When and Why You Should Opt for a Software Escrow?



As years go by, technology has become an integral part of our daily life. This increasing dependence on technology and software has been more pronounced in new businesses that are starting now. Software apps play critical roles in the day to day operations of many businesses. If you are running a business and you consider a software to be critical to the functioning of your organization, then you should be taking the right steps to make sure that it will be available in the future as well. Software escrows help you in ensuring just that.

So, What is a software escrow?

To put it simply, software escrow is a service where you deposit the source code of the software app and other related data. This will help in the continued sustenance of a proprietary software, even when the company that made it, goes bankrupt.

A business that is trying to license a software product from a vendor will want to make sure that the product they are licensing will be available for use for a longer period of time. Especially if that particular app is critical to their uninterrupted operations. However, a software vendor won’t be willing to give up the source code and other associated resources as it is their intellectual property.

Software escrows can bridge the gap by creating an agreement which is beneficial for both the parties involved

When should you consider it?

Do you need an escrow clause in every one of your software deals? In a general sense, that would be overkill. It also depends on your company’s preference for certain providers as well.

There are certain circumstances in which it is absolutely necessary that you go for a software escrow agreement, so as to avoid any future complications.

If you consider the software vendor to be financially unstable at the moment of providing service, or if they have a track record of ups and downs.

If you are looking to use the software for a longer period of time than done generally and want to make sure that your business isn’t affected if and when the vendor goes out of business.

If you are concerned about the software vendor’s ability to provide the services as mentioned in the license deal throughout the entire period of the agreement.

If the software vendor has a track record of not keeping in line with the terms of the agreement before, acting rogue and violating it.

These are some of the circumstances in which you should press for a software escrow deal. If you have access to the source code after the vendor goes out of business

You will be able to fix bugs that make the app crash or unstable.

Build compatibility with other software tools you choose to use in the future or build frameworks for migration from the current one in case it becomes increasingly difficult to maintain on your own.

It is highly beneficial to be able to access the source code and the required resources so that it can be maintained with ease.



I hope this article was useful for you to learn more about what a software escrow is, and why you should use one. We also discussed the various circumstances in which you should try your best to include an escrow clause to your licensee deal. If you have any doubts with regards to this, let us know through the comments and we will be glad to help you out. If you have any suggestions regarding how we can improve the article, let us know them through the comments as well for us to improve.

Do you have any other reservations about opting for a software escrow service? Are you using any service provider at the moment? What are your experiences with them? Do you think software escrows increase the credibility of a software vendor in a booming market? Let us know through the comments.

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