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Escrow Services

WHAT YOU NEED TO KNOW

Traditionally, escrow agents have not been technology companies. Most do not have software engineers or technical staff. When an escrow agreement is created they receive a tape or CD from the software supplier and place in their vaults or safety deposit boxes - the process ends there.

However, the bottom line is that source code escrow must be maintained to be effective. Next-generation source code escrow services uses technology to provide surety of escrow viability: the benefits are beyond risk mitigation and apply whether you are a software vendor or buyer.

WHY TECHNOLOGY ESCROW IS IMPORTANT—FOR A TECHNOLOGY BUYER

There is no doubt the global financial crisis has impacted software developers with many going out of business. What do you do if this happens to your software vendor?

More importantly what happens if you are waiting on fixes to critical software issues and the vendor suddenly cannot be contacted because they have ceased trading?

A well prepared source code escrow is the only way to regain control over your business by providing you access to a copy of your vendors software source code allowing you to make arrangements for software engineering support to address the critical problems you need fixed.

Without a tested, operational, source code escrow in place you will not have this option. In some cases companies are earning multi-million dollar revenues using software licensed for less than $100,000 from a small vendor. What an incredible business exposure if this small vendor goes under.

Stress-test your business. Could you also suffer irrevocable damage if your business critical software could not be supported or maintained? Based on our recent experiences, here are some possible consequences of failed software vendors:

Priority bugs could not be fixed
Critical upgrades left security flaws open
Customer paid for software customisations that could not be delivered, causing a missed market opportunity
Key business projects that depend on the software product could not be completed (entire capital investment at risk)
Correct version of the source code could not be found due to poor escrow maintenance

In the current economic times, businesses are highly sensitive to disruptive events. Lower and slower cash-flows reduce the ability to meet the unbudgeted costs of moving software vendors, canceling projects, recovering from systems crashes, long term systems outages and other effects of software vendors going under. A managed and operational technology escrow is a fraction of these costs, making it a highly effective risk mitigation strategy.

WHY TECHNOLOGY ESCROW IS IMPORTANT— FOR A TECHNOLOGY VENDOR

Escrow Services have traditionally been seen by vendors as a necessary evil to keep big clients happy, but in today's economic climate more and more buyers are wanting the surety that escrow services provide. Unlike traditional CD-in-a-safe escrow services where vendors tend to have been at the mercy of the buyer's escrow agreement, in a technology escrow arrangement you can offer world's-best-practice to your customers.

A hot-backup or continuous build service from APPS Global enables you to utilise a technology service inherent to your development process—and an essential risk management tool for your own business—to provide peace of mind to your customers, very cost effectively.

Having a technology-based master escrow service in place also allows you avoid the stall in the sales cycle that routinely arises when a customer suddenly requests an escrow agreement and introduces their lawyers into the process. A solid master escrow agreement and technology process already in place allows future licensees to participate in the escrow through the addition of a schedule tailored to your customer. This reduces the effort of creating escrow agreements in full for each customer. Our master agreement templates can be tailored to your business saving many hours of work.

Next, learn about what can go wrong with escrow and how to avoid it.

Escrow Pitfalls Escrow for Buyers Escrow for Vendors Intellectual Asset Property Protection

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If you are interested in escrow

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