Posts Tagged ‘Software Code’

In a software scenario there are normally two main parties involved; the software programmer or the software company, and the end-user or the company purchasing the software package. Escrow software is a means by which a third party is involved, called an escrow agent, with the responsibility of holding the software’s source code.

Software is made up of code. Programmers write code in ‘object’ format which then gets compiled by the computer into ‘source’ format. Ultimately this code is then translated to ‘machine’ format which can be read by the computer’s hardware, basically ones and zeros. Included with the software code, documentation is also normally present as part of the whole package.

The source code is the origin of the ultimate software application and has a substantial value in the sense that without it the application cannot be generated and therefore executed. This code is not normally delivered to the end-user (or client), but the part delivered would normally consist of the executable part only.

To many programmers and developers, supplying the source code is normally not a very desired option. By doing so, they are exposing their hard work to anyone in the field that can read the code. The client can easily supply the code to a third party which can then change the code or use it to develop something even more elaborate which will then compete, or worse, make obsolete the origin piece of work.

This is where escrow software agents come into play. These agents are responsible for handling and storing the source code. Their role is to protect both the rights of the end-users as well as the proprietary technology present in the programmer’s code.

In cases where software is very costly or is business-critical to the organization involved, software is placed into escrow. But what advantages do parties take from escrow software.

End-User

Having an escrow software service, the user is guaranteed that the source code used for his business application can be available if anything had to happen to the programming organization or software developers. Anything can happen, from company insolvency to bankruptcy, or closure of business. By having escrow, the end-user is immune from these problems and in the case they actually occur, the source code can be utilized and handed over to other professional software companies who can continue in supporting the end-user.

Programmer/Developer

Two advantages can be highlighted for programmers. First, since the source code is escrowed, they can guarantee to the client that their high-cost investment is protected and not liable to any change of business they may encounter. Secondly, by escrow software, developers are assured that their proprietary assets found in the code are well protected from being copied and/or manipulated.

Escrow Software Agent

Needless to say, the responsibility handled to an escrow agent is compensated by the high rates these agents charge. After all, escrow software is not the every day software found on store shelves but most probably is a very precious item both for the people who developed it and also for those who are benefiting from it by using it for their business requirements and every day operations.

Escrow software has become a must for specialized software. It is currently the best solution for piece of mind both for developing companies as well to end-users alike.

Sandro Azzopardi is a professional author who writes several articles on various subjects on his web site and local newspapers and magazines. You can visit information about this article and others on: [http://www.theinfopit.com/technology/software/escrowsoftware.php]

Author: Sandro Azzopardi
Article Source: EzineArticles.com
Netbook, Tablets and Mobile Computing

Many businesses, both small and large do not realize that software can be leased or financed. Although software financing is unique in some manner, in general it has many similarities to equipment leasing.

It is also proper to ensure that right finance firm is utilized, as many lenders are somewhat risk averse to financing this asset. However, many others are looking for business in this area!

Contrary to popular opinion software as an asset in many cases has more value that a depreciating hard asset. It has also been confusing for lenders when it comes to the registration of collateral under Canadian PPSA (PERSONAL PROPERTY SECURITY ACT) legislation.

In its broadest term the financing or leasing of software that can’t be transferred to another user. The business owner does also of course not own any development rights in the software. Software financing is treated as a financing mechanism, it is not a true lease per se.

Some additional key points around the technicality of software leasing/finance are as follows:

The right of a customer to use the software gives the company no right in the intellectual property surrounding the developers rights in the software code. The best example of this is when we look at our EXCEL spreadsheets that we use in finance and home matters. We use the software, but Microsoft of course owns it.

The problem in the past around the financing of software revolved around the fact that lenders did not know how to collateralize and register their security. Under current PPSA legislation intangibles and software can be collateralized. Therefore the software financing lender/lessor can be very confident that the software can be collateralized.

At the heart of the software financing issue is the true value of the software to the business owner. He runs his business on it, i.e CRM programs, office software, manufacturing software, etc. Software lease payments tend to be made since the asset is indispensable to the value and on going concern of the business. Unless companies are liquidated in total bankruptcy most lessors and finance firms recover fully on their software leasing – Source – Journal of Equipment Leasing In many business bankruptcies the software lessor or lender is treated as a secured creditor.

Also key to the software financing issue is that many software firms offer maintenance, support, and updates around their product. This enhances the lenders asset as it is used for longer lengths of time, and often constantly upgraded. Quite frankly it becomes less obsolete than computer hardware!

Many software lessors and lenders also finance the service and maintenance contracts associated with their customers software acqusition.

We do acknowledge in this article that it is more difficult to finance customized software although it is possible based on the overall credit strength of the borrower. Many customized software deals are done with only investment grade borrowers where credit risk is minimal. Many smaller ticket lessors and lenders however do now lease software. In general these transactions are full payout capital leases.

In summary, software lease financing is available and should be considered by every business owner in the same context as a capital equipment finance transaction. The computer hardware industry has grown with leasing, and the software industry is doing that also. The same considerations an owner gives to lease vs buy apply to a software finance acquisition.

Stan Prokop is founder of 7 Park Avenue Financial – http://www.7parkavenuefinancial.com The company originates business financing for Canadian companies,specializing in working capital, cash flow, and asset based financing. In business 6 years the company has completed in excess of 45 Million $ of financing for companies of all size. For info on Canadian business financing and contact details see: http://www.7parkavenuefinancial.com/toronto_ontario_equipment_financing.html

Author: Stan Prokop
Article Source: EzineArticles.com
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