Just like many industries seeking to gain efficiencies and make improvements, energy and power organisations have turned to digital technologies to help run and manage critical systems and infrastructure. Third-party software and applications provide everything from real-time grid management to asset performance monitoring and predictive maintenance. They’re fully embedded and integral to safe and continuous operations.
But with increasing reliance on software from external vendors, energy organisations face heightened risks of business disruption if a vendor ceases operations, withdraws support or otherwise fails to meet contractual regulations. Software escrow agreements and verification services offer a proactive way to mitigate this risk.
As the global leader in Software Escrow, we help energy businesses build operational resilience by ensuring that should a supplier fail they have access to their critical software source code.
This is a legal arrangement usually between three parties, which are the software vendor (licensor), the software user (licensee) who would be the energy company in this example, and an independent escrow agent like Escode. As the trusted third-party we’d the hold source code and any other related materials in our secure physical or virtual vault which means that should a vendor failure occur, these can be released to ensure business continuity.
Here’s at outline of how energy companies can implement robust software escrow agreements aligned with industry best practices. Don’t forget, we offer a free software escrow risk assessment to start the process, using our sector expertise to give you guidance and insight to help you choose your next steps.
1. Identify critical software dependencies
Begin by mapping your software ecosystem. Which applications are essential for core operations, regulatory compliance, and safety? Consider:
Prioritise these for escrow arrangements to safeguard business continuity.
2. Assess vendor risk
Evaluate third-party vendors using a risk-based approach. Examine:
This assessment will help determine the necessity and depth of escrow arrangements.
3. Select an experienced, reliable escrow agent
Escode is the world-leader in software escrow, with experience providing services to the energy industry. We also provide supportive services such as verification, which checks that the source code we’re securely holding works as intended, for additional peace of mind. For the next steps, one of our experts would manage and guide you through the process.
4. Define the agreement terms
Ensure that all parties’ responsibilities are clearly defined and documented; this includes release conditions and frequency of software deposits.
Specify in the escrow agreement the precise conditions under which the source code and supporting materials will be released. Typical triggers include:
5. Verify Deposits Regularly
For software escrow to truly support resilience, it’s important to check that deposits are not outdated or incomplete. Establish a schedule for regular deposit updates, ensuring:
This reduces the risk of a non-viable release package when you need it most.
6. Integrate Escrow with Third-Party Risk Management
Incorporate software escrow into your broader third-party risk management strategy. This includes:
By embedding escrow within your governance framework, you strengthen resilience against vendor failures and cyber threats.
7. Communicate with Stakeholders
Ensure that internal teams—particularly IT, legal, procurement, and operations—understand the purpose and benefits of software escrow. External stakeholders, including regulators and customers, may also require assurance that continuity plans are in place. Transparency supports trust and compliance.
8. Scenario test
Ensure the right people are assigned responsibility for handling a release event, and that they know next steps. Whether as individually, or part of a wider scenario testing plan, periodically conduct a mock release to establish potential speed to implementation and uncover any gaps in readiness that could hamper resolution.
In an industry where reliability and security are non-negotiable, software escrow is a vital tool for managing third-party risk. By following these best practices, energy organisations can strengthen their operations, protect critical systems, and maintain service delivery, even in the face of supplier failure.
We offer a free software risk assessment with an energy expert to uncover any risk gaps, give you our sector insights, and offer you guidance to next steps, so you can make informed decisions.
Our free software risk assessment will help you:
Get expert insights and practical recommendations to support operational resilience and compliance with energy sector regulations.
