Business Tips on Escrow and Software

Whilst some might already be familiar with escrow services in the strictly financial sense, it’s important to discuss the additional escrow options available. Specifically, it’s important to be aware of the software escrow services available, and why these are important for any business for both financial and practical reasons.

Business Tips on Escrow and Software

Software is important, especially for many businesses and companies. In the digital age, nearly everything is done via computers, often through specific and specialised software. For many, this is designed by another company; in this case, you as a company are a customer, having entered an end-user agreement.

This agreement is crucial, mainly because it’s up to the provider, not you as the lease-holder, to provide a working product. In this case, you don't have access to the source code, but the provider has agreed to provide a working and effective piece of software. It’s when this isn't the case, however, where an escrow account becomes the most effective.

Software Supplier's failure

Depending on the exact agreement, and this can very highly depending on the nature of the software being used, there are various situations where the software provider is no longer upholding their end of the user agreement. Whether it’s a non-working product, lack of customer service, or something else, there are a few things that they are legally obliged to do or provide.

When they don't, then you may have legal grounds to claim the source code. After all, you're paying for a license to a product that isn't fulfilling its function. With a failure from the provider, you may be granted legal access to the (usually highly guarded) source code.

Of course, to determine this, there needs to be a neutral third party that holds the code itself. In a case where it’s determined, they can then pass on the correct information and code to you and a correct and legal fashion. Since the third party has entered an agreement with both companies, there is no bias. This is why a source code escrow agency can be recommended for both the software leaser and provider.

Source Code

The source code, as you may have guessed, is often at the heart of these matters. Such code is generally kept close guarded, and software providers are generally very selective about who has any access to this, as it is essentially giving away the intellectual property crucial to the software's success.

As such, both a company as a software developer and provider, as well as the company that leases or buys the license, need a reliable way to protect and maintain the source code. The provider, for instance, can't simply give away their valuable assets to the license holder. Likewise, the license holder needs to know they can receive the source code in the worst possible situations.

In both view points, it’s clear that an escrow agency acts as a reliable and neutral third party, acting between the two in accordance with the law, rather than showing any personal bias or preference to either company. This keeps both companies happy, as it demonstrates an act of good faith between the two, building a stronger relationship as a result.


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