3 Ways Automated Software Escrow Safeguards Beneficiaries

When an end-user, or beneficiary, seeks to enter a software license or SaaS subscription agreement, their most important question to ask is “What’s in it for me?”

It’s the ultimate value proposition and one that software developers are eager to answer. The thing is, it’s a pretty darn easy solution. Software and SaaS applications are developed specifically with the end-user in mind.

The end-user will choose software or a SaaS application because it solves a specific problem for them. And once an end-user finds an application that can help its business, the company is going to want some assurances. Most importantly — they’re going to want to make sure their investment is secure, that they have application continuity and access to their data.

In today’s digital world, application continuity, and data and source code are perhaps the most precious commodities, and the new application they onboard must not only perform as promised but also have a business continuity plan in place should their business rely so heavily on it. One way to protect your investment is through software escrow.

But not just any software escrow — automated software escrow provides another level of comfort and security. It’s agile, nimble, and moves with today’s rapid development. Because most software developers use some form of Agile development methodology, only an automated escrow solution can keep up with the pace of change.

In this article, we’re going to look at three ways automated software escrow protects an end-user’s data and provides security in a software license agreement.

But first…

What Is Software Escrow?

When an end-user finds a software product it would like to use, the company will want to make sure their investment is secure, especially with the time and resources it takes to onboard that technology and train company personnel on how to use it. Enter software escrow — an agreement that provides a business continuity plan, shows beneficiaries that the developer is credible, shows commitment to application continuity, and protects the beneficiary’s investment.

For many end-users, software escrow may actually be a requirement in a software license agreement for a vendor to even earn their consideration.

Why? Let’s take a look.

Software escrow is an agreement between a software or SaaS application developer (the depositor) and end-user (the beneficiary). Software escrow offers protection to both the depositor and beneficiary in a software license agreement. It provides a plan of action to take possession of important things like your data, source code, and documentation, should the software vendor experience situations like financial instability or bankruptcy.

The software escrow service is provided by a software escrow agent, who acts as a neutral third party in the agreement.

This arrangement adds extra comfort to the end-user in case the software SaaS application developer doesn’t meet the agreed-upon demands listed in the software escrow agreement. In these instances, the source code will be released to the beneficiary, enabling them to continue the use of the software even if the software developer goes out of business.

Software escrow outlines all responsibilities involved for each party, including predefined release conditions such as the one above (the developer goes out of business). If a release condition occurs, the beneficiary can then apply to the escrow agent to release all intellectual property in escrow.

What Is Automated Software Escrow?

Automated software escrow is a better, more agile, modern version of software escrow. PRAXIS invented the automated escrow process in 2016 — a development that was perhaps the most significant innovation in the software escrow industry.

Automated software escrow is the only software escrow that is agile enough to keep up with today’s fast-moving software development. Years ago, developers would push out changes two to three times per year in a waterfall development style, meaning the updates had to follow the same downward, linear flow each time. Today, developers make code level changes on a daily basis.

This shows that waterfall development is now extremely outdated. End-users should work with developers that utilize agile development and update their source code at least weekly, some as frequently as every hour.

Because the development moves so fast, traditional, manual software escrow, which was relevant for waterfall development, is now obsolete.

The manual process involves CDs and DVDs. Even seeing those letters shows you how dated the process has become. When physical discs must be transported and then loaded through a secure FTP, this update to escrow is outdated by the time the process is complete.

This old-school method is even more expensive for your software vendor to maintain because it requires an IT person from their team to manually update the deposit materials, costing precious engineering time and resources.

Automated software escrow removes the internal burden of pushing manual deposits for your technology vendor, and by default, provides you, the beneficiary, with a radically more valuable escrow arrangement. With this innovative solution, your software escrow is connected directly to the vendor’s source code archival system.

The automated software escrow solution provided by PRAXIS sweeps weekly for changes in code, making sure you always have the latest and greatest update in escrow. For even more added value, all previous versions of the deposit materials are retained and backed up for easy recollection at a later date, if a release were to occur.

What Is A Beneficiary?

As mentioned above, a beneficiary is the end-user in a software escrow agreement. This is the person or organization for whom the software or SaaS application is being developed. The goal of the software or SaaS application is therefore to be useful and valuable to the end-user.

The end-user becomes the beneficiary in a software escrow agreement because if a release is ever achieved, the end-user benefits by receiving all intellectual property in escrow.
How Does Software Escrow Safeguard Beneficiaries?

There are three main benefits of software escrow to a beneficiary.

  1. It provides a business continuity plan for your business-critical software
  2. It protects your investment in the technology as well as your time and resources spent on implementation and training
  3. It eliminates downtime for software applications

1. Provides A Business Continuity Plan For Your Business-Critical Software

With software licensing agreements, a business continuity plan outlines how a business will operate should it experience a disruption in service. If the developer goes out of business, the end-user can continue to use the software.

This could be vital to your business in order to keep your services moving during a disruption. The business continuity plan in your software escrow agreement ensures your sales and services continue even when things go wrong.

2. Protect Your Investment In The Technology & Ensure Your Time & Resources Spent On Implementation & Training Aren’t Wasted

ROI is perhaps the most important in business. What’s in it for me? With software escrow, you’ll protect your software investment. It ensures the technology keeps running smoothly, which may be critical to the success of your business.

Not only that — software escrow also ensures that the time and resources your company spent on your new software don’t go to waste. There are often numerous man-hours involved in the implementation of your new software as well as further training on management. With software escrow in place, you can rest assured that it isn’t wasted time, as your software will stay active, with the application continuity thereby protecting your return on investment.

3. It Eliminates Downtime For Software Applications

As we outlined above, a major problem with waterfall development and traditional software escrow is that there can be harmful downtime. Development moves rapidly, and unless you have agile development and automated software escrow in place, your escrow cannot keep up with today’s rapid development.

Automated escrow eliminates the downtime for your software and SaaS applications because, as the name suggests, it automatically sweeps for code level changes to ensure that you’re up to date and secure, ensuring safety and application continuity.

How Automated Software Escrow Works

Using an automated software escrow provider like PRAXIS, your escrow account can be directly connected to most commercially-available source code archival systems, including GitHub, Bitbucket, TFS, and more. This automates the depositing process with a direct, weekly pull from their archival system into escrow.

Getting started is simple, and no additional software is needed to make the initial connection. Once PRAXIS is connected, it will monitor the system and contact the depositor/software vendor directly should an unlikely disconnection to the repositories occur. All escrow deposit materials will be updated weekly, eliminating all administrative burdens for your vendor while automatically achieving 100% escrow compliance, providing you more value and peace of mind.

PRAXIS will also automatically notify the depositor and beneficiary each quarter to give total transparency on their account activity.

Summary

As you can see, automated software escrow from a provider like PRAXIS offers unparalleled protection and value to beneficiaries in a software license agreement. Without it in place, you can almost guarantee the deposit materials in escrow will always be outdated. Don’t be left behind — stay secure and up to date with automated software escrow!

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