RedPrairie and Software Escrow: Partners in Sales Success
February 22, 2012
Closing a software sale is hard enough without your hot prospect suddenly raising 11th-hour concerns about technical support and maintenance. Here’s how one resourceful developer leveraged software escrow to its ultimate advantage.
“Iron Mountain’s software escrow services give us an extra advantage over any competitor that doesn’t offer these services.”
—Scott Brown, RedPrairie
The employees of RedPrairie are proud of their software products and plan to stand by them for years to come. But how do their prospective clients know that for sure? Using the power of software escrow services, the company has been turning what used to be a sensitive subject into a topic of open discussion during the sales cycle.
RedPrairie, a privately held company supporting more than 34,000 customer sites in 40 countries, provides software that helps retailers manage their supply chain—from inventory and logistics to fulfillment and real-time analysis. But like many reputable software firms of its size and stature, it still faces some client apprehension about issues of ongoing support for the long term.
Although at first such concerns may seem unwarranted to you and your team, consider this: In the third quarter of 2011, there were 12,142 mergers and acquisitions in the technology sector—a 23 percent increase year-over-year, according to the Software Equity Group. In addition, although they are now trending downward, U.S. business bankruptcies in 2010 actually doubled 2007 filings, according to the American Bankruptcy Institute.
Tapping the Power of Escrow
To allay clients’ apprehensions about such possibilities, RedPrairie has been working with Iron Mountain as its escrow services provider for more than 10 years. Iron Mountain acts as a trusted, neutral third party that safeguards RedPrairie’s source code in a secure, access-protected escrow account.
In the unlikely event that RedPrairie could no longer support its products as outlined in the escrow agreement, the agreement between the company and its client would kick in: RedPrairie’s source code and materials, such as documentation and specs, would be released to the authorized customer, who could then use its in-house resources or hire outside consultants to support the software.
“Iron Mountain’s software escrow services give us an extra advantage over any competitor that doesn’t offer these services,” says Scott Brown, RedPrairie’s senior director of technical services. At the time his firm started using software escrow, it was clearly ahead of the curve. But a decade later, nearly 70 percent of companies surveyed by Iron Mountain say they “always” or “sometimes” include escrow as part of their software agreements.
For Developers, Unquestionable Ownership
To be sure, escrow agreements also have additional benefits for developers. Escrow accounts are a critical part of any intellectual property (IP) strategy. For example, Iron Mountain dates and time-stamps all escrow deposit materials upon receipt. This provides an audit trail for all build versions you packaged and sent to Iron Mountain as part of the escrow agreement. Should you ever have to prove your ownership in court, the audit trail provides independent validation of your ownership.
Clearly, an escrow account protects both you and your customers. Acting in many ways as a prenuptial agreement to a marriage, it can defuse a customer’s concerns before it partners with your company. Once an escrow agreement is signed, the customer feels confident, knowing there’s a proven, long-term plan in place should the unexpected occur.
“Escrow is a very good insurance program for our customers,” says Brown. Include it in your negotiations right from the start and you’ll reassure your current—and prospective—customers that their software purchase is a protected, long-term investment.
”M&A Deal Volume and Spending: All Industry Sectors,” Software Equity Group, LLC, 2011
 Quarterly Business Bankruptcy Filings for 1994-2011, American Bankruptcy Institute
 “How to Minimize Risk With a Software ‘Prenup,’” IDG Research and Iron Mountain, 2008
Iron Mountain Suggests:
Easier Conversations with Your Customers
“When our customers want escrow protection, it’s nice for us to be able to say, ‘We use Iron Mountain.’ The response is always positive,” says RedPrairie’s Scott Brown. Here’s why:
- Only the experts. Experienced escrow professionals will work with you to establish your needed levels of protection.
- Ultimate access. An easy-to-use Web application, the Escrow Management Center, lets you view escrow account activity, produce reports, and view imaged documents.
- A watchful eye. Extensive security procedures govern physical and electronic media deposits and track your software from the time of receipt to the time it’s released.
Ironclad security and continuity measures. Physical and electronic vaults feature uninterruptible power supplies, noncombustible construction, and sophisticated access control systems.
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.
Let Software Escrow Seal the Deal
The Many Faces of Technology Escrow
Software Escrow: A Best Practice Against Business Interruptions