When a SaaS customer adopts a SaaS solution over a traditional software license the customer may no longer have possession and control over its data residing on the servers and storage devices of the SaaS vendor. The customer, as a subscriber to the SaaS solution service, is vulnerable to inherent risks of the cloud and a SaaS business relationship.

SaaS customers are faced with the reality of these risks:

• Sudden temporary or long term loss of access to SaaS services, applications and data due to legal and financial disasters such as SaaS vendor bankruptcy, insolvency, business discontinuation, contract termination, legal disputes, litigation, and deteriorating business relationships.
• Their own SaaS data being corrupted or lost by the SaaS vendor.
• The need to comply with internal policies and external regulations that are not met by the current SaaS vendor’s practices and capabilities.

A traditional SaaS storage escrow can provide assurance to the SaaS customer that it will have access to the SaaS application (source code and object code) and SaaS data if a release condition should ever arise. In this type of escrow, the SaaS application, build environment, implementation instructions, and any other desired materials are stored in escrow along with timely deposits of the customer’s SaaS data. Upon the occurrence of a contractually-agreed-upon release condition, the deposits materials (e.g., the SaaS application and SaaS data) will be released to the SaaS customer. The SaaS customer is then able to install and use the SaaS application to assist it in continuing operations that were dependent on the vendor’s SaaS solution. The SaaS customer will also be able to recover and use its data from the escrow.

In instances where immediate or prompt access to the SaaS solution is required, only a complete SaaS data center escrow is sufficient. In a SaaS data center escrow, the SaaS application and data are hosted on servers and storage devices at an Escrow Data Center. The SaaS application is continually populated with the customer’s SaaS data. In effect, a mirror of the SaaS solution is held at the Escrow Data Center. If a release condition occurs, the mirrored SaaS solution can be brought online for access and use by the customer. The SaaS customer is then able to continue operations without losing access to a functioning SaaS solution and its SaaS data.

There are significant motivators for software users to transition from traditional software licenses to SaaS solutions accessed over the Internet. In many instances the risks described above have inhibited some customers from adopting a SaaS solution. SaaS escrows can eliminate or substantially mitigate those risks for customers. SaaS vendors can also benefit from the adoption of SaaS escrows because these escrows proactively alleviate the concerns of prospective customers. By proactively protect the interests of customers when a SaaS vendor escrows its SaaS solution, the SaaS vendor provides a more reliable solution and addresses what may be the unspoken reservations of a prospective customer.

To learn more about EscrowTech’s various levels of SaaS Escrow solutions watch https://escrowtech.com/video_saas.php.

Because of the uncertainty in the economy and recent Wall Street meltdown, the stability of software companies is increasingly volatile. There is great concern about software companies being able to maintain important and Mission Critical software.  If your company relies on any type of software for business processes, you may be in danger.  A Software Escrow is a useful resource to help prevent lapses in your software use and maintenance.  

Several recent articles have covered the software escrow issue, including the following from PC World http://www.pcworld.com/businesscenter/article/151850/the_it_workers_wall_street_meltdown_worry_list.html, saying that “The bottom line is that you need to make sure that you can get a hold of the source code if that company goes under and ensure that it is the correct version and is valid.” 

EscrowTech is the leading Software Escrow agent in the country, with offices in India as well.  Please see the related blogs and visit www.escrowtech.com for more information about Software Escrows and Technology Escrows.

Contact EscrowTech with questions about Software Escrows and Technology Escrows. 

Phone: 801-852-8202    email: mail@escrowtech.com    website: www.escrowtech.com

This blog is dedicated to the explanation and exploration of Software Escrows and Source Code Escrows.  Much of this is taken from the article “Doing Software Escrows Right” published in the Computer and Internet Lawyer.  The author, Jon Christiansen, is not only a recognized computer law expert, but is also one of the founders of our company, EscrowTech International, Inc.  A full copy of the article can be found here http://escrowtech.com/article.php

Are software escrows useful?  How do you do a software escrow right?

Although software escrows have been used since the 1970′s, they are an increasingly common practice. Today, most software lawyers deal with them occasionally, if not frequently. 

A software escrow protects a software licensee by ensuring that the licensee will have access to the source code in the event that the licensor goes out of business, discontinues support of the licensed software, breaches maintenance obligation, or some other release condition occurs.  Typically, the parties use a software escrow when the license is for the object code (binary form) of the software, but the licensee does not receive the source code and therefore is unable to maintain, update, or enhance it.  The licensee is dependent on the licensor for maintenance, updates, and enhancements to the software.  Simplistically, a software escrow can be described as the following:

1. The licensor delivers a copy of the source code to a software escrow agent.

2. The software escrow agent holds the source code.

3. The software escrow agent releases the source code to the licensee only if a release condition occurs.

4. The software escrow agent returns the source code to the licensor if the escrow terminates without the occurrence of a release condition.

Sometimes software escrows are referred to as technology escrows.  For clarification, software escrow are a subset of technology escrow.  Some technology escrows do not involve software or source code.  For example, technical documents, chemical formulas, prototypes, drawings, and other embodiments of intellectual property can be held in a technology escrow.

Once you have selected EscrowTech as your Software Escrow agent, follow these steps:

1. Request the appropriate Agreement and forms from an EscrowTech representative by calling 801-852-8202 or email us at mail@escrowtech.com.

The following processes can be expedited by sending PDF copies via email or fax.

A. Single Beneficiary Software Escrow Agreement

a. Once you have reviewed and filled out the Agreement, print off at least one copy, sign it, and fax/email PDF a copy to the other party. Ideally, three original copies should be mailed through the loop for signatures so that all three parties can have an original.

b. The other party will then sign the originals and mail them to EscrowTech at the following address:

EscrowTech International, New Accounts, 3290 W. Mayflower Way, Lehi, UT 84043

c. Once EscrowTech receives a copy signed by both parties, an account manager will process the Agreement immediately and set up the Software Escrow to receive a Deposit. At that point, you will receive instructions and froms to make a Deposit.

B. Multiple Beneficiary Software Escrow Agreement

a. Review the Agreement and fill out the front page and Exhibit A. Also, verify that Exhibit B regarding Release Conditions is acceptable to both parties. Once you have reviewed and filled out the Agreement, print off at least one copy, sign it, and fax/email PDF a copy to EscrowTech to be fully executed and set up. Ideally, two original copies should be mailed to EscrowTech so that both parties can have an original.

b. An EscrowTech account manager will process the Agreement and contact you same day.

c. The next step is to fill out the Beneficiary Registration form. Input the Escrow No. given to you, your company information and contact person, reference your license with the client, input the product name next to its number (in a separated products Agreement), and choose the release conditions that you want to use from the sample language at the end of the form. You may need to have them approve the form before signing, but once you sign it go ahead and have your client sign it and send to EscrowTech. The other party should receive a copy of the master Agreement for their reference.

d. Once EscrowTech receives a copy signed by both parties, and account manager will process the Agreement immediately and set up the Software Escrow to receive a Deposit. At that point, you will receive instructions and forms to make a Deposit.