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What is Software Escrow?

Many businesses today spend large sums of money developing unique business critical software. However, these same businesses also risk potentially serious situations arising in the future if they do not protect their investments.

Purchasing software or having bespoke systems developed is much like buying any other commodity. Therefore, certain reassurances should be put in place when it comes to the purchasing process. This is where software escrow comes in.

Put simply, software escrow is an arrangement designed to mitigate risk. It seeks to protect all parties that are involved with the software development process, most notably the developers and their clients.

Many reputable companies such as nccgroup.com are now offering software escrow services which are hugely beneficial for businesses developing critical software of high value. If this is something your business is considering, you should most definitely seek further advice in the field of software escrow.
To help you understand the concept further, let’s take a look at the most common types of escrow:

Software escrow

As the most common form of escrow, software escrow protects the relevant source code of software and can also include web applications and websites. It applies to situations where software has been specifically developed for a business or an existing product has been updated for use by a single licensee. It also covers off-the-shelf applications that are inevitably used by multiple companies and allow for several licensed users to be registered on the same supplier agreement.

Escrow as a service

Cloud computing is one of the biggest buzzwords in today’s online world. Escrow services give businesses the power to protect their investments in the cloud and balanceany risks.One of the biggest reassurances for a business is that the required application and data can be accessed and made available if a supplier goes out of business or fails to meet their contractual obligations.

Information escrow

This type of escrow is designed to specifically protect businesses that outsource critical information to third parties,particularly intelligence relating to company development. Areas such as product design, industrial formulae, manufacturing processes and marketing materials are all covered when it comes to business critical information.

Copyright escrow

Designed to assist with copyright infringement claims, copyright escrow protects a client’s original material.It also helps when it comes to establishing ownership of specific resources such as websites, applications, fashion designs, artwork and original music scores. This is compounded by the fact that the material is stored with first drafts and other relevant plans proving how it evolved. Furthermore, owner details, authorship and relevant staff contracts related to development are also included as copyright escrow essentials. Should a copyright infringement claim arise, the owner of the material can use all or any of the evidence to support their claim that they did indeed create the material.

Registry data escrow

The internet’s specific naming system has been controlled and managed since 1998 by the Internet Corporation for Assigned Names and Numbers or ICANN. Specific criteria set out by ICANN governpart of the generic top-level domain application process. One such requirement is that WHOIS data must be transferred on a daily basis to a registered escrow agent.

Trust is the key

Relationships between developers and businesses require trust in order to survive and thrive. Software escrow provides that extra certainty and is particularly beneficial as it works both ways.Customers need never worry about future access to source codes that may be required for maintenance, upgrades or even disaster recovery.Meanwhile, developers ultimately protect their assets and also benefit from the fact that they can prove they have a viable long-term solution when it comes to software support. Software escrow provides a little extra peace of mind for all parties involved and in today’s modern times, that can’t be a bad thing right?

Some developers may work off the premise that their reputation precedes them and they do not need to consider software escrow. However, a sterling reputation is one thing, but providing a cast iron guarantee for customers is always going to be the more favourable option when it comes to attracting new business. At the end of the day, software development is about giving customers what they want and with software escrow, you can do just that. There is simply no better way to negotiate a new contract than by offering customers guarantees that last. Software escrow is exactly that –long-term assurance that aims to negate any potential issues in the future for all stakeholders.