Software escrow does not fit with cloud - how to work round this

Business customers are familiar with software escrow.  It can be an effective remedy where a business pays for a software licence but the vendor goes bust. But it’s not really an effective answer for cloud customers.

The traditional model of proprietary software licensing has been for software supplier to license the object code to customers and hold back the source code.  Without the source code and with complicated practical and legal restrictions on decompiling the object code back to source code the customer can’t adapt the software to do what the customer wants. For this, the customer must rely upon the software supplier. 

This works fine until the customer and supplier fall out or the supplier goes bust.  The answer is escrow where, for a fee, the customer can get the source code if certain events occur. Under this arrangement, the customer will install the object code on its equipment and run it locally. The software supplier will deposit the source code of its proprietary software and relevant documents with a trusted third party – the escrow agent. The escrow agreement between the customer, supplier and escrow agent will specify that if certain "release" or "trigger" events occur, the agent will release the source code and documents to the customer.

Typically, a trigger event is where the supplier fails to maintain the software or becomes insolvent.  Once it has the source code, the customer can hire a new supplier to adjust the code to do what the customer needs.  That’s the theory anyway.  It’s not a simple task to take someone else’s source code and make sense of it, but at least it’s an option. 

Cloud is different and escrow is not the cure-all that many think.  If a customer has opted for a public cloud SaaS offering, that software will likely be a standardised version offered to all customers.  The supplier won’t want to enter into escrow arrangements with all its customers who are paying rock-bottom prices.  Even if it’s a bespoke software solution, by the very nature of cloud, there is likely to be very little installed on the client’s equipment.  Perhaps it will be accessible by via a web browser.  Therefore, the customer won’t even have the object code but will have access to software run on the supplier’s infrastructure.