5 Uses For Companies

Posted on Posted in Business Products & Services

Benefits of Using Software Escrow Services

With the growth of technology, it has become extremely important for companies to take advantage of various software to improve business processes. This then means that companies have to license software from various developers. Because of the prohibitive cost of developing application software, licensors and licensees want to ensure that they protect their investments. As such, escrow services have been very critical for software developers because the help protect the interests of both parties. A software escrow service involves using a third party to store the source code of a particular application software. The escrow agent is the third party in this case, and he is supposed to impartial so as to ensure the rights of both the licensor and the licensee are guaranteed. Either the buyer or software vendor can introduce the escrow agreement to protect their interests.

Software is available in two formats, that is, the object code format and source code format. As a licensee, you only get the object code format while the escrow gets the source code for safe keeping. Deposing the source code with the escrow agent ensure that the software is updated and maintained on a regular basis. This allows the business to cushion itself against losses that may arise from poorly maintained software. Source code escrow services protect the business using the application for any event including the bankruptcy of the developer which may terminate some services. Under the escrow agreement, the developer, has the responsibility to maintain and offer support to the licensee based on the agreed terms and if this is not fulfilled, the licensee has the right to acquire the source code.

Besides protecting the rights of the licensee, the escrow agreement is key to protecting the intellectual property of the developer. Due to the high number of software theft, developers are not comfortable with sharing their source code with the licensee. Source code escrow is anchored on various terms and condition which bind both parties. Each of the parties in the escrow agreement has obligations to fulfil. If any of the parties fails to observe these agreements, there are certain consequences. The use and transfer of the source code is clearly discussed under the escrow agreement.

Apart from storing the source code, the escrow agent has to authenticate 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. While it is advisable to always use escrow services, those licensees who use the software to support a vital function of the company have more to lose and they should make sure they protect their investments. Also, when the price of the software is very high, it is only best to protect the investment with the use of an escrow service.

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