Software Escrow to reduce supplier risk
Software is an essential component of an organisation's day to day activity. They allow increased productivity, better management and overall enable growth. This means that organisations are increasingly dependant on on software to produce and sell their products and services and most of the time, this software is provided by an external publisher, called ISV (Independant Software vendor). So what happens if this ISV is no longer able to run and maintain the software ?
Bankruptcy, insolvency, change of ownership, maintenance or support issues, discontinuation of a specific software can have catastrophic impact on the software licensee, leading to business interruption in the worst case.
In order to mitigate that risk, it is common practise for software licencees to require a software escrow agreement before they sign the commercial agreement with the ISV.
A software escrow agreement requires two essential steps :
1- the parties must agree on the release conditions by contract
2- the ISV must make a deposit of the source code and other related documentation such as database, black book, user guide, technical documentation, passwords, etc... with and independant software escrow provider.
At Vaultinum, these elements are immediately encrypted to ensure confidentiality and then deposited on our secure servers located in Europe.
Vaultinum's Software Escrow strict release process
Upon the occurrence of one of the release conditions agreed in the software escrow agreement, the client is entitled to ask the software escrow agent for access to a copy of the deposited source code and other elements. At Vaultinum, we enforce a strict verification and software escrow release procedure to securely transfer the deposited elements to the client. The client is then able to continue using and maintaining the software and can thus ensure their business operations.
Different types of software escrow
At Vaultinum, a software escrow agreement is possible no matter the delivery method of the software. We offer SaaS escrow agreements, Cloud based escrow agreements and On premise software escrow agreements.
Vaultinum also offers 3 types of software escrows agreement formats, depending on the needs of the supplier and client.
The simplest version of a software escrow agreement is the access clause which is a contractual provision that is included in the main commercial contract between the technology supplier and the client. It defines the conditions under which the source code will be released and names the software escrow agent. For this clause to be effective, the technology supplier must deposit their source code and other relevant elements with the named software escrow agent. With a Vaultinum Access Clause, the technology supplier is the only one to have access to the online dashboard to manage the contract.
A bipartite software escrow agreement is an independent contract between two parties: the technology supplier and the client. Once the contract is signed, the technology supplier will deposit their source code and other relevant elements with the escrow agent. With a Vaultinum bipartite software escrow agreement, both the technology supplier and the client have access to the online dashboard to manage the contract.
A tripartite agreement is an independent three-party software escrow contract between the technology supplier, client, and escrow agent. Once the contract is signed by all three parties, the technology supplier will deposit their source code and other relevant elements with the software escrow agent. With a Vaultinum tripartite software escrow agreement both the technology supplier and client have access to the online dashboard to manage the contract, with Vaultinum ensuring that the terms of the contract are respected (e.g. frequency of updates, payment of fees, etc.).
Getting started with a Software Escrow
Our IT and legal experts are available to guide you throughout the process.
Before you start,
⇨ you will need to make sure you have prepared the following elements:
- Files containing the materials to escrow (source code, documentation, database, etc.).
- Defined the release conditions (bankruptcy, insolvency, change of ownership, maintenance or support issues, discontinuation of a specific software, etc.).
⇨ And made a few decisions:
- Frequency of updates,
- Type of Deposit,
- Term of the software escrow (number of years),
- The level of verification, if applicable,
- The length and limitations on use of the accessed escrow (rights of use, ownership, time limitation, etc.),
- Payment of escrow agent fees (this can be shared),
You are now ready to go, assured with the protection of Vaultinum.