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A pre-nuptial contract with your vendor?

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CIOL Bureau
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PUNE, INDIA: What if your technology provider goes out of business? What if it gets merged with or gets acquired by another company? What if they lay off key technical staff, or fail to provide support for their technology?

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The recent corporate fiascos, witnessed both in India a and worldwide, may ring more such alarm bells for clients and IT decision makers. More so, as IT departments and contract managers work together to license technology, they look to put safeguards in cases of such exigencies. Most often such unforeseen circumstances are taken care of with technology escrow agreements.

As to the question of Why do CIOs rely on escrow arrangements?

The most probable answer is- They're a precaution, should the licensing vendor go out of business. Next answer could be - it protects them in case the vendor stops or decreases support, while still others say it is part of a larger risk management policy.

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IDG Research Services has polled and received responses from 174 information technology and business leaders across a broad range of industries, and 62 percent of responding companies reported that they always or sometimes include escrow as part of their software agreements.

The IDG Research survey reveals how technology escrow agreements and verification services can safeguard investments against contract breaches, discontinued support and vendor bankruptcy, all of which pose even greater risks in a difficult economic climate.

However, according to Iron Mountain Digital statistics, 66 percent of technology escrow deposits are incomplete, while an astounding 92 percent require additional input from programmers.

Iron Mountain Digital, the technology arm of Iron Mountain Incorporated will announce the results of its recent survey on verification services for technology escrow, including software escrow and source code escrow, at the International Association for Contract and Commercial Management's IACCM Americas 2009 conference in Orlando, Florida on April 23-24.