Does The Cloud Alter The Need For a Software Escrow Agreement

For those who are familiar with Software Escrow Agreements the cloud does not change the need for one.  It does not matter whether the Licensor is running the software in the cloud, in-house or elsewhere.  If your software developer should go out of business then your software will still require maintenance and updating.   If that should happen then the Licensee (customer) will need to be able to have access to the source code. 

For those of you who are not familiar with Software Escrow Agreements you may ask what is it and why is it necessary?  It is a means by which a company (licensee) can ensure that they will be able to get the source code to a software programme they may have had commissioned or purchased from a software company (licensor) should that company go out of business.   Recently a company we are familiar with was the subject of just such an occurrence.  They had requested a software company to write a programme particular to their needs.  They realised they needed an up-date only to find the company had gone out of business and they did not have the source code. 

Unfortunately, due to the current depressed worldwide economic climate, the stability of software companies has become increasingly volatile and such happenings are becoming more common.  There is also the concern that software companies are unable to maintain important and critical software due to these problems.  If your company relies on any type of software for your business processes you may have left yourselves vulnerable to just such a problem.  .  Ultimately you need to ensure that you can obtain the software source code, (current and valid) from the software company should it go into liquidation and a Software Escrow Agreement is a useful way to ensure this. 

An Escrow Agreement is a third party contractbetween the purchaser, the software owner/developer and an independent third party being the Escrow Agent who will hold the software source code on behalf of the other two parties.  The Escrow Agreement gives the purchaser the right to gain access to the software source code under specific circumstances.  Standby Consulting has been offering Escrow storage services internationally for many years now. We are reliable, economical and dependable.  Contact us to see if we can help you in this regard.


Customer Reviews:-

"It is critical to us, when selling our outbound call center software around the world, that our customers and prospects view our company as stable, secure, and reliable. They also want to be sure that their investment in our solution is protected. They want to be sure, that if for some unlikely reason we went out of business that they would be able to continue using our product and have a third-party with technical know-how able to provide support to them. Smaller customers may not need this but in todays environment these sorts of issues are on the minds of decision makers. To provide this level of assurance to prospects and customers we use Standby Consulting’s Escrow service. It is a pleasure working with Standby, they were flexible to tailor the escrow agreement to meet our requirements and once set up the process of updating escrow material is straight forward. We use the escrow service as an optional extra part of our offering so customer pay an additional fee if they would like to be added as a beneficiary of the escrowed source code."

Pete Cossey, President, Acarda Sales Technologies Limited, Outbound Calling Solutions

"There is an old proverb that commences ‘Do your best and prepare for the worst…’.  This epitomizes Kinetiq’s approach in catering for our end user requirements. As a software company, we insist on our customer contracts catering for a Software Escrow agreement. Usually it is the other way around where a vendor will require a software company to have this in place. Given the changing times we are in, the peace of mind for system users where software source can be retained by a reputable escrow agent is a risk management ‘must have’. The protection this type of ‘insurance’ provides can make all the difference to business continuity if support is no longer available and one is reliant on the software in place. When making software choices, be sure you have the co-operation of the software vendor in agreeing to a sound escrow agent who respects both the system users and the software vendor. Kinetiq have an on-going relationship built with trust over time with the well know software escrow agent Standby Consulting. We regularly update source code lodgements to ensure our customers have the best protection in obtaining up to date software source code should the‘worst’ happen."                 

Mike Craven, General Manager, Kinetiq Ltd,