Software escrow one of the hottest Term in search engine. Why? And what the hell is that?

For non giki person who runs a company or his/her own company, it’s definitely hard when they need any software, not the as usual one in the market. Something a little more customized to feet the needs of their need. As ultimately everyone is not high-tech, we require 3^rd party programmer to create program for us, according to our test and needs. For example- Billing software, accounting software, human resource software, small business software, inventory management software, pestpatrol etc. Everything’s fine when you hire a freelancer or company to build software and it’s done properly. But everything goes upset if something odd happen. And since very large amount of money usually involved, it’s headache.

Software escrow is one way of protecting you in certain types of projects when certain things go wrong. You can say one kind of an insurance policy, especially for software. When you go for contract for making software, there are a number of judgments that are part of the procedure. One that’s very often ignored is whether or not you get a copy of the source code when the project is done. The source code is the core of written instructions that the programmer actually writes to create a program or the scripts that dictate the software. For most types of programs, the source code is then compiled into the executable (EXE/BAT) that you actually run. For example “winword.exe” is a executable program that comes with Windows. Somewhere back at Microsoft they keep the written instructions, or source code, that the programmers used to create it.

Open source software projects make the source code publicly accessible, like Mozilla, Firefox, and Thunderbird etc. Anyone with knowledge of programming can create the software executable using the source code. Closed source, or “proprietary” or “OEM”software is just the opposite. the source code is not available openly, only the executable. Companies use this approach to retain their intellectual property, and trade secrets. When you contract with someone to write software for you one decision, implied or explicit, is whether the source code belongs exclusively to the developer, or whether you get a copy. If you do, you have the safety of being able to have someone else make changes or fix bugs in the future, but the developer is giving up some of his or her potential control of that software. If the developer retains the source code and you don’t have access to it, then you are dependant on the developer for all future updates. Typically developers will charge more if you get the source code.

It’s common to opt for the cheaper option, or to have the developer simply not give you the option. So what happens if your developer raises the cost? What happen when he gone out missing, killed? What if all of the source code simply disappears?

That’s where software or source code escrow comes in action.

As part of arranging for your software to be written, you and the developer can agree that a copy of the source code will be given to a neutral third party - an escrow agent. The agreement would then specify under which conditions that agent would be allowed to release the source code to you. For example one of the conditions might be the developer’s bankruptcy or going out of business for other reasons. By using software escrow, the developer is protected as long as it makes sense for them to retain control, and you are protected should the developer decease or missing. (Naturally other conditions might trigger the release, but the developer’s going out of business is a clear example.)

Software escrow is not 100% fool proof. For example, what happens if the escrow agent comes out a fraud? And escrow typically adds some cost to you as premium. So better choose better and knows software Escrew. Do some research before you step on any agreement.

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