SaaS Escrow

SaaS escrow are solutions designed for AWS, Microsoft Azure and Google Cloud hosted software and extends beyond source code and can include cloud infrastructure components such as:

• Hosting configurations
• Snapshots
• Container images
• Access credentials to the production cloud environment

Depending on the preferred approach.

It’s designed to protect clients using cloud-based applications if the vendor can no longer maintain the solution. The Escrow Company’s SaaS escrow solutions can also include continuity planning with tested fully managed failover capabilities and resources.

In many cases, a standard SaaS Escrow agreement can be put in place within a few days. The timeframe will depend on the complexity of the SaaS application, the materials being protected and any legal review required by the depositor and beneficiary. More advanced continuity solutions, such as SaaS Access Continuity, Recovery Escrow or Managed SaaS Continuity, can take longer to implement as they involve additional technical scoping, testing and configuration.

The Escrow Company works with both parties to define the appropriate level of protection, agree the deposit requirements and release conditions, and complete the technical setup as efficiently as possible. For standard SaaS Escrow, once the agreement is in place, depositing the materials can typically be completed quickly, particularly where automated deposits from development repositories are used.

Ways to speed up the SaaS Escrow setup process

• Use The Escrow Company’s standard agreement templates to reduce the time required for legal review.
• Agree in advance which materials and assets need to be protected. Depending on the SaaS application, these may include:
  • Source Code
  • Databases
  • Deployment scripts
  • Containers and images
  • Infrastructure configurations
  • Access credentials and encryption keys
  • Dependencies
  • Technical and deployment documentation
• Agree the release events with all parties before commencing the setup process.
• Ensure the software vendor’s technical team is available to support deposits, integrations and any required verification.
• Consider automated deposit options to make both the initial deposit and ongoing updates easier to manage.

For more complex cloud-hosted applications, The Escrow Company can also help determine whether traditional SaaS Escrow is sufficient or whether Access Continuity, Recovery Escrow or Managed SaaS Continuity would provide a more appropriate level of operational resilience.

Both. SaaS escrow is suitable for both startups and large enterprise companies.  Startup technology companies use software escrow to build trust and credibility with their clients. Some startup founders implement software escrow agreements during the development of their product by third party developers.  

• Establish confidence with enterprise clients by providing assurance of software continuity in the event of a critical failure or bankruptcy. 
• Streamline procurement processes by addressing concerns of risk-averse stakeholders upfront. 
• Elevate their credibility during sales engagements and due diligence by demonstrating proactive risk management 

Enterprise companies typically use SaaS escrow to protect against third-party supplier failure of mission-critical solutions.  

• Recommended when working with a smaller vendor whose financial stability may be uncertain. 
• Consider software escrow with verification if you anticipate vendor lock-in or long-term dependency on the software solution. 

In the event of a release event being triggered, the beneficiary must send a statutory declaration or notarized notice to The Escrow Company to advise of the event of default. The Escrow Company will send the notice to the depositor and provide an opportunity to provide contrary instructions. If no contrary instructions are received after a set period of time, The Escrow Company will release the source code and other deposit materials to the beneficiary.

Under The Escrow Company’s software escrow agreement, there is a set process for dispute resolution which is by an independent arbitrator appointed by The Escrow Company. The decision of the arbitrator is binding. If arbitration is required, The Escrow Company will usually appoint an independent arbitrator in the jurisdiction of the agreement.

Yes, SaaS escrow can be useful even when open-source components are used, but there are important factors to consider. If your solution includes a mix of proprietary and open-source elements, the escrow agent can store the proprietary code along with deployment tools and environment configs to ensure the entire system is reproducible.  

Important factors to consider: 

• Open-source code is usually publicly available so it may not need to be deposited into escrow unless it has been modified. 
• Licensing obligations: ensure that you are in compliance with the licensing obligations of the open-source code included within your software code base.
  

The Escrow Company offers a range of Audit and Testing Services, including an Open Source Code Licensing Audit to assist you if your software includes open source code.

Costs vary between suppliers and service levels but is typically only a small percentage of the software licence fee. Pricing can be influenced by various elements such as:

• the number of applications in scope 
• which tier of service from the escrow agent 
• volume of data 
• infrastructure requirements 
• verification testing level and frequency

The Escrow Company offer transparent, flexible pricing for single and multi beneficiary agreements,  SaaS escrow, and enterprise-level solutions. Get in touch for a tailored quote. 

What affects the price? 

Several factors influence the price of software escrow services, and they can vary depending on the complexity of the agreement,  and the specific needs of the parties involved. Here’s a breakdown of the key elements that affect pricing: 

• Type of software escrow agreement : A standard three-party software agreement tends to be simpler and less expensive than multi-beneficiary or more complex Managed SaaS continuity software escrow agreements. 

• Verification Services: Adding software escrow verification which may include validation of access credentials or verification of the build and deploy of the escrow materials increases the cost of software escrow but provides stronger assurance.  

• Storage Requirements or Cloud Vendor Costs: For software escrow deposits exceeding 1 terabyte of files or databases, an additional fee applies. The Escrow Company charges hosting costs based on the direct rates of the underlying cloud vendor, plus a 15% service fee.  For The Escrow Company’s Managed SaaS Continuity and SaaS Recovery services, any cloud vendor hosting costs are invoiced directly to clients, with an additional 15% service fee applied. 

• Liability and Insurance: The level of liability and insurance offered by a software escrow vendor plays a significant role in determining service costs. Vendors with minimal or token liability cover may offer lower pricing, but this often comes at the expense of greater exposure to risk.  The Escrow Company provides a robust standard liability cover of up to £2.5 million / Aus $4 million / U$1 million, with the option to extend coverage up to £5 million / Aus $9 million / U$5 million for an additional fee, giving clients added assurance and protection. This is the highest level of liability coverage offered by any software escrow vendor.