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Software
Escrow
The purpose of software escrow is to protect
software application source code. An escrow agreement is usually
made between three parties - the developer, who may also be referred
to as the supplier, the user, or buyer, and the escrow company. The
escrow company holds the software code securely, and only releases
it in the event that certain scenarios are indicated.
The situations that might trigger the action to release the code,
are those agreed to between all concerned parties and are legally
documented in the software escrow agreement between the parties. One
example that is a fairly common one, is if the supplier goes out of
business or is otherwise unable to continue to provide service, due
to bankruptcy, liquidation, or other similar occurrences.
Any organization that relies on a third party for critical business
resources should acquire a software escrow 'insurance' solution. It
is also imperative to those organizations that are involved with the
authorship, development, licensing or use of software or other
proprietary technology, to offer this assurance that if unforeseen
situations occur, it would not impact the client's business. The
client must be protected from the risk of depending on another
fallible party for the continued ability to conduct their business
without interruption or detriment.
Software escrow also provides beneficiaries access to the source
code that is the backbone of their business-critical applications in
the event that the supplier fails to maintain its contractual
obligations. It ensures that the source code will be released safely
and expeditiously to the end user, providing the assurance of
continuity in their business, irregardless of situations beyond
their direct control.
For the supplier, there are specific benefits to entering into
software escrow in practice. Representing themselves as a provider
that is utilizing the services of an independent escrow service
demonstrates their commitment to providing a secure environment in
which their clients will not feel vulnerable. The very act of
proactively including this in their business proposal, proves to
their potential clients that they have confidence in their business,
their product, and their ability to supply and assume responsibly
for the product in the future.
The process for securing an adequate software escrow agreement is
relatively straight forward. Both the provider and the user document
the acceptable requirements. This is analyzed by the software escrow
company, and any amendments or accommodations are indicated. This is
reviewed and if acceptable to all parties, a final document is
generated and signed by all parties.
The source code, etc., is deposited with the software escrow
provider, and they test it to be sure that it meets the agreed
criteria as represented in the agreement. When it meets all of the
agreed stipulations, it is securely held in escrow by the escrow
service provider, until upgraded , or until such time as one of the
trigger events indicate the requirement to release it to the user.
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