How to Setup a Software Escrow

When a business hires someone to write software specific to their business, they face certain risks, particularly if the software is critical to their business operations. For instance, say you hired someone to create software that tracks your warehouse inventory and then, that "someone" goes out of business. What are you to do when a glitch comes up in the software, or you want to expand its capabilities? That's when it would have been good to have a software escrow in place. With a software escrow in place, the software creator would provide the source code to a third party called an escrow agent. In the event the business owner needs access to the source code because the creator is no longer in business, the business owner will be able to get the source code from escrow agent to have someone else make the changes for them.

Difficulty: Moderately Challenging

Instructions

1. Locate a reputable, established software escrow agent. You can locate a software escrow agent by typing "software escrow" into your web browser. Interview several. Ask them about pricing, how long they have been in business, what percent of escrows are claimed, and check with the Better Business Bureau to see if any negative claims have been filed.

2. Once you have chosen an escrow agent, consult with them about the conditions you want incorporated with your escrow agreement. For instance, you might want to include a specific mention of what will happen in the event the software developer goes out of business. Another example: the software vendor is not providing updates to the escrow agent and that could be listed as an event entitling you to get the source code. Those are just examples of reasons to have a software escrow, and are not the only types of events that might justify receiving a copy of the software source code from the escrow agent.

3. Fill out and return the necessary paperwork to the escrow agent, and the escrow agent will then send the paperwork to the software developer to sign. The software developer will them give a copy of the source code to the escrow agent to store.

[prosperoiom]

on 5/16/2009 Well, in my view a user should be talking to their software vendor first before going anywhere near an escrow agent. Software is not widgets. If you don't get your vendor onboard first, you must consider what gets put in escrow is at best difficult to verify and at worst useless. Frank Vipond. http://www.softwareescrowguide.com

[showpup]

on 3/12/2009 Valuable information. I had no idea this was even possible. Great eye opening information. Thanks for sharing it. 5 *