Predictions for Software Escrow and SaaS Escrow in 2024
As we look into 2024, the landscape of technology and business continues to evolve at a rapid pace, with software escrow and SaaS Escrow gaining increasing importance to deliver on business goals. In 2024, several trends and predictions are expected to shape the dynamics of software escrow services, from an increasing number of insolvencies to the emergence of new regulatory policies and the growing significance of software escrow and SaaS escrow solutions to specific industries.
Rising Insolvencies and the Need for Contingency Planning
In 2023, the business landscape witnessed a notable rise in insolvency cases. According to statistics published by gov.uk, there was a 34% surge in insolvencies for software development and IT service companies in the 3rd quarter of 2023 compared to the previous year and a growing trend from previous years too. Additionally, bankruptcy filings in the USA increased by 12% from September 2022 to September 2023. The abrupt collapse of D365 Group, a prominent software development company in Australia, and the earlier downfall of Silicon Valley Bank highlighted the challenges faced by businesses and their supply chain. This trend is expected to continue into 2024.
As companies continue to survive financial turbulence, the necessity for contingency planning has never been more evident. The significance of software escrow and SaaS escrow is set to soar. These services, pivotal in securing access to critical source code and data, are poised to become indispensable components of businesses’ risk mitigation strategies. Organisations are increasingly recognising the value of software escrow, turning to these services to safeguard the continuity of their operations should a software vendor face bankruptcy.
Evolution of Regulatory Policies around Third-Party Risk Management
As businesses increasingly depend on external vendors for software and services, global regulators have intensified their oversight of third-party risk management. The convergence of new regulations targeting financial institutions, such as Prudential Regulation Authority (PRA) SS2/21 and PS7/21, The Digital Operational Resilience Act (DORA), and revised guidelines from regulatory bodies like the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve Board (FED Board), alongside updated standards like ISO/IEC 27001:2022, is prompting companies to reevaluate their continuity of service plans and stress-tested exit strategies.
Looking ahead to 2024, governments and industry regulators are anticipated to introduce additional policies aimed at ensuring that businesses effectively safeguard their interests in the digital world. This includes measures to enforce the use of software escrow agreements as part of comprehensive third-party risk management practices. Companies that fail to comply with these regulations may face legal repercussions, further emphasising the need for proactive engagement with software escrow vendors. With increased regulations in the financial services sector, there will be a push for software vendors to transition from multi-tenant solutions to offering the option of a single-tenant solution, facilitating easier compliance with stressed exit planning and testing. This shift is anticipated to result in a broader range of SaaS escrow options for regulated firms.
Heightened Importance of Software Escrow in Specific Industries
Industries vital to shipping, logistics and the supply chain as an example, are placing an increased importance on software escrow and SaaS escrow in recognition of the critical nature of their operations. Within these sectors, where the seamless flow of goods and information is critical, the adoption of software escrow and SaaS escrow will be prevalent next year.
In shipping and logistics, the reliance on advanced digital services for tracking, management and coordination is integral to ensuring the efficiency of operations. Software escrow agreements will continue to play a crucial role in safeguarding critical software assets, mitigating the risk of service disruptions in the event of a software vendor’s challenges or unforeseen circumstances. Learn how APC implemented a SaaS continuity escrow solution to provide assurance in the unlikely event of SaaS vendor failure.
The supply chain industry stands to benefit significantly from software escrow. Software and SaaS escrow services can act as a safeguard, ensuring that the underlying software supporting supply chain operations, remains accessible and operational even in the face of vendor-related disruptions.
As these industries navigate the complexities of their operations, the incorporation of software escrow agreements will become a strategic imperative in 2024. By doing so, they will enhance operational resilience by proactively addressing potential interruptions that could have devastating effects on the broader logistics and supply chain ecosystem.
As we approach 2024, the role of software escrow and SaaS escrow is set to undergo significant transformations. The landscape will be shaped by a combination of economic uncertainties, regulatory changes and technological advancements. Businesses, irrespective of their size and industry, are encouraged to stay abreast of these developments and proactively incorporate software and SaaS escrow into their risk management strategies. In doing so, they can navigate the complexities of the digital age with resilience and confidence, ensuring the continuity of their operations in an ever-changing business environment.
About Escrow London
Escrow London is a global software and SaaS escrow company with offices in London, UK, Atlanta, USA and Sydney, Australia.
We have invested considerable resources into innovation to reinvent software escrow for a SaaS world. Escrow London provides a range of SaaS Continuity escrow solutions suitable for AWS, Microsoft Azure and Google Cloud hosted SaaS applications. We support a wide range of clients includes major law firms, banks, central banks, insurance companies, technology companies and government organisations.
To find out more about Escrow London and our Software Escrow and SaaS Escrow solutions, visit our YouTube channel.