Formerly known as ESCROW EUROPE (Pty) Ltd

ISO 9001 & ISO/IEC 27001 certified

The modern business environment is in a constant state of flux. This means that company directors and owners must be vigilant about myriad factors influencing their companies’ business continuity. From changes in consumer trends, to shifts in technology, to changing social and employee dynamics. Leaders are looking for ways to strengthen business resilience in these demanding times.

Writer Dixie Somers suggested (on five actions companies can take to do just that.

Here is a brief overview of what Somers writes.

How to improve business resilience

  1. Understand risk management
  2. Secure your software licences with escrow
  3. Educate your workforce
  4. Refine search engine optimisation
  5. Back up essential files

While the advice may seem rudimentary, the solutions to most problems plaguing businesses can often be reduced to one simple action.

I recall the example of a newly mechanised and robotised vehicle manufacturer, which operated its plant 24 hours a day, complaining about the high cost of electricity eating into profits. The management consultant’s advice? Switch off the lights – robots don’t need to see the car they are building.

While Somers makes some good points, I’d like to expand on how businesses can safeguard continuity and resilience when it comes to software escrow.

Software Escrow and Business Resilience

Somers writes, “Even if you have complete control over your business, sometimes forces outside your control can conspire against you. If the company who provides your company with software were to go under, what would happen to its software? Securing your licenses with a software escrow agreement would ensure that you would not lose the source code because of the software company’s failure.”

While that is 100% true, there are other reasons why software escrow is needed to protect your investment in that software.

How software escrow safeguards your business continuity

  • The technical or IT know-how you use everyday is critical to your business processes. It’s one thing if your IT system crashes when you are a panel-beating business but completely another if you are a web-driven courier company.
  • This technical know-how is not easily replaceable by an alternative. If you use an off-the-shelf package that becomes corrupted, hopefully you can simply replace it by visiting the nearest store. But what happens if you’re the compiler of an annual tourism guide which uses a bespoke database to keep track of 1000s of hotels, restaurants and the like, and that database crashes?
  • The conversion to an alternative could be too costly or too lengthy. Could your business survive a week without its mission-critical software? A month? Half a year?
  • The company that developed and now maintained your critical software applications was taken over by a competitor and changed business direction leaving you and your business unsupported.
  • A virus or hacker could maliciously destroy critical operational software.

Under a software escrow agreement, the supplier and end-user of the software product agree that the source code for the vital software product and related documentation are deposited with a neutral third party – the escrow agent – who is authorised to release the materials to the end-user under conditions as agreed by the supplier and the end-user in a written agreement.

Such conditions may relate to operational risk, technical malfunction or even failure of the supplier who tailored and contextualised the software to the end-user’s business requirements.

Greater protection, resilience, and continuity: the key objectives of software escrow

  • Continuity of use of the software by the end-user under circumstances where that would be impossible without escrow.
  • Safeguarding the underlying business process.
  • Protection of end-users’ investment in the software, related hardware and staff training.
  • Limiting the end-users’ total dependency on supplier for support and maintenance of the software.

Final thoughts

Seeing as it was Somers’ who inspired me to write this piece, I’ll end with a quote from his article: “The future of your business should be secure. Taking steps to ensure future success is at the centre of every entrepreneur’s strategy. Don’t gamble on the future of your business when the steps to a secure future are so simple.”

 Or, as one the directors of Hollard so succinctly put it ‘The need for escrow protection as a cost effective part of proper operational risk management is a no brainer.’

Ensure improved business resilience. Safeguard business continuity with software escrow.