escrow presentation2010
DESCRIPTION
Overview of Escrow Solutions for 2010TRANSCRIPT
Commercial in Confidence - © Copyright 2009 NCC Group Plc - all rights reserved
NCC Group PlcManchester Technology Centre Oxford RoadManchesterM1 7EFwww.nccgroup.comwww.nccgroup.com
Simon Greaves Simon Greaves
Key Account Manager Tel: +44 (0) 161 209 5190e-mail: [email protected]
Escrow SolutionsEscrow Solutions
Presentation
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Agenda
About NCC Group
The need for software escrow
What is software escrow?
Benefits
NCC Group Escrow Solutions
Primary Components Of Escrow Agreement
What Can You Do if a release event is triggered
Why is testing important?
NCC Group Verification Services
Effect Of Current Economic Climate
Risk assessment / escrow policy
Current Agreements
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About NCC Group
What we do: independent IT assurance, security and consultancy services - over 15,000 clients worldwide including 94 of the FTSE 100
USP: no ties or relationships to hardware or software suppliers - focus on developing intelligent solutions & building lasting partnerships with clients
Size: based in Manchester with offices throughout the UK, Europe & California, currently employ 350 + staff worldwide
History: formed in 1999, listed on London Stock Exchange since July 2004, consistent track record of solid growth. July 2007 full listing
Our business: three complementary divisions: Escrow Solutions, Assurance Testing and Consultancy
NCC Group is the world’s largest Software escrow provider
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Our services
Escrow Solutions– Ensure business-critical material or source code is
protected and accessible should a key supplier fail– Confirms material held is properly protected - verify it can
be rebuilt from components
Assurance Testing– Test & monitor system, network & web site performance to
ensure effective, robust and delivering optimum performance
– Ethical security testing of networks and applications and security policies in practice to ensure organisations safe from threat of unauthorised access
Consultancy– Provide advice at all levels to help organisations improve
performance through effective use of IT & business processes
– Protect organisations against a variety of risks through development & implementation of effective plans and compliance with relevant standards
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The need for software escrow
The failure of any these applications would result in financial or operational loss
Therefore organisations are reliant on the owner / supplier to provide support and maintenance
BUT they will only supply the ‘object code’ - the ‘source code’ is required to support and maintain
However if the owner is no longer willing / able to provide support in the event of failure…..
And there is increasing scrutiny on corporate governance and risk management – Sarbanes Oxley, Basel II, FSA Rules and Regulations
Source: Vision One Research 2007
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What is software escrow?
Legal agreement between supplier, licensee & escrow provider (distributor if applicable)
Supplier obligated to deposit source code in escrow and to keep updated
‘Trigger Events’ defined in the agreement where source code released to licensee such as: – Liquidation – Ceasing to trade– Failure to meet maintenance
obligations– IPR assignment (if new owner
provides no escrow protection)
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Benefits for the licensee
‘Insurance policy’ against the unpredictable IT market
Allows continuing maintenance of critical applications in event of release of code
Provides protection during investment in IT development
Essential part of business continuity and disaster recovery planning
Provides leverage against supplier who defaults on contractual obligations / IPR’s assigned to a new supplier
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NCC Group Escrow Solutions
Software Escrow– Single and multi licensee agreements– Holding Agreements– Development agreements– Specialised outsourcer and distributor agreements– Staggered release agreements to protect distributors and end-
users– Web sites and web applications covered
Information Escrow– Product designs– Manufacturing processes– Marketing information
Copyright Protection Agreement
NCC Group Escrow Solutions are flexible and can cover all situations
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Primary Components of Escrow Agreement
Owners Duties and Warranties– Initial deposit within 30 days– Frequency of future deposits (yearly / quarterly)– Scope of material to be deposited– Warranty of IPR ownership in the material
Licensee Responsibility– Notify NCC Group if deposit update required– Confidentiality undertaking in event of release
Release Events
Release Process– Independent expert determination in the event of dispute– Time bound process
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Primary Components of Escrow Agreement
Integrity Testing and Full Verification
NCC Group Liability / Indemnity
Termination– Owner cannot terminate without licensee consent
Schedules– Package Name– NCC Escrow Fees
– The proportion of fees paid by each party
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What can YOU do if a release is triggered?
Get a release of the source code deposit:– Appoint another software supplier to take over
maintenance OR– Take over support and maintenance in-house– i.e. be prepared in the case that the application
subsequently fails or needs maintenance
Use the potential option of release to negotiate a good deal with the new Owner of the IPR, introduced through NCC Group
Remember that Escrow is a leverage tool in cases of:– Issues with support and maintenance– Change of IPR ownership, negotiate good terms with new
supplier– Software Owner liquidation – leading to change of IPR
Ownership
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Why is testing important?
Only the depositor knows what’s stored on the deposited media
Mistakes are often made when preparing the deposit
Vital information such as build scripts can be left out
The scope of the material to be deposited can be misunderstood
It’s too late to ask questions if the supplier has gone out of business…
All escrow deposits are integrity tested as standard to ensure accessible and virus free
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NCC Group Verification Services
Full Verification: – We observe complete build of application at supplier's
site – Every detail of environment & build process detailed in a
comprehensive report, describing every step involved in building the source code into the working application
Escrow Now:– Recommended where source code maintenance would be
undertaken by a third party – Full Verification with additional assurance of build in
independent secure location - our secure test laboratory– Report also provides information on timescales, technical
skills & costs of rebuild to assist with selection of suitable third party
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NCC Group Verification Services
Escrow Complete:– Recommended where source code maintenance would be
undertaken by the licensee – Full Verification with additional assurance of build
repeated in licensee's environment – Source code collected & built at supplier's site and then
built & installed at user's site
Integrity Plus:– Recommended for other material which cannot be
checked through build process / during software development
– Intelligent collection & audit of material at supplier’s site
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Effect Of Current Economic Climate
Software companies need cash to develop new applications to survive
Access to credit is the lowest it’s ever been
Small and mid size companies are under real threat of closure due to falling profits and not being able to finance debt
Your company is reliant on those software owners
If your supplier fails the effect on your business could be catastrophic... e.g. – Zavvi uses EUK (Woolworths) – EUK stops supplying– Zavvi has to close online sales as they have no stock and are
now being run by administrators with 22 stores already closed
200% increase in release events in last ¼ of 2008
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Act on Escrow NOW
Nortel has gone into Chapter 11:
Nortel is the first major vendor in the ICT industry to have gone into administration as a direct result of the credit crunch.http://www.electronicsweekly.com/Articles/2009/01/14/45269/nortel-goes-into-administration.htm
1 in 5 software companies could go out of business according to a recent survey by Plimsollhttp://www.computerweekly.com/Articles/2008/04/24/230427/recession-could-force-uk-software-firms-out-of-business.htm
Autodesk has joined the growing number of technology companies to cut staff, announcing today that it will reduce its workforce by 750http://www.vnunet.com/vnunet/news/2234114/autodesk-cuts-750-jobs
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Risk assessment & escrow policy
Assess business criticality of application (guidance sheet provided):– Initial procurement– Major upgrade– Every 12 months
Educate and involve business users in evaluating need for escrow & managing protection once in place
Educate and involve sales staff in evaluating need for escrow protection to assist sales and protect distributor arrangements
Check required protection is in place through regular risk management and business continuity audits
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Escrow Clause
The [owner] shall lodge the source code (documents, materials and any other relevant information) of the [software package as defined within the software contract] with NCC Escrow International Limited upon the attached terms and conditions. The escrow agreement shall be completed as soon as practicable and in any event within [30 days] from the date of this agreement. In addition, should the [licensee] require it, the [owner] hereby agrees to cooperate in carrying out full verification testing as defined in and in accordance with the terms of the escrow agreement.
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Questions and Answers
Simon Greaves
NCC Group plc
Manchester Technology Centre, Oxford Road,
Manchester M1 7EF
UK
+44 161 209 5327
www.nccgroup.com
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21 Commercial in Confidence - © Copyright 2009 NCC Group Plc - all rights reserved
22 Commercial in Confidence - © Copyright 2009 NCC Group Plc - all rights reserved
Your Account Manager
NCC Group plc
Manchester Technology Centre, Oxford Road,
Manchester M1 7EF
UK
+44 161 209 5190
Simon Greaves
www.nccgroup.com