Software escrow provides for the deposit of the source code of a vital software product with a neutral and independent trusted third party. This third party is authorised to release the source to the end-user under conditions agreed upon by the supplier and end-user in the escrow agreement. However, if the software deposit is out-of date, incomplete or, worse still, unusable, the end-user`s business continuity could be seriously compromised.
End Users and in particular CIO`s in the Suppliers user base and target market are posing key questions with respect to business continuity and operational risk.
For instance:
1. How many mission critical business processes depend on a software system that is a licensed for use product, ie, the product is owned by the supplier/developer and not the end user themselves?
2. Does the supplier/developer stand behind their product and offer a professional escrow arrangement?
3. Is the escrow arrangement of any value - practically speaking, would it be possible to simply take the deposit out of escrow, compile, `boot up` and the mission critical systems would continue unaffected?
Until now, most escrow arrangements were passive in their approach. This means that passive custodians (such as banks, notaries, legal firms) may physically `hold` a copy of the software source code as a deposit but these custodians do not technically verify that the deposit is the `correct` or `up-to-date` release version or, for that matter, that the material on deposit is complete in terms of the purpose or purposes intended.
With active escrow, the escrow agent subjects the material on deposit to consistent standards of technical verification, at least once a year, and provides a report to both Supplier and End User that warrants that the deposit contains what the Supplier has committed to lodge so as to provide proper reassurance that it is complete, up-to-date and is most likely to be usable.
Today`s market for licensed software products is far more discerning when it comes to business continuity and matters of operational risk.
For suppliers and developers, active escrow represents a major marketing advantage, for instance:
* Winning deals: In a positive and structured way you are able to meet a growing need among clients and, by excluding unnecessary discussion, shortening the sales cycle substantially. Having an active escrow arrangements in place for your clients gives you a tangible advantage over competitors of any size. Active escrow arrangements effectively eliminate business continuity risks for your clients and encourages them to use your licensed products in preference to those of even the largest software suppliers/developers.
* Single deposit advantage: Escrow Europe makes it easy if you have multiple licensees based on one deposit into escrow of your source code (per product). You make a single deposit on behalf of all your licensees and Escrow Europe takes care of the administration/prompting for updates as well as the logistics involved with deposit release should this be applicable.
* Patent, trade secret and copyright preservation: Active escrow arrangements provide you with documentation when securing a patent claim, significant assistance in an infringement suit and robust proof to support an intellectual property copyright claim.
* Disaster recovery: Permanent loss of critical information is not an option. Having your most valued asset in escrow with a neutral third party provides you with an alternative to disaster in the event of an emergency. The active escrow agent will maintain a copy of your intellectual property stored off-site in a professional vaulting facility and available for restoration.
* Collateral provision: Putting up your technology as collateral may secure your company much needed funds and, in fact, many lending institutions, such as venture capitalists, angel investors, and banks are requiring technology escrow for asset backed loans where the borrower is using its technology as collateral.
* Reduced dependency on key employees who tend to `hoard` instead of `share` information. 30-day escrow deposit cycles can ensure proper delivery according to functional specification and agreed deliverables (including documentation) when independent technical verification is performed on each deposit as a matter of course.
* Electronic deposit delivery: We have several options for depositors wanting to send their deposits to Escrow Europe electronically.
* Quality deposits: Our verification services provide assurance to you and your clients that all source code deposits meet a superior technical standard.
* Peace of mind: On request, Escrow Europe can provide extended verification services. Compilation is included in the analysis and testing of the deposit that verifies that the deposit is readable, correct, and complete in all respects. This testing provides peace of mind to all parties that the escrow deposit will be useable, if released.
* Professional drafting of agreements: All Escrow Europe agreements are modifiable. If requested, we will assist you in addressing your specific requirements. As we list more than 15 000 clients as beneficiaries, we have a broad knowledge of requirements in this area.
The modern reality is that active escrow - which is specifically targeted at safeguarding your user`s business continuity - is a business necessity - not a nice to have.
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