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How to Protect Yourself With Software Escrow

June 17, 2014

Hiring a company to write software tailored to your requirements can result in a wonderful bespoke solution to your problems. It can also expose you to a significant degree of risk, if things were to go wrong. Software escrow eliminates the risk factor in many ways with the most prominent being the provision of disaster recovery, which should be selected in your initial software escrow agreement to protect both your initial and future investment. By hiring software as a service you have a smooth and straightforward way of protecting you, or your company, from certain kinds of projects if things do go wrong in the future. It would be unwise to operate as a business without having any kind of back-up security in place for the if’s and when’s and although there are fees involved, to be outlined in your agreements, they are insignificant costs compared to the huge financial damages which you could incur were you to have no protection.

It often happens that a developer will go out of business. In the current climate especially this is a very significant risk and so if you’ve arranged software escrow you need to ensure that you will be safe if the worst did happen. This can be arranged prior to signing within your escrow agreements, and it is of the essence that you and your developer agree to a copy of the source code to be supplied to a third party that is neutral – such as an escrow agent. It would need to be specified that under named conditions the agent is to release the source code to you. This is similar to having an insurance policy in place – vital for protection when you need it.

Escrow Verification Testing is a prolonged test to make certain that your software can be rebuilt from the provided source code and able to run to a standard where you are able to use and recognise it. There are likely to be prior restraints on the process, this is due to the fact that someone outside of the business is gaining inside knowledge into the development environment where the verification testing is performed. It is important to understand that if your software does need to be rewritten it may never be the same as it was. But without business continuity you are jeopardising your business functions from all possible risks that can be completely avoided with the use of technology escrow solutions.

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written by David Clee

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