Learning The “Secrets” of Companies

Maximising the Advantages of Escrow Services

Many companies are now taking advantage of the improved technology to maximize the use of various software solutions. This then means that companies have to license software from various developers. The software tends to be very expensive, and it is important for both the licensor and the licensee to protect their investments. For this reason, software vendors use escrow services to protect their interests as well as those of the licensee. A software escrow service involves using a third party to store the source code of a particular application software. The third party is identified as the escrow agent and should have no ties to either the licensor or the licensee. Indeed, the source code escrow is a very important part of vendor agreement, and both the licensor and licensee have the right to initiate it.

Software is available in two formats, that is, the object code format and source code format. While the licensee gets the object code format, the escrow service providers remain with the source code format. This ensures the continuity of the software maintenance over time. This is very important for the licensee since the software may be a key part of their business and this cushions then from possible losses. In the case of bankruptcy of the developer, the escrow agent makes sure that the software keeps running by providing the source code to the licensee. The escrow agreement ensure that the licensee has the right to the source code in case the developer fails to fulfill his obligations as per the escrow agreement.

Source code escrow also benefits the software developer by protecting their intellectual property rights. Due to the high number of software theft, developers are not comfortable with sharing their source code with the licensee. The software escrow agreement has various terms and conditions that bind both the developer and the licensee. Each of the parties in the escrow agreement has obligations to fulfil. When one of the parties fails to meet their obligations as stated in the agreement, various penalties apply. The source code escrow agreement outlines possible use or transfer of the source code which is key in protecting the rights of both parties.

Besides just storing the source code, escrow agent helps verify the availability of the source code. There is also the need to ensure that the software is working as it should and thus the escrow agent has to verify this. It is always advisable for a licensee to use escrow services if the software supports a vital function of the organization or has a direct impact on the revenue. Some software is also very expensive which makes it prudent for the licensee to use an escrow service to protect their interests.

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