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4 Common Questions Businesses Ask About Software Escrow

August 27, 2014

If your business uses tailor made software to run some of its processes, then you will have heard about software escrow agreements at some point. If you are concerned about business continuity and how best to manage your disaster recovery strategy, then entering into an agreement that protects your software provision is vital. And it’s a good idea to get it done before things go wrong.

Do I need software escrow?
The simple answer is yes. If you have software that is vital for the functioning of your company then it pays to have that insurance. Your licensor or vendor may well go out of business and having the full software held with a neutral third party can save a lot of time and expense in switching to a new software system.

Doesn’t the cloud change the need for a software escrow?
No. The cloud is just a more convenient way to transfer digital products and makes it easier to get hold of software when you need it most. In effect, it doesn’t make any difference if the vendor is running software in the cloud, in house or anywhere else for that matter. If your licensor suddenly crashes and goes out of business you will still want and need your systems maintaining and updating.

How likely is it that my vendor will go out of business?
That’s the $64,000 question. Whilst we are coming out of the financial recession, companies are still struggling and that includes software providers. There is no guarantee that everything will go smoothly and having something like a software escrow in place is just another sensible level of protection.

There are a number of things that can happen to any company including:
• Going out of business.
• A breakdown in the supply chain.
• A natural disaster that effects the running of the business.
• Threats to the integrity of the software from hackers.
• A change in company policy that means your software is suddenly not going to be maintained.

My supplier doesn’t run a software escrow, what should I do?
Any reputable software company will utilise a software escrow. Not only does it protect their customers in the advent that something goes wrong but it protects their own business too. If your supplier doesn’t run an escrow plan then it might be time to think about going elsewhere. A software verification process with a suitable escrow ensures that all the building blocks for the software are present and correct, which means that, should your vendor go out of business, everything your company needs is available.

If you have a critical application, particularly one that has been tailored to your specific needs, then a software escrow is the simple solution to make sure that you have everything in place should you need to instigate a disaster recovery protocol or maintain business continuity in the event that your provider goes out of business.


written by David Clee

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