• Legal Escrow & Arbitration Services Ltd.

    Escrow news

Escrow Agreement Offers Affordable Protection Against Saas Provider Failure

Posted on by admin

The key attraction of moving IT to the cloud for many businesses lies in the potential for significant cost savings.

But in their desire to save costs, businesses should not overlook the importance of buying a SaaS escrow agreement which for a very small additional cost, protects against the potentially catastrophic consequences if the service or hosting provider stops trading.

As many businesses have discovered, moving to a SaaS model can dramatically reduce the capital and operational expenditures traditionally associated with IT.

The SaaS model has another big advantage in that IT “running costs” become much more transparent and predictable.

We are thus seeing a fundamental shift away from businesses buying hardware systems and software licences to consuming services that are hosted on external infrastructure which, in many cases, is owned by a third party, not by the company that provides the services.

The chain of accountability has therefore changed dramatically from the traditional setup in which the IT department is responsible for all aspects of IT and the business itself usually owns the hardware and software outright.

Unfortunately, few businesses stop to give much thought to clearly delineating the chain of accountability when considering a SaaS provider as the discussion is usually heavily focussed on the economic benefits.

Cost savings are compelling reasons, of course, particularly for the finance director, who has long sought a simpler and more predictable budgetary model for the IT function.

But in the event of a failure of the service provider or the infrastructure owner, the economic consequences would potentially be catastrophic for businesses that have come to depend on the SaaS service to support their day-to-day operations.

For that reason, it is essential that when budgeting for a SaaS service, businesses also include the cost of subscribing to a SaaS escrow service.

The monthly fee that LE&AS charges of less than £20 (plus a one-off set-up charge of £750 to £1000), is a small price to pay for the peace of mind that a SaaS escrow provides.

Share it now!
This entry was posted in Agreements, SAAS Escrow. Bookmark the permalink.