As the recession shows signs of easing, it is worthwhile to take a look at your business’s intimate software vendor relationships, and protect yourself – if you haven’t already – from unforeseen circumstances that could put your business continuity at risk just as you steady yourself to take advantage of the recovery, says Andrew Stekhoven, MD, Escrow Europe.
No one gets married to get divorced, however pre-nuptial agreements provide a necessary safeguard if things don’t go as expected. Likewise, your business is exposed to many risks with its software partners and needs the same protection, especially inside these tough times.
For nearly five years we have witnessed contractions on a massive scale with the global economic meltdown.
Never before had the risk of a technology provider going out of business, merging or being acquired by another company, laying off key technical staff, or failing to support their (your) technology been so high. Savvy organisations needed to protect themselves from such unforeseen circumstances with active escrow agreements.
And just because the economy is seemingly less fraught in 2014 doesn’t mean that the need for vigilance has subsided.
Active software escrow is well used in Europe and the USA to manage risks and comply with good governance regulations, but many local companies still tend to either ignore its potential for managing the multifaceted risks and due diligence obligations facing their company directors and/or officers, or they mistakenly believe that a cheap or passive escrow arrangement offers the same protection as one can deliver in terms of the purpose.
Not only does active escrow provide a safety net that allows your company to hit the ground running if the worst happens, but it can also be used to woo customers and succeed in business ventures. Assuring customers about the stability of applications and therefore providing good risk governance helps retain existing business and close new deals.
Software escrow – which was previously seen as a deal sweetener – in a down economy, has become a deal closer.
A watertight pre-nup for your company’s relationship with its software vendor must ensure that all the escrow deposits are technically verified and tested. Only an active escrow arrangement ensures that all of the necessary components are included in the deposit, and are in working order, so that when disaster happens, there is no down time.
In line with international accepted practice, active escrow meets industry best practice standards and is compliant with SAS 70 and type II audited, HIPAA and PCI DSS.
But, my suggestion that you protect your business continuity or IP with an active escrow agreement comes with a caveat – due diligence is vital before you commit to an escrow provider.
A quick web search will list many providers. Unfortunately, a number of these will have sprung up overnight to offer their services at vastly reduced fees, often while blatantly misrepresenting their track record and their facilities.
As with any business sector, there are a fair number of fly-by-nights lacking the support structures and expertise to give you the guarantees you need. If necessary, check the International Software Escrow Association (ISEA) for those in South Africa (http://www.internationalsoftwareescrow.com).
Escrow Europe is the only BEE and ISO quality certified provider of active software escrow in South Africa and was already recognised as the leader in its field in 2007 with the annual Risk Management Award by the Institute of Risk Management of South Africa’s (IRMSA).