Consider the following.
We’re heading into a new year and your business is thriving. Congratulations! There is no doubt that you have worked hard to get to where you are today. You’ve invested time and money in your people and resources and you’ve finally found the winning recipe. Your impressive annual sales reports are evidence of a business well run. You use state-of-the-art software solutions that give you the upper hand over your competitors.
Consider the following.
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Businesses increasingly rely on software that stores revenue-generating and highly customized data. A sudden limitation in data access could mean the failure of the entire business operation. This is where software escrow agreements come in, as they protect these data by depositing a software source code with a third-party agent. This trusted agent works to protect the developer's intellectual property while keeping a safe copy for the licensee.
If anything happens, like when a vendor can no longer support the software, the source code can be released from escrow to the licensee in order to keep their business running and give them options to move forward. Deloitte emphasizes that businesses should plan contingencies through resilience programs in order to create a proactive and agile risk capability. A software escrow is one intelligent component of a continuity strategy in an ever-changing business environment. Because developers will not part easily with their source code, having a software escrow agreement is the most effective way to overcome such an impasse.
Dwight Olson CLP, author of The Long Journey to Software Valuation, describes technology escrow as a business tool. Olson explains that it allows for a proper software valuation and protects licensing and intellectual property. Because software is an asset with substantial monetary value, businesses have an interest in protecting it from risks, much like any of their other assets. This is precisely the kind of protection that software escrows can provide.
However, despite being proven effective, many companies are still hesitant to acquire a software escrow because of misconceptions that plague the transaction. Today, we'll debunk those common myths about software escrow:
A software escrow is designed to store an application's source code, virtual machines, configuration, build instructions, and other critical documentation. A business can easily overlook or see such an agreement as an added operational cost. However, as we outlined in our post ‘Escrows as Part of Your Disaster Recovery Plan’, they need to be part of your business risk strategy. Your disaster recovery plan should include an escrow because companies should anticipate disasters before they happen instead of managing their after-effects. Escrows ensure the stability of a business by protecting critical software programs that are inevitably affected by the unpredictable industry landscape.
Disney’s new series, “The Dropout”, has every tech entrepreneur and investor glued to the tv with their hands in their hair.
Sixt, the car rental giant located in Germany, confirmed that a cyberattack caused major disruption in their systems last week.
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Risk planning is already a critical part of every business's strategy, but the past few years have cemented its importance in business continuity. Recognizing the impact of the pandemic on businesses, Escrow Europe Director, Guy Krige, emphasized that businesses should not wait for events to trigger a disaster before investing in a software escrow. Krige pointed out that risks are inevitable, but they can be managed through source code escrows that protect mission-critical software programs in the unpredictable landscape of business.
While no one wants to experience disasters, businesses can safeguard their stability by arranging a software escrow agreement. To illustrate, here’s why escrows should be a part of your disaster recovery plan:
Businesses have been hard-hit by the pandemic, but the event has taught us all an important lesson about investing in operational resilience. While businesses may not be able to predict future disasters, they can ensure that they will be able to bounce back and maintain their commercial status by establishing a proper disaster recovery plan.