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The Importance of Software Escrow Agreements

 

laptopAs the managed services model of IT governance continues to spread and grow, some organizations are beginning to realize the need for software escrow agreements.  These agreements are designed to be a part of a comprehensive disaster and recovery plan, a critical need for any business.  Indeed, industry experts have estimated that more than one-third of businesses impacted by a major disaster never manage to reopen.  Disasters responsible for closing businesses permanently range from natural events such as hurricanes and floods to manmade problems such as power outages and Internet intrusion attacks.  Those businesses that fail to reopen would have had a better chance of withstanding such events and problems if they had had an excellent disaster preparedness plan in place.

What is a Software Escrow Agreement?

A real estate escrow involves placing money and documents with a trusted party so that they will be secure until a transfer of property is complete.  A software escrow is similar, though it serves a different function.  When a software escrow agreement is in force, a business protects the source code for its most important programs by placing that code in escrow with a trusted party.  Should a disaster occur, the source code could be reclaimed from the trusted party.  In this way, businesses can be assured that they will not lose vital code that they need to keep their business functioning. 

Businesses that are already working with a managed services provider or other IT company can contract with this company to provide them with software escrow services. 

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