Software Acquisition Insider Tips, Part IV

Forego the Escrow (because It’s All About the Data)

You’ll be hard-pressed to cheerily find a vendor who won’t agree to put their code in escrow for you, in case they go bankrupt, and laugh all the way to the bank when they do so. That’s because your average vendor knows that it’s no effort for them and useless for you. Why?

  1. You probably don’t have software developers working for you, and have no ability to do anything with the code.
  2. Even if you do have a couple of developers, who probably spend most of their time doing integration projects and not core development, they’re not going to be able to translate 1,000,000 lines of code — or more — and do anything sensible with it any time soon. It will be months, and maybe years, before they are fluent in the code.
  3. If the software was remotely hosted, it will be a monumental effort to get a local copy compiled, linked, loaded, configured, hooked up, and populated with your data. Monumental. Especially if you need a recent version, because you have no idea how to do this and neither does your team. You could be facing months of downtime before you figure it out, if you ever do.
  4. Even if you half an IT team with a few competent developers, there’s no guarantee that the escrow code-base is going to be up-to-date (many vendors never update the escrow code-base because they know you’ll never check if they do) or that it’s going to contain the documentation you need to make sense of it, if it has any documentation at all!

You’re only safe if you have a stable application installed behind your firewall that your team, or third party system integrator, can maintain or if you’re using an on-demand application that could easily be replaced with one or more competitor products at the drop of a hat.

What you really need is a data availability agreement which allows you to get a complete extract of your data in a neutral format (like XML or CVS) at any time, and guarantees that you will get a complete data extract within 24 hours if the provider stops supporting your product at any time for any reason. That way, you can just switch to a competitive on-demand solution, load up your data, and keep on truckin’.

Is it Software or Service?

Many software products aren’t really software products at all. In other words, there is some incantation that has to be performed by the software vendor, in the form of services, configuration, or other magic, on a regular basis, to keep the software running. In this case, you haven’t bought software, you’ve bought software plus services. What’s even worse is that you’ve single-sourced it. If the vendor goes broke, or can’t deliver, you have no options.

Always ensure that you can procure services from multiple third party vendors, not just from the software vendor. Even better, make sure that whatever magic process the software vendor is performing can be easily transferred to your own staff. If there are special tools that the vendor uses, insist on owning them yourself. If the vendor cannot provide them, or is unwilling to train your personnel to use them, then find another vendor — fast.