There are certain software and services that your business may be dependent on but do not own, that may help your business function better but may also involve operational risks. Therefore, businesses must consider implementing software escrow agreements in order to protect a business as well as avoid any operational risk.
When you outsource software to be written for your business, you may or may not get a copy of the source code after completion. The source code of open source software projects can be accessed freely; however, the codes of proprietary software or closed source are not publicly accessible and can only be executed. When entering into an agreement with a developer, you may choose to let them retain the source code. However, in case the developer ceases to trade or if a source code simply vanishes, it can pose serious problems for your business.
An escrow is basically a contract between two parties who deposit a valuable possession with a third party. This possession could imply important documents, money or an intellectual property. The third party agents hold these under certain conditions.
When you need software escrow, there could have been several reasons for the need. Three of the most important reasons for needing software escrow are:
1.
A software escrow helps maintain the confidentiality of the source code of the licensor. Being an independent software vendor, the licensor provides the licensee with complete access to the software programme for use in the licensee’s own company. However, a source code is a confidential entity and, hence, is not usually given to any business. The source code and all the documents related to it are unique for every project. A software escrow states the guidelines under which the source code needs to be released or provided to the licensee. The terms and conditions are agreed to by both the parties involved and the software escrow provider keeps the source code information and data. It is the responsibility of the software escrow provider to maintain the confidentiality of the data and to ensure that the specified conditions are followed by the parties. This also helps provide the vendor a sense of security.
2.
The licensee is able to get access to the source code data and other related information under exceptional circumstances that helps alleviate the operational risks involved. Though the licensee may have full access to the programme and its capabilities, it might be required to access the source code in certain circumstances. The software vendor gives consent for access to the source code under circumstances or conditions specified in the agreement. For instance, if the software vendor goes bankrupt, the agreement may allow the software escrow provider to give the source code to the licensee. This feature of a software escrow provides access to the source code in case of inevitable situations and reassures the smooth running of a business.
3.
By entering into an agreement for software escrow, both the licensor and the licensee are rest assured of unbiased services. As the software escrow provider is a third party agent, there is no reason for being partial to either of the parties. There are legal documents prepared by mutual consent that makes all the parties accountable for their responsibilities with regard to the software license. As the confidential data is placed in the trust of the software escrow agency, it can only be accessed through them. A licensee needs to contact the escrow provider to gain access to this data, which can be allowed strictly as per the conditions specified in the agreement.
Software escrow is beneficial for both the independent developer or the vendor who creates the programmes and the company that uses it. While the ownership of the programme remains with the licensor, the licensee can gain access to it under certain conditions. When you need software escrow, an expert provider, that meets the expectations of both the parties, helps to create confidence and trust between all parties.
Author Bio: Nathan Morgan has been an IT professional for 14 years. His work is currently focused on Linux servers. He has encryption experience including the deployment of True Crypt and similar packages, and detailed knowledge of document scanning solutions to transform off-line archives into accessible digital data.