Practice Safe Software Procurement

Worried about a developer’s staying power? A software escrow agreement ensures that the source code will be there whenever you need it.

An escrow partner should address your business's particular conditions and risks with a custom-tailored escrow agreement.

You did the research, you’ve evaluated the options, your lawyers have weighed in—but you still have doubts. Yes, selecting a vendor of mission-critical software may be one of the toughest decisions you’ll make as a business owner.

After all, your business will be depending on this application for a long time. Will its developer, who may be new or unproven, always be around to support it? How will you update, reinstall or maintain the application if the developer is suddenly MIA? If the vendor goes out of business or stops supporting the technology, your company could suffer losses in revenue and productivity. How can you reduce the risk?

Software escrow is the smart solution. By requiring that all source code is safely stored with an independent third-party escrow services provider, you ensure that you’ll be able to run the application in the future. You can then work with the escrow services provider to verify that what items the developer places in escrow are complete, and you’re good to go.

Escrow, the Preemptive Measure

It’s important to note that software escrow is collaborative, not adversarial. The developer should welcome the chance to prove its stability—and make the sale—by giving you the comfort level you need to make your purchase.

If something does go wrong in the future, a potential business disaster remains a manageable glitch. For example, if the software vendor is unable to help you at all (because it’s no longer in business or its key developers have left), your escrow services provider would release the code to you according to the terms of your escrow agreement; you could then either support the software in-house or hire a consultant to do the job. In such instances, you might stumble, but you wouldn’t fall.

Agreements Are Like Snowflakes

Your business is unique, as are your software needs. For this reason, an escrow partner should address your business’s particular conditions and risks with a custom-tailored escrow agreement.

To provide that type of service, a reputable escrow services provider should take the time to learn your business needs while also giving you time to confer with colleagues and counsel to make a confident decision to partner with the firm. This is, after all, a legal agreement; it’s important to get it right. Develop an agreement that fits your needs today while also addressing your anticipated needs as you add more mission-critical applications and refine your corporate risk management strategy.

Here’s what else to look for in an escrow services provider:

  • A dedicated client manager for your account
  • Physical and electronic vaulting
  • Verification services that ensure your deposited materials are operational and complete
  • Automatic notification of deposits and deposit updates
  • Web-based access to real-time transactions with up-to-date escrow account information

A Win-Win Situation

A legally sound and reusable escrow agreement isn’t hard to establish. However, forging that pact is much easier when you work with a trusted escrow services provider that can balance your need for business continuity with a developer’s need to protect its intellectual property. When this happens, you can rest easy and get down to business, because you know your technology investments are protected now and in the future.  

What to Ask Potential Software Vendors

As you research software for your company, you may come across vendors whose technologies seem appealing but that don’t have a proven track record or a large installed base. You may want their applications, but are you willing to take a leap of faith? Software escrow can ultimately alleviate some of your concerns, but feel free to ask these questions up front as well:

  • Can you cite particularly successful examples of your development work?
  • How long have you been supporting this application?
  • How many applications do you currently sell and support?
  • How large is your client base?
  • How many developers do you have? (And how many, if any, are devoted to the application we’re considering?)
  • How are you funded?

Do you have questions about software escrow services? Read additional Knowledge Center stories on this subject, or contact Iron Mountain’s consulting services team. You’ll be connected with a knowledgeable product and services specialist who can address your specific challenges.

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