What is Software Escrow? | CNC Group

Other Names for Software Escrow

You may have heard of software escrow by other names, some of which are:

Software escrow and source code escrow are the most common names.

To clarify, source code is the fundamental component of computer programs written by a computer programmer in plain text and understandable by humans. Proprietary software vendors generally do not share source code with their customers because it is their intellectual property, essentially the crown jewels of their business. This is one of the main reasons for this tripartite agreement. The source code is held securely by the escrow agent and is not shared directly with the client. When a customer purchases or receives operating system or application software, it is generally in compiled object code form and source code is not included.

Technology escrow is sometimes used interchangeably with software escrow as a more general term. Indeed, escrow can also be used to protect design documentation, formulas, algorithms, recipes, non-source code-based technology, and other proprietary materials. (Yes, we protected cookie recipes and paint formulas!)

This brings us to SaaS Escrow. When software escrow was first envisioned, there was no software as a service; your software was hosted onsite at the customer’s physical location. Fast forward to today with 99% of businesses currently using one or more SaaS solutions and a projection that 85% of all software used by businesses will be SaaS by 2025. To adapt, there are now multiple software escrow options for SaaS and cloud. – also hosted applications – variants support public or private cloud, single tenancy or multitenancy, etc.