There is a long process involved in creating new software. Every stage from the drawing board to completion and everything in between can cause headaches, team disputes and even the need to start again. Once this is completed you may think that all the hard work is done but the sale of a product can end up being one of the hardest processes.

The problems

With a new piece of software, such as an internal system for a large company, comes a hefty price tag. If you are a small development company who has come up with an innovative idea then the problem is trust from the large company. The risk of investing could be huge. After spending a large amount of money on installing the software, training employees up and maintaining it, the investment is expected to be for the long term. If the software company was to go bust then all the money invested would be wasted. There would be no access to the source code so new software would have to be purchased and installed.

With the worry of a risky investment and lack of control in the software development it can put a lot of company’s off from purchasing through a smaller software development company. Due to this broad thinking healthy competition in the market ceases to exist as new and exciting ideas are shelved and more established software companies begin to monopolise the market.

The solution

Escrow arrangement can provide a solution to these problems. By setting up a third party arrangement called source code escrow it is allowing a greater balance and security for all concerned. Escrow Associates supply this service by setting up an agreement between the two parties the end-user and supplier. Escrow associates will then hold the source code and be legally bound to not show the source code of the software to the end-user unless conditions of the contract are broke.

For example, if the software company was to go bust then Escrow Associate would supply the purchasing company with the source code and any other support information to ensure that they can continue using this and their investment is secure.

 

This kind of agreement makes sure that no one is missing out on a vital piece of software and that start-up software companies are getting a fair go at competing with legally binding control on the investment. This is providing an even balance of control which will supply longevity to the investment.