<p>(Guard-It Corporation, Infowar, TechLinks, Datamation)</p>
<p>Are you concerned that some of your software vendors may go bankrupt or stop supporting key applications? Do you wish there was some way of minimizing the damage of this potentially crippling event? There is: software escrow.</p>
<p><b>What Is Software Escrow?</b><br>
Software escrow is a service that costs upwards of $2,000 per year that stores a vendor''s source code and related intellectual assets in a secure location so that a customer can obtain these assets in the event of a "major" problem. These major problems include vendor bankruptcy, change of ownership, and the vendor discontinuing product support.</p>
<p><b>How this Saves Money</b><br>
Escrow agreements protect both the software vendor and licensee in two major ways. Licensees get access to source code and other important assets in the event of a major loss of service. Vendors give their valuable source code to a trusted third party who won''t publish it to the Internet or destroy its value some other way.</p>
<p><b>Action Plan</b><br>
Implement and take full advantage of software escrow agreements following these steps:</p>
<ol>
<li><b>Check if you are already part of an "open" escrow agreement</b> with your existing software vendors. An open escrow agreement is a contract with one software vendor that multiple licensee companies can join for a fee.</li>
<li style=" list-style-image: none; list-style-type: none;">
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<b>Tip: Don''t let the software vendor choose the agent</b>
<p>. It should be a mutual decision</p>
</li>
<li><b>Negotiate escrow agreements when you buy new software</b>. These agreements should include not just the source code, but third-party tools, manuals and other documentation related to the software, as well as names and contact information for major programmers, and a provision for adding software upgrades to the escrow depository.</li>
<li><b>Insist on escrow agreements or full ownership of source code</b> when you''re looking to purchase new software from a vendor that''s much smaller than you. This is a great risk reduction feature that many companies don''t think of.</li>
<li><b>Make sure the clause covering the release of deposit materials contains all the conditions you may encounter</b>. These conditions include bankruptcy, change of ownership, and cessation of product support (either intentionally or by poor vendor performance).</li>
<li><b>Document and make available the procedure for getting the intellectual property from the Escrow agent</b>. Your company may not need the source code for many years, and if you''re not around when it does, your successors won''t know what to do. The procedure usually involves making a written request of the Escrow agent and the vendor. You should also document and make available the dispute resolution process, since there are usually steps written into the Escrow agreement that must be taken before traditional litigation.</li>
<li><b>Try to get both your company and the vendor to pay part of the Escrow fee</b>. That way you both have a stake in it working properly (i.e. protecting the vendor''s intellectual property while they still make money from it and ensuring your right to get it when you really need it).</li>
</ol>
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<p><b>Tip: Don''t have your company''s lawyer administer the escrow</b>. He or she is too close to your company''s interests to act in the best interests of the escrow.</p>
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<p><b>Use an Escrow agent that has the following criteria:</b></p>
<p> · <b>Specialization in escrow agreements</b>. Some companies offer other services, which can make them less responsive to your needs.</p>
<p> · <b>High quality maintenance facilities and expertise</b>. You can''t make use of an Escrow agent that has poor quality facilities, since magnetic and other storage media break down over time if they are not stored and maintained properly.</p>
<p> · <b>Responsive but fair contract administration</b>. You shouldn''t be able to get access to the source code by making just one phone call.</p>
<p><b>Bottom Line</b><br>
Software escrow is a great way of reducing technological and financial risk, especially if you have critical assets that you need to protect.</p>
<p><b>Want to Know More?</b><br>
<a href="http://www.datamation.com/" target="new">Datamation</a> has an <a href="http://itmanagement.earthweb.com/cio/article/0,,11967_1004071,00.html" target="new">article</a> about software escrow.</p>
<p><a href="http://www.guard-it.com/article004.html" target="new">Guard-IT Corporation</a> has an excellent article listing the <a href="http://www.guard-it.com/article004.html" target="new">"Components of a Basic Escrow Agreement."</a></p>
<p><a href="http://www.infowar.com/" target="new">Infowar</a> has an excellent article about the <a href="http://www.infowar.com/p_and_s/99/p_n_s_030499a_j.shtml" target="new">"Keys to a Reliable Software Escrow Agreement."</a></p>
<p><a href="http://www.jaye.com/" target="new">TechLinks</a> has an article about <a href="http://www.jaye.com/article.cfm?articleurl=21802113713" target="new">"Securing Trust in Licensing Relationships."</a></p>
<p>Escrow service providers include <a href="http://www.dsiescrow.com/" target="new">DSI Technology Escrow Services,</a> <a href="http://www.escrowtech.com/" target="new">EscrowTech</a>, and <a href="http://www.guard-it.com/" target="new">Guard-IT Corporation.</a></p>
<p><!--Info-Tech Research Group--></p>
