NCC Group plc, the world’s leading software escrow provider, has warned telecommunications companies to protect themselves against software supplier insolvency as the industry becomes increasingly reliant on providers for end-user services and products, as well as their own business-critical applications.
Jon Leigh, operations director for Escrow at NCC Group plc, said: “Telecoms companies are under pressure to offer an increasingly diverse range of software and services driven by the growth of broadband, wireless networks and the increased use of data applications. They are therefore highly dependent on technology that evolves extremely quickly.
“Many firms rely on outsourcing, often to small, niche vendors, in order to meet demand. Should a supplier fail, telecoms companies risk losing access to business-critical applications, which could result in financial loss, as well as damage to a company’s reputation and a significant drop in customer confidence.”
Access to crucial software that telecoms firms do not own or control is ensured if an escrow agreement is in place. The escrow provider securely holds a copy of the software source code on behalf of the telecoms company at the agreement of the application provider. Should the software supplier become bankrupt, or default on contractual obligations, the escrow provider can legally release the material so that the telecoms firm can continue to operate the application with minimum disruption to their business.
The recession has taken its toll on businesses’ relationships with software suppliers; with NCC Group reporting a 150 per cent increase in software releases in 2009, compared with 2008. Now experts are advising businesses in the bespoke software-reliant telecoms sector to consider their disaster recovery strategies.
Leigh commented: “The telecoms industry encompasses companies of all sizes, from small service providers to multinational infrastructure businesses. Despite this broad range, most of the key drivers regarding escrow use are the same. Escrow agreements are crucial for this sector, with firms providing services and products to customers, as well as being beneficiaries of specific internal software themselves. In turn, Escrow should be considered as an essential element of a wider disaster recovery strategy for telecoms businesses.”