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Software Escrow Service: Importance and Working Model

Many organizations and entities maintain a policy of gaining access to the source code of Application software before deploying it in the organization. They do this to make sure that they have no problems in future with the maintenance of the software if the vendor stops the support it normally provides to maintain the software.

A software escrow service or source code escrow service keeps the source code safe without disclosing it to the customers and provides it to the customers or users only when the vendor fails to provide support for the software due to a specific reason.

Why is Software Escrow Service Essential

Software escrow is important both for software vendors and the customers who buy the software. Large software vendors try not to disclose the source code of the software to customers to prevent hijacking of complete or part of the source code. On the other hand, the customer needs an assurance that maintenance of the software will be handled by the vendor.

A software escrow service would take source code from a vendor for one or more software products, along with the build environment. The customer would be allowed access to the source code in case the vendor stops supporting or maintaining the software..

How Does Software Escrow Service Work

A software escrow service serves as an escrow agent. The vendor of the software signs a legal agreement with this escrow agent for one or more of its products. The software escrow agent agrees with the software vendor on an annual or quarterly escrow fee to be taken from the customers for providing its escrow services.

This fee is known as the software escrow licensing fee to the customer. A customer, wanting access to the software, will buy the software escrow license from this escrow agent by signing an agreement. Till there is a paying customer, i.e., till the time customers keep buying escrow licenses for the products, the software vendor will keep updating the source code with the escrow agent. The license fee paid by the customer is divided by the software vendor and the software escrow service agent.

A customer is granted access to the customer only when the vendor stops providing support for it. If a customer renews his software escrow license timely, he is rightfully entitled to gain access to the source code if any of the following happens:

  • The software vendor goes out of business and this prevents the customer from maintaining the software.
  • The software vendor stops providing support to the customer.
  • The software vendor sells the rights of the software product to another company or organization and the second party declines providing support for the software product.

Why use a Software Escrow Service

Software escrow service allows validation of the software’s source code and at the same time ensures a cost effective solution to the software vendor. Also, confidence develops in the customer when access is available to the software’s source code in case of lack of support from the vendor. The software escrow service, serves as a cost effective solution to both the vendor and the customer.

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