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09 May 2024

Verifying Deposits: An Integral Part of Software Escrow

Deciding to escrow your software, or other licensed technology, is just the first step. Ensuring that everything agreed upon is securely deposited into escrow is crucial. If your software vendor suddenly goes out of business, you don’t want to discover that essential components are missing and that the escrow deposit can’t be rebuilt into the working application when you need it most.

While placing software in escrow guarantees that the code will be released if and when a release condition occurs, there's no assurance that the software will be complete, usable, or even readable. That's where Software Escrow Verification Services become invaluable, ensuring that your escrow deposit is comprehensive and ready for use when necessary.

If your software vendor suddenly goes out of business, you don’t want to discover that essential components are missing, leaving the escrow deposit unable to be rebuilt into the working application when you need it most.

What is Software Escrow Verification?

Escrow Verification Services validate the completeness, accuracy, and functionality of the software vendor’s escrow deposits. This critical audit of the source code and deposit materials ensures that you can read, rebuild, and maintain the working application independently of your software provider. This provides a higher level of resilience and business continuity assurance.

Some may confuse Software Escrow Verification with a Software Escrow Agreement. While a Software Escrow Agreement provides customers with the legal right to access the source code behind third-party software, if the material deposited in Escrow is incorrect, out of date, or incomplete, it cannot be utilized as intended to rebuild the software. Therefore, both solutions are equally important. It's crucial to note that verification is essential for both cloud-based and on-premise applications.

What are the Benefits of Software Escrow Verification?

Software Escrow Verification offers several key benefits essential for safeguarding your software assets and ensuring business continuity.

Firstly, it guarantees the availability of the knowledge and guidance necessary for the future rebuilding, maintenance, and development of the software independently, without reliance on the software provider. Verification also supports compliance with regulatory requirements to test business continuity and exit plans for critical third-party software. By certifying that these plans can be executed with minimal disruption or downtime, it provides assurance of operational resilience.

The Potential Ramifications of an Incomplete Escrow Deposit

Consider the potential repercussions of an incomplete escrow deposit for your organization. Although you may be able to continue using your licensed software without support or updates in the short-term, you may eventually incur significant costs associated with:

  • Consultants’ fees, court costs, arbitration fees, and legal fees
  • Replacing licensed software and hardware
  • Retraining personnel to use new software
  • Reputational damage: customer dissatisfaction and loss of business
  • Missed opportunities and lost time

A release condition, in and of itself, doesn’t mean that your software will suddenly stop functioning. However, you need to exercise your release option as soon as possible after a release condition occurs. Sooner or later, you will need access to your software’s source code, whether due to a systems upgrade, an operating system upgrade, a newly discovered bug, or to add new functionality to the software. If a critical component is missing from your deposit, contacting the software vendor will be much easier soon after the deposit is made rather than, say, years after it’s gone out of business. Once an escrow deposit is made, you should verify the contents of the deposited material as soon as possible, preferably within the first 30 days and regularly throughout the life of the escrow agreement as deposits are updated.

Which level of Software Escrow Verification do you need?

All organisations have different requirements to protect their assets and software, so finding the most suitable Software Escrow Verification is dependent on how the application is hosted and the chosen business continuity plan. Find out more about our Escrow Verification options.

Interested in learning more about our Software Escrow Verification?

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