Data Escrow Explained - A Strategic Shield for Critical Data

It’s common knowledge that many businesses depend on software provided by software vendors to run their operations and store critical data. But what if a software vendor (also known as a software provider) shuts down, gets bought out or stops supporting the product? More importantly, what happens to a business’s data? That’s where Software Escrow for data, also known as ‘Data Escrow’ comes in. It helps protect your data and keeps your business running, even if your vendor is facing disruption or problematic issues.

What Is Software Escrow?

New to Software Escrow? Check out our blog - 'A Beginner’s Guide to Software Escrow’.  Essentially, Software Escrow is a three-party agreement involving:

1. Licensor (Vendor): The party that develops and licenses the software.
2. Licensee (End-User): The party that uses the software vendor’s software and wants assurance of access.
3. Escrow Agent: A neutral third party that holds and manages the Escrow materials.

Under this agreement, the vendor deposits a software application’s source code, documentation, and in some cases, data backups with the Escrow agent. These materials are then only released to the licensee under specific predetermined conditions such as vendor insolvency, breach of contract, or failure to maintain the software.

Data Escrow for Data Protection

For many businesses, data forms the backbone of business operations and decision making processes. Therefore, it’s no surprise that data security is widely established as critical necessity.

Data Escrow safeguards critical data in a variety of ways:

1. Ensures Access to Critical Data

If your software provider hosts or manages your data, a failure on their part could mean losing access to essential business data. Escrow agreements can include regular data backups, ensuring you retain access even if a vendor fails.

2. Prevents Data Lock-In

Data Escrow directly addresses the risk of being locked into a vendor relationship with no exit strategy. Data Escrow gives you the ability to retrieve your data and migrate to another system.

3. Supports Regulatory Compliance

Industries like finance, healthcare, and legal services are subject to strict data protection regulations. Data Escrow can help with meeting these requirements by ensuring data continuity and recoverability.

4. Mitigates Cybersecurity Risks

If a vendor suffers a cyberattack or data breach, having Escrowed data and source code can help you recover faster and maintain business continuity.

Data Escrow in Practice

The activation of a Data Escrow Solution involves a series of various events:

1. Agreement Setup: This stage involves clearly defining what data and materials are to be Escrowed and the specific conditions under which they would be released.
2. Regular Deposits: The vendor is required to submit updated source code and data backups to the Escrow agent.
3. Verification (optional but recommended): The Escrow agent verifies that the data is accurate, complete and usable.
4. Release Event: If a release condition is met (e.g., vendor failure), the Escrow agent releases the materials to the licensee. In situations where the loss of data is a primary concern, the Data Escrow model would enable an end-user to regain access and control over the data.

Data Escrow at SES Secure

At SES Secure, we recognise Data Escrow as more than a legal safeguard. We see it as a major component of a data protection strategy. In an era where data is one of your most valuable assets, ensuring its availability, integrity, and recoverability is non-negotiable. By integrating Data Escrow into your risk management plan, you’re not just protecting code, you’re protecting your business.

Every Escrow Solution we that we carefully craft is tailored to the specific needs, preferences and specifications of the client. Over the past 25 years, SES Secure has worked with over 3,000 clients across 45+ countries. We currently have over 200 verified reviews on Feefo – check them out here.

If you have any questions or would like to arrange a chat with one of our experts, please don’t hesitate to get in touch.