Cloud helps allay company fears
When technology companies began a push to make their source code available for free licensing on the Internet in the late 1990s, there was a general consensus that the need for escrow services would disappear along with the proprietary software they were intended to protect. But while the adoption of open source has increased exponentially over the past two decades, the same can be said for the technology escrow business.
"While we don't have any purely open-source players who want us to hold code that gets publicly downloaded, most companies use open-source code inside of their proprietary software — and those are the products that keep us busy," said John Boruvka, vice president of sales for the intellectual property management arm of Iron Mountain. "For as much open-source code as we have out there, the issues and concerns around licensing a product from a software developer have remained the same."
Badri Nittoor, co-founder and CEO of Cherry Hill-based Tripod Technologies LLC, said his open-source-based products had been placed in escrow at the request of his clients in the past because, at the time, his company "was so new that our customers were skeptical we would go out of business, and they wouldn't be able to get updated versions of their products."
But since those early days, Nittoor said he hasn't run into an escrow situation, since his firm divulges every line of computer code in its software products to its clients upfront, and "with that full visibility, customers can get our source code anytime they want, even if we go under."
However, with software companies like Tripod progressively using cloud computing to deliver their products through the Web as a service, instead of a hard copy, Boruvka said the licensees of those products are turning to technology escrow agents to mitigate the greater risk of losing access to them.
"If companies are moving mission-critical applications to cloud environments to provide them as a service, and those companies were to fail or shut down the network equipment where those applications are stored, it would have a bigger impact on their clients because they would have no way to access the products their businesses rely on," Boruvka said. "Whether they're accessing licensed software in the cloud or through a hard copy, clients want to make sure that if the company developing and updating their product goes out of business, they'll still have access to it and its secret sauce."
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