For Calyx Software Cory Jones, 678-781-7203 Calyx Software(R), the mortgage industry's leading provider of loan marketing, originating and processing software, has expanded the Calyx Network(R) with a new network interface update. The March Calyx Network Interface update contains connections to six additional mortgage service providers. The Calyx Network allows users of Calyx Software's Point(R) loan origination software to connect directly with lenders and mortgage service providers, automating data exchange and streamlining the loan origination process.
Updates are automatically installed into Calyx Point, and new providers are added to the application on a bi-monthly basis. The Calyx Network Interface update is automatically installed into Point versions 5.2 and higher when users open their software and connect to the Internet.
The following mortgage service providers have joined The Calyx Network: -0- -- Title Reports -- Northwest Title & Escrow Corp. -- Old Republic Title Information Concepts -- Regent Title Insurance Agency, LLC -- Down Payment Assistance -- PreferredProgram -- Title/Escrow -- Investors Title - Etrack Bridge -- TSS TitleExpress
Calyx recently reported 16.6 million distinct business transactions took place on 12.5 million Calyx Point loan files in 2007. January credit pulls totaled approximately 1.07 million, a 72 percent increase from December 2007.
About Calyx Software
Calyx Software(R) is dedicated to helping mortgage brokers, mortgage bankers, and direct lenders increase their profitability by providing reliable and affordable software that streamlines and optimizes all phases of the loan process. The Calyx Network connects loan officers and processors to over 300 lenders and service providers, using technology that allows all parties to exchange data easily. This seamless interaction, coupled with the robust features in the Calyx Point(R) solution product line, increases efficiency and maximizes profitability by enabling more loans to close quickly. For more information, call (800) 362-2599 or visit the company's Web site at www.calyxsoftware.com.
Interface Update Expands Connections to Mortgage Service Providers
Wednesday, March 19, 2008
Software International Reaches Settlement of Amsol Litigation
SOMERSET, N.J., March 18 /PRNewswire-FirstCall/ -- Software International, Inc. ("SII") (OTC Pink Sheets: SWII) announced today that it reached a settlement agreement with respect to its litigation against Subba Raju Indukuri, the former Chief Executive Officer and a director of SII and the principal officer and stockholder of the Amsol Companies, American Solutions, Inc., Amsol, Inc., IK Solutions, Inc., Anthony Information Technology, Inc. and Indtech Info Solutions Private Limited (collectively, the "Amsol Companies") and other stockholders of the Amsol Companies (Mr. Indukuri, the Amsol Companies and the other Amsol stockholders are referred to herein as the "Amsol Parties"). The litigation involved whether SII had completed the acquisition of the Amsol Companies pursuant to a Stock Purchase Agreement dated March 30, 2006. In accordance with the settlement agreement, the Amsol Companies agreed to pay SII the sum of $5.625 million (payable on a monthly basis through October 2008) in consideration of SII relinquishing any ownership rights with respect to the Amsol Companies. In addition, Subba Raju Indukuri forfeited all ownership rights with respect to securities of SII. In accordance with the settlement agreement, $1.5 million of the cash settlement is required to be held in escrow to protect certain indemnification obligations SII has to the Amsol Parties.
About Software International, Inc.
Software International provides a full suite of on-site, onshore and offshore application development services (ADS) and IT consulting to Fortune 1000 companies in the financial, brokerage, manufacturing, pharmaceutical, legal and insurance industries worldwide. Every project is fully staffed and managed by SII's team of project managers, engineers, technical support and account management professionals.
Forward-Looking Statements
This release is provided in compliance with Commission Regulation FD and contains certain "forward-looking statements." Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact and may be "forward-looking statements." Forward-looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward-looking statements may be identified through the use of words such as "expects," "will," "anticipates," "estimates," "believes," or statements indicating certain actions "may," "could," or "might" occur. Such statements reflect the current views of Software International, Inc. with respect to future events and are subject to certain assumptions, including any which may be described in this release. Should one or more of the underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed or expected. Software International, Inc. does not intend to update these forward-looking statements prior to announcement of quarterly or annual results.
Contact Person: Suneel Sawant, Chairman and President Software International, Inc. (732) 302-1900 Ext. 233
Software International, Inc.
About Software International, Inc.
Software International provides a full suite of on-site, onshore and offshore application development services (ADS) and IT consulting to Fortune 1000 companies in the financial, brokerage, manufacturing, pharmaceutical, legal and insurance industries worldwide. Every project is fully staffed and managed by SII's team of project managers, engineers, technical support and account management professionals.
Forward-Looking Statements
This release is provided in compliance with Commission Regulation FD and contains certain "forward-looking statements." Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact and may be "forward-looking statements." Forward-looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward-looking statements may be identified through the use of words such as "expects," "will," "anticipates," "estimates," "believes," or statements indicating certain actions "may," "could," or "might" occur. Such statements reflect the current views of Software International, Inc. with respect to future events and are subject to certain assumptions, including any which may be described in this release. Should one or more of the underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed or expected. Software International, Inc. does not intend to update these forward-looking statements prior to announcement of quarterly or annual results.
Contact Person: Suneel Sawant, Chairman and President Software International, Inc. (732) 302-1900 Ext. 233
Software International, Inc.
United States: Source Code Escrow: Are You Just Following The Herd?, CIO.com 12 March 2008
Growing up, mothers train their children to resist mindlessly following their peers by asking the glib question: "if your friend jumped off a bridge, would you?" This simple question is packed with insight. Independent thought that questions others’ habits, beliefs and actions is a hallmark of maturity. However, today’s business culture sometimes fails this childhood test.
Take source code escrow. Without truly considering it, many organizations have a standing policy to require software developers to escrow source code of products the organization is licensing. If organizations would carefully analyze the risk / return investment, the business case for source code escrow arrangements would almost always come up negative. Dealmakers and lawyers spend countless hours negotiating escrow terms and conditions and pay escrow agents like Iron Mountain thousand of dollars to maintain the escrow account....
Article by: Shawn C. Helms
Due Diligence In Use Of Open Source Software — Benefits And Pitfalls
25 February 2008
Article by Jeremy Logsdon
Do you know what open source software is? Does your company run open source software on its servers? Do your proprietary software products incorporate open source code? Are you distributing open source code in accordance with open source licensing agreements? Do you know what the terms and obligations of those agreements are? These questions and more must be answered before prudent companies can feel secure in their technology infrastructures or software development, distribution, and licensing strategies.
In recent years, open source software has become a force in the software industry. Once considered to be fringe software with little use except in academia, open source software programs are now being implemented in a multitude of institutions ranging from startup companies to the Fortune 500 firms. Open source software manages the smallest file servers and the largest, most complex databases....
Take source code escrow. Without truly considering it, many organizations have a standing policy to require software developers to escrow source code of products the organization is licensing. If organizations would carefully analyze the risk / return investment, the business case for source code escrow arrangements would almost always come up negative. Dealmakers and lawyers spend countless hours negotiating escrow terms and conditions and pay escrow agents like Iron Mountain thousand of dollars to maintain the escrow account....
Article by: Shawn C. Helms
Due Diligence In Use Of Open Source Software — Benefits And Pitfalls
25 February 2008
Article by Jeremy Logsdon
Do you know what open source software is? Does your company run open source software on its servers? Do your proprietary software products incorporate open source code? Are you distributing open source code in accordance with open source licensing agreements? Do you know what the terms and obligations of those agreements are? These questions and more must be answered before prudent companies can feel secure in their technology infrastructures or software development, distribution, and licensing strategies.
In recent years, open source software has become a force in the software industry. Once considered to be fringe software with little use except in academia, open source software programs are now being implemented in a multitude of institutions ranging from startup companies to the Fortune 500 firms. Open source software manages the smallest file servers and the largest, most complex databases....
Monday, March 10, 2008
Source Code Escrow: Are You Just Following the Herd?
– Shawn Helms and Alfred Cheng, CIO
February 25, 2008
Growing up, mothers train their children to resist mindlessly following their peers by asking the glib question: "If your friend jumped off a bridge, would you?" This simple question is packed with insight. Independent thought that questions others' habits, beliefs and actions is a hallmark of maturity. However, today's business culture sometimes fails this childhood test.
MORE ON Source Code Escrow
What It's Like To...Take Your Application Source Code Out of Escrow
Take source code escrow. Without truly considering it, many organizations have a standing policy to require software developers to escrow source code of products the organization is licensing. If organizations would carefully analyze the risk/return investment, the business case for source code escrow arrangements would almost always come up negative. Dealmakers and lawyers spend countless hours negotiating escrow terms and conditions and pay escrow agents like Iron Mountain thousand of dollars to maintain the escrow account. This time and money is often a wasted investment, as the potential benefits are marginal. Customers should be skeptical of expending valuable time and money on an arrangement that is largely ineffective at accomplishing the very purpose for which it was created. Before explaining why, let's first discuss what software source code escrow is and why it has become a common part of many software transactions.
What is "Source Code" and Why Is it Escrowed?
Every day, companies around the world license and implement custom software applications that are critical to the operation of their businesses. Development and implementation can cost millions of dollars. Because these applications are critical, software development and maintenance contracts often require the software developers to store the "source code" of the software and explanatory documentation in an escrow account. Source code is the sequence of logical statements and operations written in a human-readable computer programming language that controls the processing of data and the functionality of software. The source code itself can be hundreds of thousands of lines of code and is normally designed and written by software programmers in programming languages such as C++, Java or Visual Basic. When completed, the source code is compiled into "executable code" that can be downloaded, installed and run on a computer. However, with only the executable code, customers have no ability to see how the software is processing data or performing functions and, for the most part, have no ability to change the operation of the software.
Because repairing problems or changing functionality is only possible with the source code, the escrow of source code is common in large software transactions involving custom developed or operationally critical applications. In a source code escrow arrangement, the source code and documentation are held in escrow by a trusted third party, the escrow agent. The source code and related documentation are to be released upon the occurrence of a "release event" such as the software developer filing bankruptcy or failing certain obligations under the license.
Following a release event, the promise of a source code escrow is that the customer can obtain the code to maintain the software without the original developer. This maintenance involves fixing bugs, ensuring compatibility with other system upgrades and adding the functionality required in the customer's changing business.
Software maintenance is essential to enterprise applications. Because the customer has no assurance that the software developer will always be around to perform software maintenance, and since such maintenance cannot be performed without the source code, escrow is considered a necessary part of certain software deals.
Why Escrow Is an Ineffective and Costly Mechanism
For the reasons described above, escrowing source code of critical business software seems to be a prudent business decision for customers. However, for various reasons, the time, legal fees and other resources spent establishing and maintaining escrow accounts provide little protection for the customer.
1. Only a Small Percentage of Escrows Is Ever Released
Iron Mountain, the dominate escrow agent in the United States, has thousands of escrow accounts and more than 45,000 customers worldwide that have stored their software and intellectual property with Iron Mountain, including over 75 percent of the Fortune 500. Over the 10-year period from1990 to 1999, Iron Mountain released 96 escrow accounts, less than 10 per year. While it is unclear how many are typically released in a given year, these low release rates indicate that only rarely does a release event occur and, when it does, customers often realize it is easier to find an alternative software provider.
2. Most Escrowed Source Code Is Defective
While some customers may view a source code escrow as an insurance policy to protect themselves in the slight chance that a release event occurs, often source code escrows fail to provide adequate protection because, upon release, the source code is frequently outdated, defective or otherwise fails to meet the customer's needs. According to Iron Mountain, 97.4 percent of all analyzed escrow material deposits have been found incomplete and 74 percent have required additional input from developers to be compiled.
Take, for example, what happened to Radisson Hotels Worldwide. Several years ago, Radisson hired a third-party software company to maintain its mission-critical reservation system. The software vendor agreed to escrow the Radisson software code. The code was eventually released as a result of the software vendor going out of business. But upon release, Radisson found that the source code in escrow could not even perform the fundamental and critical task of booking guests at Radisson's hotels. The released code was missing many components and the escrow account did not contain any documentation developed after the initial escrow of the software. This unfortunate discovery is not atypical in source code escrow arrangements, especially when the customer has not been vigilant in continually monitoring and auditing what is being stored with the escrow company.
3. Customers Lack Expertise to Use the Released Source Code
Even if the customer has been diligent and the released source code is properly updated, well-documented and fully operational, most customers lack the resources or capability to utilize the code upon release. In most cases, source code has been escrowed because customers are licensing software from a vendor that is providing technology and expertise the customer does not possess internally. Thus, once the software is released from escrow, the customer often is in no position to properly implement the software, train its employees on maintaining and supporting the software, or purchase the necessary hardware and third-party software. In addition, this process of bringing such software in-house can be lengthy and demanding on a company's resources. Further, the customer will likely be faced with a shortage of available talent knowledgeable on the released software, especially because many software license agreements prohibit customers from soliciting the vendor's employees upon termination of the licensing arrangement. All of these factors combined make it extremely difficult for a customer to utilize source code upon release, even if the code is in pristine condition. The only alternative for the customer is to hire a third-party software company. This is an expensive alternative and is often no better than moving to a substitute product. Furthermore, with this decision, the customer is back to where it started—relying on a third party to properly maintain the code.
4. Significant Delays and Legal Battles Often Accompany a Release
Another problem is that software vendors have the ability to prevent the timely release of the escrowed code and customers have limited recourse to prevent such a delay. It is not unusual for an escrow agreement to require the vendor's approval before the source code is released; thus, even if the customer demands the escrow agent to release the software upon a release event, the escrow agent is prohibited from doing so until it receives the approval of the vendor. Delays in the release of the software are problematic because vendors may not keep the software properly updated during the period of time that the parties are disputing its release.
Adding to the delay, escrow agreements often require parties to participate in alternative dispute resolution proceedings, such as arbitration or mediation, in the event of a dispute regarding the release of the source code. A commonly disputed issue is whether a release event has actually occurred. Although parties strive to clearly and completely define the triggers for a release of the software in software license agreements and escrow agreements, the language in these agreements may be ambiguous as to whether certain circumstances qualify as a release event. Therefore, the vendor can almost always dispute that such an event has occurred. A prime example of this can be found in the recent court case between Vemics, Inc. and Radvision, Ltd. (Vemics, Inc. v. Radvision, Ltd., No. 07-CV-0035, 2007 WL 1459290 (S.D.N.Y. May 16, 2007)). In this case, Vemics purchased a software license from First Virtual Communications (FVC), and the parties entered into a license agreement requiring the software to be placed in escrow and released upon specified release conditions. The parties also entered into a separate escrow agreement with the escrow agent, Iron Mountain. FVC filed for bankruptcy on March 11, 2005, and Radvision became the successor in interest to FVC's rights and obligations under the license agreement and escrow agreement with Vemics. Vemics demanded Iron Mountain to release the source code in January 2006 claiming FVC's bankruptcy constituted a release event. Interestingly, even though parties typically enter into source code arrangements to, at a minimum, protect the customer's interest in the software in the specific event of the vendor's bankruptcy, Radvision argued that FVC's bankruptcy was not a valid basis for release of the software. More than two years have passed since Vemics demanded the release, with the parties still at odds over whether the source code will ever be released. Even if it is finally released, the long delay and expensive legal battle have been a costly investment for Vemics.
5. Utilizing an Escrow Can Be Expensive
Another obvious cost consideration is that the expenses related to the opening and maintenance of an escrow account are typically borne by the customer. These fees can amount to thousands of dollars. In addition to the fees paid to the escrow agent, the customer will often incur significant legal expenses related to the drafting and negotiation of escrow agreements. Software developers are resistant to provide their source code to anyone in fear of inadvertent or unnecessary release. Therefore, escrow arrangements are often intensely negotiated. However, these legal expenses pale in comparison to those the customer will be forced to spend if the vendor disputes the customer's claim that a release event has occurred. The costs of resolving such a dispute can range from thousands of dollars in alternative dispute resolution proceedings to hundreds of thousands (or even millions) of dollars in protracted litigation. A point of great frustration for customers is that these added costs will not change the fact that the customer has no assurance the source code is useable and has little control over the time period of release.
For these reasons, customers should consider whether it makes sense to ever enter into source code escrow arrangements. Despite their appearance of importance, source code escrow arrangements are almost completely ineffective at protecting customers from failing software companies and carry with them significant costs and risks.
Shawn C. Helms and Alfred Cheng are attorneys at Jones Day in Dallas, Texas. Their practice is focused on complex technology and intellectual property-centric transactions, including business process and information technology outsourcing and technology licensing. The views set forth in this article are the personal views of the authors and do not necessarily reflect those of Jones Day.
February 25, 2008
Growing up, mothers train their children to resist mindlessly following their peers by asking the glib question: "If your friend jumped off a bridge, would you?" This simple question is packed with insight. Independent thought that questions others' habits, beliefs and actions is a hallmark of maturity. However, today's business culture sometimes fails this childhood test.
MORE ON Source Code Escrow
What It's Like To...Take Your Application Source Code Out of Escrow
Take source code escrow. Without truly considering it, many organizations have a standing policy to require software developers to escrow source code of products the organization is licensing. If organizations would carefully analyze the risk/return investment, the business case for source code escrow arrangements would almost always come up negative. Dealmakers and lawyers spend countless hours negotiating escrow terms and conditions and pay escrow agents like Iron Mountain thousand of dollars to maintain the escrow account. This time and money is often a wasted investment, as the potential benefits are marginal. Customers should be skeptical of expending valuable time and money on an arrangement that is largely ineffective at accomplishing the very purpose for which it was created. Before explaining why, let's first discuss what software source code escrow is and why it has become a common part of many software transactions.
What is "Source Code" and Why Is it Escrowed?
Every day, companies around the world license and implement custom software applications that are critical to the operation of their businesses. Development and implementation can cost millions of dollars. Because these applications are critical, software development and maintenance contracts often require the software developers to store the "source code" of the software and explanatory documentation in an escrow account. Source code is the sequence of logical statements and operations written in a human-readable computer programming language that controls the processing of data and the functionality of software. The source code itself can be hundreds of thousands of lines of code and is normally designed and written by software programmers in programming languages such as C++, Java or Visual Basic. When completed, the source code is compiled into "executable code" that can be downloaded, installed and run on a computer. However, with only the executable code, customers have no ability to see how the software is processing data or performing functions and, for the most part, have no ability to change the operation of the software.
Because repairing problems or changing functionality is only possible with the source code, the escrow of source code is common in large software transactions involving custom developed or operationally critical applications. In a source code escrow arrangement, the source code and documentation are held in escrow by a trusted third party, the escrow agent. The source code and related documentation are to be released upon the occurrence of a "release event" such as the software developer filing bankruptcy or failing certain obligations under the license.
Following a release event, the promise of a source code escrow is that the customer can obtain the code to maintain the software without the original developer. This maintenance involves fixing bugs, ensuring compatibility with other system upgrades and adding the functionality required in the customer's changing business.
Software maintenance is essential to enterprise applications. Because the customer has no assurance that the software developer will always be around to perform software maintenance, and since such maintenance cannot be performed without the source code, escrow is considered a necessary part of certain software deals.
Why Escrow Is an Ineffective and Costly Mechanism
For the reasons described above, escrowing source code of critical business software seems to be a prudent business decision for customers. However, for various reasons, the time, legal fees and other resources spent establishing and maintaining escrow accounts provide little protection for the customer.
1. Only a Small Percentage of Escrows Is Ever Released
Iron Mountain, the dominate escrow agent in the United States, has thousands of escrow accounts and more than 45,000 customers worldwide that have stored their software and intellectual property with Iron Mountain, including over 75 percent of the Fortune 500. Over the 10-year period from1990 to 1999, Iron Mountain released 96 escrow accounts, less than 10 per year. While it is unclear how many are typically released in a given year, these low release rates indicate that only rarely does a release event occur and, when it does, customers often realize it is easier to find an alternative software provider.
2. Most Escrowed Source Code Is Defective
While some customers may view a source code escrow as an insurance policy to protect themselves in the slight chance that a release event occurs, often source code escrows fail to provide adequate protection because, upon release, the source code is frequently outdated, defective or otherwise fails to meet the customer's needs. According to Iron Mountain, 97.4 percent of all analyzed escrow material deposits have been found incomplete and 74 percent have required additional input from developers to be compiled.
Take, for example, what happened to Radisson Hotels Worldwide. Several years ago, Radisson hired a third-party software company to maintain its mission-critical reservation system. The software vendor agreed to escrow the Radisson software code. The code was eventually released as a result of the software vendor going out of business. But upon release, Radisson found that the source code in escrow could not even perform the fundamental and critical task of booking guests at Radisson's hotels. The released code was missing many components and the escrow account did not contain any documentation developed after the initial escrow of the software. This unfortunate discovery is not atypical in source code escrow arrangements, especially when the customer has not been vigilant in continually monitoring and auditing what is being stored with the escrow company.
3. Customers Lack Expertise to Use the Released Source Code
Even if the customer has been diligent and the released source code is properly updated, well-documented and fully operational, most customers lack the resources or capability to utilize the code upon release. In most cases, source code has been escrowed because customers are licensing software from a vendor that is providing technology and expertise the customer does not possess internally. Thus, once the software is released from escrow, the customer often is in no position to properly implement the software, train its employees on maintaining and supporting the software, or purchase the necessary hardware and third-party software. In addition, this process of bringing such software in-house can be lengthy and demanding on a company's resources. Further, the customer will likely be faced with a shortage of available talent knowledgeable on the released software, especially because many software license agreements prohibit customers from soliciting the vendor's employees upon termination of the licensing arrangement. All of these factors combined make it extremely difficult for a customer to utilize source code upon release, even if the code is in pristine condition. The only alternative for the customer is to hire a third-party software company. This is an expensive alternative and is often no better than moving to a substitute product. Furthermore, with this decision, the customer is back to where it started—relying on a third party to properly maintain the code.
4. Significant Delays and Legal Battles Often Accompany a Release
Another problem is that software vendors have the ability to prevent the timely release of the escrowed code and customers have limited recourse to prevent such a delay. It is not unusual for an escrow agreement to require the vendor's approval before the source code is released; thus, even if the customer demands the escrow agent to release the software upon a release event, the escrow agent is prohibited from doing so until it receives the approval of the vendor. Delays in the release of the software are problematic because vendors may not keep the software properly updated during the period of time that the parties are disputing its release.
Adding to the delay, escrow agreements often require parties to participate in alternative dispute resolution proceedings, such as arbitration or mediation, in the event of a dispute regarding the release of the source code. A commonly disputed issue is whether a release event has actually occurred. Although parties strive to clearly and completely define the triggers for a release of the software in software license agreements and escrow agreements, the language in these agreements may be ambiguous as to whether certain circumstances qualify as a release event. Therefore, the vendor can almost always dispute that such an event has occurred. A prime example of this can be found in the recent court case between Vemics, Inc. and Radvision, Ltd. (Vemics, Inc. v. Radvision, Ltd., No. 07-CV-0035, 2007 WL 1459290 (S.D.N.Y. May 16, 2007)). In this case, Vemics purchased a software license from First Virtual Communications (FVC), and the parties entered into a license agreement requiring the software to be placed in escrow and released upon specified release conditions. The parties also entered into a separate escrow agreement with the escrow agent, Iron Mountain. FVC filed for bankruptcy on March 11, 2005, and Radvision became the successor in interest to FVC's rights and obligations under the license agreement and escrow agreement with Vemics. Vemics demanded Iron Mountain to release the source code in January 2006 claiming FVC's bankruptcy constituted a release event. Interestingly, even though parties typically enter into source code arrangements to, at a minimum, protect the customer's interest in the software in the specific event of the vendor's bankruptcy, Radvision argued that FVC's bankruptcy was not a valid basis for release of the software. More than two years have passed since Vemics demanded the release, with the parties still at odds over whether the source code will ever be released. Even if it is finally released, the long delay and expensive legal battle have been a costly investment for Vemics.
5. Utilizing an Escrow Can Be Expensive
Another obvious cost consideration is that the expenses related to the opening and maintenance of an escrow account are typically borne by the customer. These fees can amount to thousands of dollars. In addition to the fees paid to the escrow agent, the customer will often incur significant legal expenses related to the drafting and negotiation of escrow agreements. Software developers are resistant to provide their source code to anyone in fear of inadvertent or unnecessary release. Therefore, escrow arrangements are often intensely negotiated. However, these legal expenses pale in comparison to those the customer will be forced to spend if the vendor disputes the customer's claim that a release event has occurred. The costs of resolving such a dispute can range from thousands of dollars in alternative dispute resolution proceedings to hundreds of thousands (or even millions) of dollars in protracted litigation. A point of great frustration for customers is that these added costs will not change the fact that the customer has no assurance the source code is useable and has little control over the time period of release.
For these reasons, customers should consider whether it makes sense to ever enter into source code escrow arrangements. Despite their appearance of importance, source code escrow arrangements are almost completely ineffective at protecting customers from failing software companies and carry with them significant costs and risks.
Shawn C. Helms and Alfred Cheng are attorneys at Jones Day in Dallas, Texas. Their practice is focused on complex technology and intellectual property-centric transactions, including business process and information technology outsourcing and technology licensing. The views set forth in this article are the personal views of the authors and do not necessarily reflect those of Jones Day.
Analytix introduces active escrow training course, effective IT risk management tool
[ Johannesburg, 4 March 2008 ] - Analytix launched its active software escrow training course, which will assist organisations to enhance their approach to IT risk management and IT governance.
Speaking at the launch event in Illovo, Analytix Managing Director Johan Botha explained that most organisations' business continuity is compromised due to their dependence on mission-critical IT software applications. In reality, a vast majority of organisations are not adequately managing the risks associated with their reliance on software applications
Botha explained that there is rarely an organisation that does not depend on software for mission-critical business processes and functions, and it is only these organisations that might not be concerned with active escrow. However, for any other organisation a need exists to mitigate the risks associated with its dependence on IT software via an active escrow arrangement.
Quoting Jane Disbrow of Gartner, Andrew Stekhoven, Managing Director of Escrow Europe, defined escrow as "...an insurance policy to make sure you have access to that source code should that vendor no longer maintain that software for your organisation..."
Analytix, Escrow Europe and Chetty Law joined specialist forces to offer this unique Active Software Escrow Best Practices Training Course, which is presented as a public course, or can be tailor-made for in-house training.
This training course will provide CIOs, IT management, risk and business continuity managers, software developers, escrow agents, business process managers, quality assessors, legal practitioners, compliance officers, etc, with the necessary ammunition to actively defend the vulnerability of information and IT - two of the organisation's most valuable assets.
"There is a distinct correlation between active escrow best practice principles and the requirements for organisations to comply with various local and international standards, frameworks and guidelines, such as ISO 9001: 2000, King II and especially once King III is launched, COSO and COSO ERM, BS 25999, ISO 17799 / 27001, Cobit, SOX etc," Botha explained.
"The purpose of placing source code in escrow is to reduce the risk of being unable to have the system it represents supported and maintained. To ensure that the reduction of risk is meaningful, controls should be in place to minimise that risk so that the assurance provided by escrow is itself protected," according to Botha.
If the necessary controls are not checked (passive escrow), it may only be discovered too late that the code submitted to escrow is unavailable or unreadable, and is therefore worthless.
For more information, or to register for the Active Software Escrow Best Practice Training Course or other courses, please contact Analytix Customer Service on 011 215 2480, e-mail info@analytix.co.za
Speaking at the launch event in Illovo, Analytix Managing Director Johan Botha explained that most organisations' business continuity is compromised due to their dependence on mission-critical IT software applications. In reality, a vast majority of organisations are not adequately managing the risks associated with their reliance on software applications
Botha explained that there is rarely an organisation that does not depend on software for mission-critical business processes and functions, and it is only these organisations that might not be concerned with active escrow. However, for any other organisation a need exists to mitigate the risks associated with its dependence on IT software via an active escrow arrangement.
Quoting Jane Disbrow of Gartner, Andrew Stekhoven, Managing Director of Escrow Europe, defined escrow as "...an insurance policy to make sure you have access to that source code should that vendor no longer maintain that software for your organisation..."
Analytix, Escrow Europe and Chetty Law joined specialist forces to offer this unique Active Software Escrow Best Practices Training Course, which is presented as a public course, or can be tailor-made for in-house training.
This training course will provide CIOs, IT management, risk and business continuity managers, software developers, escrow agents, business process managers, quality assessors, legal practitioners, compliance officers, etc, with the necessary ammunition to actively defend the vulnerability of information and IT - two of the organisation's most valuable assets.
"There is a distinct correlation between active escrow best practice principles and the requirements for organisations to comply with various local and international standards, frameworks and guidelines, such as ISO 9001: 2000, King II and especially once King III is launched, COSO and COSO ERM, BS 25999, ISO 17799 / 27001, Cobit, SOX etc," Botha explained.
"The purpose of placing source code in escrow is to reduce the risk of being unable to have the system it represents supported and maintained. To ensure that the reduction of risk is meaningful, controls should be in place to minimise that risk so that the assurance provided by escrow is itself protected," according to Botha.
If the necessary controls are not checked (passive escrow), it may only be discovered too late that the code submitted to escrow is unavailable or unreadable, and is therefore worthless.
For more information, or to register for the Active Software Escrow Best Practice Training Course or other courses, please contact Analytix Customer Service on 011 215 2480, e-mail info@analytix.co.za
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