How to Protect your Business Against Critical Software Failure

frfewgIn today’s tech world, there are lots of new software startups popping up, providing wonderful services that were previously unheard of. These new software vendors have made the workflow of various businesses much more easier and have improved their productivity manifold.

These new age software providers are so good that it is impossible for many businesses to continue operating efficiently in the absence of them. That is where the problem with today’s business model lies.

People create these amazing software products and license it to licensees. But what happens when the software vendor goes bankrupt, acquired or out of business due to any other reason?

What will happen to the business that invested in the software and you will be heavily affected if critical processes of your business depends on such softwares.

Escrow Services

What would you do for support, documentation or critical bug fixes to the software once the software provider is not in business? That’s when software escrows save your business.

Online escrows are not very different from offline escrows. According to Wikipedia,

Internet escrow has been around since the beginning of Internet auctions and commerce. It was one of the many developments that allowed for trust to be established in the online sphere.

As with traditional escrow, Internet escrow works by placing money in the control of an independent and licensed third party in order to protect both buyer and seller in a transaction. When both parties verify the transaction has been completed per terms set, the money is released. If at any point there is a dispute between the parties in the transaction, the process moves along to dispute resolution. The outcome of the dispute resolution process will decide what happens to money in escrow. With the growth of both business and individual commerce on the web traditional escrow companies have been supplanted by new technologies.

Software escrows work in a similar fashion. A software escrow is a neutral third party, who will store the source code of the software being licensed in a secure location along with the documentation and other support materials.

Upon arrival of a mutually agreed upon event between the software vendor and the licensee, say for example, the software vendor going out of business.

Then the escrow will make sure that the licensee gets access to the software source code and other protected materials. This helps both the parties in the sense that, the source code of the software, which is a vital asset of the software vendor would be kept safe and intact until the vendor is out of business.

It also protects the licensee by providing access to the source code in situations where the vendor faces bankruptcy, gross maintenance agreement breaches or other disastrous events, and your business is dependent on the software’s continual functioning.


Using a software escrow has become part of best practices that have to be established by software vendors to have positive business relations and ethics. Since, it has been an increasing trend in the tech world for software providers to go out of business quite soon due to acquisition or bankruptcy it becomes increasingly difficult for other businesses to invest upon software products.

A software escrow would ideally solve the problem for both the parties. One of the leading escrow services when it comes to software and source code escrowing services would be EscrowTech.

Vetting the Escrow provider

We opt for escrow services to make sure that our business stays afloat even during critical times like a vendor going out of business or not able to provide support. It then becomes highly critical that the escrow provider that we choose is much more reliable and worthy.

It’ll be a tragedy if our failsafe mechanism fails in the first place. So, how do we go about and vet a reliable escrow service provider?

Track record:

How long they’ve been in business and how many escrow operations have they carried out in the past. Sometimes escrow providers might pool the experience of their staff and claim it as the overall experience of them. Make sure you check the date in which the company was incorporated to get the actual no of years the provider has been in existence. Were there any incidents of disagreement happening between any of the two parties or any such black marks in the past and how they handled such situations. Also, look for lawsuits in the past, it’s a definite no-go.

Facilities and Procedures:

How many staffers do they have in their technical and customer support team? How secure have they stored the files? Are they encrypted? Do they have a lot of unnecessary steps in place that would come in the way of a seamless transfer process? These are some of the questions that you’ll have to verify before committing with a provider.


Agreements forms the crux of any escrow arrangement. Do the provider has readymade ease to use agreements beneficial for both the parties? This would save lot of money in legal fees in the present and future.

I hope this article helped you to add an extra degree of protection to make sure that your business is not affected by any unforeseen circumstances that are beyond your control.

A good business person would try and reduce the factors that are beyond his control and those that would critically affect his business, this would be a first step towards that.

If you have any questions, please ask below!