Feeds

Nearly half of top UK firms do not use software escrow

Source code could evaporate if vendors go up in smoke

High performance access to file storage

Almost half of the 350 most valuable listed companies in the UK do not have software escrow agreements in place to give them access to technology if a supplier goes bust, according to an escrow services company.

NCC Group has said that just 189 of the FTSE-350 group of listed firms have escrow agreements in place, meaning that 46 per cent of the FTSE-350 do not.

It said that the 100 most valuable companies listed in the UK, the FTSE-100, performed better. It said that 82 of those companies had an escrow agreement on at least one piece of software.

Software escrow agreements place the source code of software with a secure third party. A list is drawn up of events that will trigger the release of that code. That list usually includes the software firm's bankruptcy, failures to adequately support the software customer, and a change in ownership over the software.

Source code is the underlying material which constitutes a software program. It is not usually available to customers and is essential for any changes to or support of the software. Making the source code available through escrow allows a customer to continue using a product and update it if one of the "trigger events" means that the original supplier is not performing that function.

NCC said that even the 54 per cent of FTSE-350 companies that do have escrow agreements are not fully protected.

"NCC Group’s research found that while 189 of the FTSE-350 have Escrow agreements in place, the majority only protect a small percentage of their business critical software," said the company. "As a result, they could be vulnerable to the risks of applications becoming unavailable when mergers, acquisitions or legal disputes arise."

NCC said that requests for escrow source code jumped by 150 per cent between 2008 and 2009, an increase that it said was due to the recession and to increased software industry merger and acquisition activity.

NCC's director of escrow solutions, Jon Leigh, told OUT-LAW Radio in 2008 that it released about 50 pieces of source code a year.

"The lack of protection among the wider FTSE-350 is extremely concerning, particularly in light of the challenging economic environment and the ever present cyber-security threats that could potentially have a huge impact on software suppliers and software delivered over the internet," said Mark Ormerod, managing director of escrow at NCC. "The issue also appears to be too low on the auditing agenda. Software supplier and availability risks should be established steps in the overall due diligence process, not merely tick boxes that get lost in an auditor’s report."

Escrow is most useful when the source code that is transferred is easily used by the customer company or by another technology firm employed by it to take over responsibility for it. This is not always the case, though, and software programming is not necessarily clear, consistent and reliable.

"It depends on people and the people might be programmers. It might be written a language which is reasonably accessible and it has been written in a pure form, so people who were not involved in its original creation can get to the code and do what they need to do with the code," software law expert Charles Park of Pinsent Masons, the law firm behind OUT-LAW.COM, told OUT-LAW Radio in 2008. "I think bad programming would make a mockery of quite a few escrow arrangements."

Copyright © 2010, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

High performance access to file storage

More from The Register

next story
Windows 8.1, which you probably haven't upgraded to yet, ALREADY OBSOLETE
Pre-Update versions of new Windows version will no longer support patches
Android engineer: We DIDN'T copy Apple OR follow Samsung's orders
Veep testifies for Samsung during Apple patent trial
OpenSSL Heartbleed: Bloody nose for open-source bleeding hearts
Bloke behind the cockup says not enough people are helping crucial crypto project
Microsoft lobs pre-release Windows Phone 8.1 at devs who dare
App makers can load it before anyone else, but if they do they're stuck with it
Half of Twitter's 'active users' are SILENT STALKERS
Nearly 50% have NEVER tweeted a word
Windows XP still has 27 per cent market share on its deathbed
Windows 7 making some gains on XP Death Day
Internet-of-stuff startup dumps NoSQL for ... SQL?
NoSQL taste great at first but lacks proper nutrients, says startup cloud whiz
US taxman blows Win XP deadline, must now spend millions on custom support
Gov't IT likened to 'a Model T with a lot of things on top of it'
Microsoft TIER SMEAR changes app prices whether devs ask or not
Some go up, some go down, Redmond goes silent
prev story

Whitepapers

Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
HP ArcSight ESM solution helps Finansbank
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.