For a critical application, an escrow account for a SaaS application is also more essential, because if a SaaS provider goes bankrupt, everything stops and data can also be lost. However, if an installed software vendor goes bankrupt, the software will continue to run on Licensee`s system until major maintenance is required. In addition, one of the biggest points of contention between suppliers and customers regarding SaaS fiduciary relationships is the terms of publication of escrow. As noted above, publishing the source code in the traditional software model usually requires the vendor to cease all activities for a longer period of time (e.g. B, 30 to 60 days), files for bankruptcy or any other proceedings related to insolvency, liquidation or assignment in favor of creditors, or officially discontinues the software and/or support thereof. Customers tend to use escrow service providers that can manage mirrored applications that can be instantly activated and hosted by the customer`s escrow agent, customer, or third-party provider, effectively serving as a business continuity site. Such fiduciary programs can be expensive, so the issue of cost allocation is another point of negotiation with escrow SaaS regulations as they become more common in the market. If customers request it, we go through a fiduciary exercise with them, where members of our technology team go through the entire process of setting up and deploying The Trust`s system in a new environment. That is what we charge. If more customers requested the walkthrough, we`d need a more scalable solution (maybe we`d run an annual walkthrough through Webex or something similar).9 Many SaaS licensees still ask for escrow just for source code, but this has some drawbacks.
With a SaaS product, you need all the code and information to make it work properly, so a source-only escrow account won`t do much if the vendor no longer supports or offers the product. As mentioned earlier, escrow accounts for installed software have a very questionable value. However, SaaS escrow, which is more of a business continuity plan, can be a useful security agreement. In both cases, the trust agreement must be properly negotiated to meet the specific needs of the licensee. Escrow contracts for SaaS products are more complex, but for good reason. With a SaaS contract, some components must be available in addition to the code. These include: The right to use the software under an escrow contract makes little sense in reality if the customer does not have the know-how and resources to use, maintain and support the source code itself. The benefits of Option 3 should be obvious.
Components are updated regularly and can be tested in a production environment. With the right implementation, the activation of the stored system could take place quickly and seamlessly. Of course, full SaaS escrow accounts will be more expensive to trade, set up, and maintain, but could actually be useful if needed. Wise SaaS providers will establish a master escrow agreement similar to Option 3 and provide it at licensee`s expense. By defining this in advance, the supplier can strengthen goodwill and also set the conditions and avoid negotiations on the problem. Even though SaaS fiduciary provisions are becoming common in supplier contracts, the question of their effectiveness remains. While escrow can provide convenience to customers when they take the risk of integrating a SaaS solution, the real and convenient transition of the application, data center, and hosting environment in the event of a publishing condition can be more catastrophic than the downtime itself. It`s time for customers to make sure they “cover their SaaS.” If a trigger event occurs, for example. B if the vendor goes bankrupt or does not keep the required software maintenance up to date, a customer would undoubtedly be worried. The escrow service must have already been configured. Negotiations often take place on software escrow accounts, but the parties fail to set them up. If an escrow account were created, the following would be true: There are many things to consider when negotiating SaaS escrow provisions.
The scope of fiduciary documents is an important issue because the client wants the deposited materials to contain everything necessary to replicate the development environment and run the application, and yet it is not always clear what this means. The level of detail that vendors may need to provide in their documentation so that the customer or a third party can recompile the executable code well beyond what the vendor typically states in their customer documentation, which can result in additional costs to the vendor….