What is SaaS Escrow?

SaaS Escrow is a type of agreement that provides customers with access to the source code and other critical materials of the software vendor in the event that the vendor is unable to provide support or maintain the software.

The goal of SaaS Escrow is to ensure that the customer can continue to use the software and maintain its functionality, even if the vendor goes out of business, becomes insolvent, or otherwise unable to provide support.

Why is SaaS Escrow necessary?

SaaS Escrow is necessary to mitigate the risk that the customer faces when purchasing and relying on a SaaS solution. Without an escrow agreement, the customer would be entirely dependent on the vendor to maintain the software and provide support. In the event that the vendor is unable to do so, the customer would be left without access to the source code or other materials needed to maintain the software. By having an escrow agreement in place, the customer is protected and can continue to use the software, even if the vendor is unable to provide support.

How does SaaS Escrow work?

SaaS Escrow involves three parties: the vendor, the customer, and the escrow agent. The vendor deposits the source code and other critical materials with the escrow agent, who holds them in a secure, neutral location. The customer is given access to the materials in the escrow account under certain specified conditions, such as the vendor's bankruptcy, failure to provide support, or other situations agreed upon in the escrow agreement.

The terms of the agreement, including the conditions under which the materials can be accessed, are typically spelled out in a legal contract between the vendor and the customer. The escrow agent is a neutral third-party that holds the materials in trust and releases them to the customer when the specified conditions are met.

The Benefits of Using SaaS Escrow for Customers and Vendors

Using a SaaS escrow agreement can provide peace of mind for both the customer and the vendor. The customer knows that they will still be able to access the software they rely on, even if the vendor is no longer in business or is otherwise unable to provide access. The vendor can use the SaaS escrow agreement as a selling point to potential customers, as it provides an additional layer of protection and assurance.