Conventionally, a Software Escrow arrangement is where the source code of a software system is held by a third party Escrow Agent for the benefit of both the Licensor/s (software vendors) of the software and the Licensee/s (consumers). In the context of a contractual framework agreed between the Licensor and Licensee parties, the Escrow Agent would hold a copy of the source code, the documentation and possibly the data required to reconstruct the computer system elsewhere when a trigger event occurs. These trigger events are clearly defined within the terms of the Software Escrow Agreement and could include an insolvency event, failure to maintain the system according to any service level agreements, or even a takeover by a competitor of the Licensee. The Software Escrow Agent may not release the Escrow Package unless the defined conditions for a release are met and agreed by both types of party. The Escrow Package should typically be updated periodically, again this would be defined within the Software Escrow Agreement.
The arrangement benefits both types of party: The Licensor protects their intellectual property rights and licensing revenue stream, whilst giving comfort to clients and potential clients. The Licensee is assured that the investment in a business critical computer system is protected from the most common forms of commercial information technology risk.
Software Escrow was originally defined at a time when computer systems tended to be located on the premises of the Licensee, typically in a standalone computer or environment. In many cases it was simply a question of the release of administrator passwords in the event of a trigger event so another technology company could maintain the smooth running of the system, perhaps with a view to migrating the legacy system to a new application. The Escrow Package was merely a safeguard to ensure that the system could be further configured or developed in the absence of the Licensor, should that be required and to ensure that valuable data could be accessed. The paradigm shift to cloud computing and software as a service (SaaS) has invalidated this model to a large degree. In a modern business, it is likely that a number of, or all, business critical applications and data are held remotely off premise. The Licensee may have no access to the physical machine and the insolvency event of the Licensor could not only be completely unexpected, but could also be a complete ‘show-stopper’ for access where the data centre or ISP bills have not been met by the Licensor and services are cut without notice. Even in the best case scenario, a Licensee may be negotiating with other parties, who would undoubtedly view the application as an asset of the Licensor Company. This will inevitably be a costly exercise from every perspective.
Traditional Software Escrow arrangements also tended to be expensive, with limited numbers of annual Package updates allowed within the standard contract, typically biannual. Additional Packages lodged would be chargeable and the fees payable to the Escrow Agent could be significant. With the latest software development methodologies, system changes and enhancements can be implemented quickly and frequently. The volumes of data involved would tend to be significantly higher too. The days where the Escrow Package could be lodged as a collection of disks and CDs are long gone.
Caytons Cyber is a Software Escrow Agent with a huge difference. We have developed an innovative platform that streamlines the whole process, from contract creation and e-signing online, to unlimited Escrow Package updates and physical space. These are key product features that you simply will not get elsewhere. The technology is proven in the field; we are entrusted with the confidential data of many insurers, insurance brokers and law firms and hosting has achieved ISO27001 for the purposes of our information security management system.
These are just the headline benefits. Please contact us to book a demo and we will send you login details so that you can start appreciating the simplicity, power and cost effectiveness of this landmark product. Our team of technology professionals are ready to assist you at every stage.