Before yesterday


... was a piece of writing sealed and delivered to a stranger (i.e. a person not a party to it), to be held by the stranger until certain conditions were met.


software escrow

...has been offered in North America and the UK for over 30 years and in Europe for over 20 years.



... is an instrument used to reduce risk in any industry and for any product.

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Escrow Yesterday and Today

The desire buyers have to protect their interests should something go wrong with their supplier is very old. Collateral from the supplier or risk insurance for the buyer are well-known instruments that have been used for ages.  In that practice, the risk of the supplier not delivering was shifted to a third party in financial form. Escrow is different. Escrow uses a third party, the escrow agent, to reduce the risk by way of legal and technical processes.

Before Yesterday

The legal practice of escrow was already common in medieval times: “Escrow apparently from Norman-French: escrit (Britt. 98b) Latin: Scriptum, a writing. A writing sealed and delivered to a stranger (i.e. a person not a party to it), to be held by him until certain conditions be performed, and then to be delivered to take effect as a deed. It is said that, to make the writing an escrow, the word escrow must be used in delivering it, but whether this is so at the present day is doubtful.” Rapalje/Lawrence, A dictionary of American and English law, 1888, p. 457


In recent years, escrow evolved along with the software industry. There are several reasons why. Programmers were able to quickly create an innovative product using few resources. The product needed continual maintenance that could not be carried out by the customer. On the one hand, all of the indicators used in traditional supplier ratings pointed to red. On the other hand, utilizing the products would mean a significant competitive advantage for the buyer. Avoiding risk by not buying such products was no longer an option. What was needed was a way to reduce the risk.

Out of this need, the software escrow service was born and has been offered in North America and the UK for over 25 years and in Europe for over 15 years. Due to the availability of the source code placed in escrow, the software user is no longer dependent on the future financial development of the manufacturer.

What is the difference between software and a machine?

Shouldn’t the focus in risk management be on the maintenance of a whole manufacturing facility?

The software business was so new and separate from the rest of the business world: For years, suppliers and buyers reduced escrow to only mean software escrow.


… everyone involved sees the whole product. Escrow is a recognized instrument of risk reduction, independent of industry and product. Yesterday, source code and development documentation made up 90 % of escrowed goods. Today, the dominant type of materials in escrow are specifications, bills of materials (BOM), drawings, interface descriptions, layouts, compliance declarations and lists of suppliers for components related to a particular software. In 2005, buyers were most interested in the availability of a particular software. Now the maintenance of complete manufacturing facilities are the focus.