Software escrow provides for the deposit of the source code of a vital software product with a neutral and independent trusted third party (software escrow service provider). This third party is authorised to release the source code to the end-user under conditions agreed upon by the supplier and end-user in the software escrow agreement. However, if the software deposit is out of date, incomplete or unusable, the end user’s business continuity could be seriously compromised.

End Users and in particular Chief Information Officers (CIOs), Chief Technical Officers (CTOs) and Risk Managers and Audit Committees in the Suppliers user base and target market are posing key questions with respect to business continuity and operational risk.

If your software supplier fails, without access to the source code of the software you will not be able to update or maintain your product.

Software Escrow – Key Questions:
1. How many mission critical business processes depend on software that is a licensed for use product, ie, the product is owned by the supplier/developer and not the end user themselves?
2.  Does the software Supplier/Developer stand behind their product and offer a professional software escrow arrangement?
3.  Is the software escrow arrangement of any value – practically speaking, would it be possible to simply take the deposit out of escrow and restore the mission critical software. Would the software continue unaffected?

Most software escrow arrangements were passive in their approach to the deposited material. Consequently, passive custodians (such as banks, notaries, legal firms) would physically `hold` a copy of the software source code as a deposit. However, they would be unable to technically verify that the deposit is the `correct` or `up-to-date` version. Most importantly, that would be unable to confirm that the material on deposit is complete.

Today`s market for licensed software products, and Software as a Service (SaaS), is far more discerning when it comes to business continuity and operational risk.

Peace of mind for Clients/End Users
A professional escrow service provider actively tests and audits the material on deposit to consistent standards of technical verification on a regular basis. The verification report confirms that the deposit contains what the Supplier has committed to place in escrow. This provides proper reassurance that the software deposit is complete, up-to-date and usable in the event of an emergency. This is active escrow at work.

Suppliers and Developers
Therefore, for Suppliers and Developers, active software escrow represents a major marketing advantage:

Winning deals
Suppliers and Developers who have an escrow arrangement in place have a tangible advantage over competitors of any size. 

Suppliers and Developers who have an escrow arrangement in place have a tangible advantage over competitors of any size. 
An established escrow arrangement shortens sales cycles. 
Active escrow arrangements effectively eliminate business continuity risks for End Users. This represents a significant advantage to the value proposition. 

Single deposit advantage
Where a Supplier has multiple licensees based on one software product. 
The Supplier is able to make a single deposit on behalf of all licensees.

Escrow Europe takes care of the administration/prompting for updates as well as the logistics involved with deposit release should this be applicable.

Disaster recovery
The risk of permanent loss of critical intellectual property (IP) is eliminated. 
Software escrow means, in the event of an emergency the valuable asset is verified and vaulted with a neutral and independent third party. 
The escrow service holds a copy of the intellectual property (IP), stored off-site in a secure vaulting facility, readily available in an emergency.

Collateral provision
To attract funding from lending institutions, and investors such as venture capitalists it is common practice to secure the intellectual property (IP) in an escrow arrangement. 

Dependency on key resources
Reduced dependency on key employees who may leave at short notice.
Safeguarding against malicious employees in the development environment. 
Regular escrow deposit cycles ensure consistent project delivery as per: 
functional specification, and
agreed deliverables (particularly build documentation).

Patent, trade secret and copyright preservation
The deposit of an intellectual property asset into escrow provides: 
significant assistance in an infringement suit and robust proof in an intellectual property copyright claim,
irrefutable proof of ownership in the form of a vaulted artifact.

Many Software Houses are already using software escrow for competitive advantage. They have found that the software escrow arrangement helps them to secure more business, more quickly.


COBIT®, Val IT™ and COSO





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