Software escrow is dead

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Attorneys, developers and end-users constantly dispute whether or not software escrow is a necessary service. Being in the industry, I am slightly biased; however, I can say that I do understand and appreciate their arguments. Is escrow something you can live without? Absolutely! And many businesses do.

Regardless of your role in the software cycle and the types of escrow (source code, software, hardware, technology, SaaS, formula, etc.), there's something to be said about the existence of escrow. What is the purpose of escrow, really? For developers it protects their intellectual property and establishes/confirms their reputation. Escrow for end-users is like insurance or peace of mind that if the software stopped working business could continue as usual. Attorneys are usually referring clients to escrow providers or offering escrow services through their practice. Everyone has a vested role in the cycle.

The real question is, "why do I need it?"

I could give you 25 reasons why as a developer or end-user, you DO need escrow but I think the optimal approach is to conceptualize not having escrow.

So you've been running your business for years and never needed escrow. Perfect! That is fantastic news for you and your clients.

Even better, you've created software business solutions for numerous verticals and you're just starting to build your client base. A new client trickles in every few months but WOM (word of mouth) isn't taking off like you expected and overhead is hurting your wallet, you've already relied on your angels. You need more business. Now what? How can you distinguish yourself from the thousands of other vendors? What makes you different? What risk management do you have in place?

As a customer, wouldn't you be impressed if when you were making a large investment for CRM solutions for your organization the developer also had escrow in place to guarantee their credibility? A guarantee that if something unforseen were to happen to the provider your investment would be protected. I think so!

This is one small example of how software escrow is more of a risk management solution. Again, you certainly do not need escrow and I ask you to ask yourself how many times have you said to yourself, "if only I had . . . " Escrow is merely a solution to the "if only" moments.

So,is it really dead? I would argue to say no. I think with the growth of the SaaS model, many people feel there isn't a need for escrow. What they fail to realize is -- they do not own their information. For end-users, my question is -- what would you do if tomorrow the CRM, HR, Accounting, software you're using (in the cloud) fails to keep running? Or even mission critical software not in the cloud?

I think this is a very exciting debate. To escrow -- why or why not? Personally, I feel as though it's not that escrow is dead but that there is a lack of awareness. I think this will require another follow-up blog in the near future.

What are your thoughts? I'd like to hear from you (the person not working for an escrow vendor). Is software escrow dead?