your organizations disaster recovery and business continuity strategy.

Don’t be afraid to ask the difficult questions, if you ever need to call upon the escrow deposit following a critical event you will be glad you did.

 

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written by David Clee

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