22.11.2013 in Home > Article by Namit Gupta

Understanding Software Escrow

For any business that relies on certain software to operate, it’s important to protect the program as much as any other company asset.

Yet this can be difficult when, as is typical with software, you don’t own the product. Most likely you will own the license to use it and, while the Software as a Service (SaaS) contract normally ensures a working product, it’s wise to further protect and insure yourself. After all, without it productivity can easily be affected.

To this end, you should learn to understand and use software escrow to your strengths. This can help further protect your reliance on the software, so it can be an invaluable layer of security and comfort for many company operations.

Escrow-Agreement-Software

Escrow

The service itself runs like any other escrow service. The source code is held in the account by a neutral third party so neither you nor the provider has any control over it. You can’t access it – as per the SaaS agreement – but should complications arise the agency can intervene. For instance, if it’s concluded the provider hasn’t offered a working product, the escrow agency can quickly and legally hand you the code so you can get back to work.

Why you need it

Escrow is useful because if offers a quick and effective decision. By providing a neutral party with no bias, such ongoing legal disputes can be easily resolved with fast results. For a company, this means getting the code to restore a product and resume operations.

Yet, perhaps more importantly, escrow acts as a deterrent. Anyone willing to use escrow is more likely to uphold their end of the bargain. As such, the simple act of agreeing to escrow can further establish trust and reliance between two parties.

Reaffirmation

Of course, even when you have something in escrow, it helps to reaffirm what is there. From the license holder’s perspective, the account is similar to an opaque curtain – you know something is in there, but you aren’t sure what it is. When you need this code, you want to be sure the provider is offering the real code, relevant to your needs.

The best escrow providers will also offer a software verification service. After all, while you yourself cannot access the code, you should have confirmation that the legitimate materials are in the account. This way you can reassure yourself that the relevant materials are ready should anything go wrong.