How is Software Escrow Beneficial in this Technology World.

The business in the present scenario is solely dependent upon technology. Technology in a business involves the usage of software. Since a business wants the software to be available on a continued basis, it would look for a way to ensure it. That is where a concept called Software Escrow comes into the fore. Let us check out what it is and how does it benefit a software user and the developer.

Software Escrow – What It Is?

Software Escrow is a kind of service that helps protect the interests of all the parties involved in a software licensing deal. It consists of the procedure and the agreement wherein the source code, data files and related documents of a software product are deposited with a third party neutral software escrow agent.


The Escrow agent holds the data on behalf of the user and the vendor until a condition predefined in the agreement arises. The deal will help you get rid of the issues that may arise in a software deal.

Why is a Software Escrow Needed?

Well, when a software deal is being struck, you – as a businessman – will attempt to ascertain that the software will be available to him for a continued period without any hiccups. He will invariably ask the developer for the source code and other critical materials for the maintenance of the software.

However, the vendor will never be ready to part with the information. The source code and related documentation forms part of the intellectual property of the software vendor. It would amount to the risk to the business of the software vendor.

That is exactly where a software escrow agent fits in. The data and source code are deposited with the agent so that they can be delivered to the licensee under predefined agreement.

How is Software Escrow Beneficial?

A software escrow program or service is designed in a way that it would benefit both the licensee and the vendor. It will be such that all the concerns that a vendor or a licensee may have for the proper functioning of their respective businesses.

From Licensees Perspective –

  • It gives you an ability to maintain and use the software for the proper day to day functioning of your business.
  • The service does away the possibility of abrupt interruptions because of the sudden unavailability of the software.
  • You are safeguarded against the repercussions of the software vendor going out of business.
  • It gives you the legal right to the use of software.

From Vendors Perspective –

  • It involves smoother negotiations that will not hinder your business in a negative way.
  • It lets you have a confident and healthy business relation with the licensees without sacrificing your own interests.
  • The service will ensure a proper storage of your source code and other documents so that they are not misappropriated.
  • You will have all your products and the licenses stored at one place than being with multiple clients.

In Essence

From the discussion we have had in the above paragraphs, it would have been clearly understood as to how beneficial a software escrow service can get. However, we will advise both the licensee and the vendor to go through a series of checks to choose a good software escrow agent. The expertise, the method used in storing your data and the reliability should be a few points you may need to pay special attention to.

If you can take care of all these requirements, it would indeed go a long way in improving the healthy relation between a software vendor and the licensee for better prospects for both of them.


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