When Should I Use a Software Escrow?


There is no single answer to the question “when should I use a software escrow?” as it depends on the majority of the factors revolving around the software provider. So, it is important to assess the scenario before effecting an escrow. Neither the licensee nor the software provider should waste money, time, and effort on a software escrow if it is not required.

There are several cases when a licensee may worry about needing an escrow. They include:

  • The software provider may willingly or unwillingly breach its support and maintenance obligations
  • The software provider may discontinue the support and maintenance of the software
  • The software provider could face bankruptcy
  • The software provider is not financially stable

It is important to note that the popularity and size of the software provider as brand should not be the only considerations while making the assessmnt. Any vendor, irrespective of their size or reputation, may decide to withdraw maintenance and support of software products. And, bankruptcies are not limited to just unknown, small companies. Large businesses also reject contracts using bankruptcy laws.

The scenarios when the licensee is left without any support or maintenance of the software could be worse, especially during the following instances:

  • There is a need for software upgradation due to changing business or individual needs
  • The software experiences incompatibilities with other software applications, produces erroneous results, or crashes more often

When facing issues with the software, it would be beneficial to have source codes and other important software-related documentation such as the list of developers who designed the software, virtual machines, deployment documentation, and build instructions at disposal.

If that’s the case, a software escrow will come in handy.