Technology Escrow Agreement & Application Service Provider

Software as a Servicesupplied by Application-Service-Providers (ASPs) is a popular software model in which software is centrally hosted and is generally priced via a subscription fee. Organizations licensing software from ASPs can realize reduction in IT costs by outsourcing hardware, software maintenance and support to the SaaS Provider.

This model differs from the traditional “on-premises” license agreement, where the licensed software is installed and run on computers on the premises of the Licensee.

As mentioned in a previous blog entry, in many of today’s “on-premises” technology license agreements (where the licensed software is installed and run on computers on the premises of the organization using the software), Source Code Escrow Agreements are established by Technology Vendors and Licensees to resolve the “source code dilemma”.  A Source Code Escrow Agreement provides the Licensee with access to the Technology Vendor’s source code and documentation, in the event that a specific, release/triggering event agreed upon by the Technology Vendor and Licensee occurs.

But what about when the software is installed remotely?  Does it make sense to establish an Escrow Agreement when licensing software supplied by an Application-Service-Provider (ASP)? The answer to this question is YES.

Albeit benefits (i.e. reduction in IT costs by outsourcing hardware, software maintenance and support to the SaaS Provider) licensing from ASPs, there are “costs” as well.  One such “cost” is that in a SaaS environment, a Licensee’s data resides with the SaaS vendor and not on the Licensee’s premises

In order to safeguard their critical application data, a Licensee should maintain the practice of establishing SaaS Escrow Agreements when licensing software from an ASP. This works by having the ASP submit a copy of the Licensee’s critical application data to an agent of a SaaS escrow account, who will then in turn, store the critical application data in a secure location.  If an agreed-upon release/triggering event occurs (i.e. vendor’s bankruptcy, data corruption, service outage, etc.) the agent then will have the right to pass the critical application data that was deposited into escrow, to the Licensee.  A SaaS Escrow Agreement is similar to that of taking out an insurance policy in order to safeguard the rights a Licensee has to their application data.

Similar to the traditional Source Code Escrow Agreement, a SaaS Escrow Agreement should be considered a “living, breathing instrument” that is fed frequently.  In order to maintain an effective escrow arrangement, a Licensee’s critical application data should be refreshed frequently by the ASP.

Selecting a trusted, neutral third-party to provide Technology Escrow Services (both traditional on-premises and SaaS model) is crucial.  Both the Technology Vendor and Licensee should select an organization that is professional, neutral and will attend to both parties’ needs.

The company you choose to open your escrow account should have an appreciation of the value that both parties place on the Vendor’s source code (traditional on-premise escrow), as well as on the Licensee’s critical application data (SaaS escrow).

National Software Escrow (NSE) appreciates the fact that when selecting a ‘Service’, you are in fact, selecting a ‘Promise’… a ‘Promise’ that something will be completed in a manner that meets/exceeds your expectations.  NSE promises your organization the following:

▪      Experience—Since 1986, NSE’s sole line of business has been that of providing Technology Escrow Services

▪      Unparalleled Service—Immediate, professional attention to your needs

▪      The Protection of the Escrowed Materials

▪      A complete line of Insurance Coverage will be maintained

▪      Simple, no-nonsense Price Schedule


National Software Escrow, Inc.

8225 Brecksville Road, Building Three, Suite #105 Brecksville, OH 44141

PHONE: (440) 546-9750 FAX: (440) 546-0207

Email: [email protected]