John Boruvka, vice
president of Intellectual
Property Management
at Iron Mountain.
Laura DuBois
How to Minimize
Risk with a
Software Vendor
Safeguard technology investments
against contract breaches,
discontinued support and vendor
bankruptcy before signing your
next software agreement
photographs by mark wilson
By Karyn Murphy
WHEN IT COMES TO
SOFTWARE VENDOR
RELATIONSHIPS, some
CIOs still operate on
a wing and a prayer.
But there’s too much
that can go wrong—
from a vendor filing for
bankruptcy, to a drastic
change in product focus,
to the termination of
the one engineer who
can keep that software
working—not to put
more protections in
place.
The best defense for
CIOs today is a technol-
ogy escrow arrangement. “Technology escrows are
like pre-nups for software vendor relationships,”
explains John Boruvka, vice president of Intellectual
Property Management at Iron Mountain. “No one
goes into a marriage thinking it’s going to fail, but
pre-nuptial agreements make for great safeguards,
just in case.”
BOTTOM LINE
the best defense
against a catastrophic
loss or disabling of
critical software is a
technology escrow
arrangement. think
of it as a pre-nup
for software vendor
relationships. “no one
goes into a marriage
thinking it’s going to
fail, but pre-nuptial
agreements make for
great safeguards,”
says John boruvka.
software pre-nups
A technology or software escrow is a contractual
arrangement under which the licensee requires
the vendor to deposit source code into an account
held by a third-party agent. The deposits are held
in secure, access-protected escrow accounts to
ensure the ongoing availability of the software. It’s
much like a financial escrow, which many people are
familiar with.
Given the critical role that software plays in
everyday business continuity, escrows are perfect
safeguards against the disastrous consequences that
could befall a business should there be a disruption
in software availability. Many companies already
recognize their value: According to a recent IDG
Research Services poll, 62 percent of information
technology and business leaders across a broad range
of industries always or sometimes include escrow as
part of their software agreements.
The most obvious reason for such a precaution,
cited by the majority of survey respondents, is to
protect the company’s interests should the vendor
go out of business. Slightly fewer respondents say
an escrow protects them against the vendor’s failure
to continue product support, or it’s part of a risk
management policy.
