Global IT Outage Disrupts The World: How Software Escrow Can Help Companies Mitigate Third Party Risk
Introduction
Today’s global IT outage has caused significant disruptions across multiple sectors, including aviation, rail transport and broadcasting. This outage around the world underscores the many vulnerabilities many companies today face due to their dependence on third-party software providers.
Our article highlights what has caused the global IT outage and how companies can make sure that they are fully protected and can mitigate risks associated with third-party software dependency by having a software escrow or SaaS escrow agreement in place.
Global IT Outage Overview
First reported in Australia on Friday 19th July, a global IT outage quickly spread across the world and disrupted multiple industries, leading to the cancellation of nearly 1,400 flights and affecting sectors like banking, healthcare and retail. Cybersecurity firm CrowdStrike identified a software update defect impacting Windows systems and has deployed a fix, but full system recovery may take some time. In the UK, GP surgeries, trains, shops, and pharmacies are among those experiencing issues.
According to the BBC, CrowdStrike’s George Kurtz, the cybersecurity boss repeats that the issue was caused by a bug in their update that hit Microsoft operating systems. “We know what the issue is … and have resolved the issue,” he says. How long will it take to get everything back up and running for users? “It could be some time for some systems that just automatically won’t recover, but it is our mission… to make sure every customer is fully recovered,” he says.
In light of this global IT outage, companies are suddenly realising the risks associated with third-party software providers which have prompted them to look at software escrow as a viable solution.
Evan Lever, CEO & Founder of Escrow London and The Escrow Company comments, “The recent global IT outage has highlighted the critical need for businesses to put in place robust contingency plans. We have seen a significant increase in customer enquiries for new software escrow and SaaS escrow solutions, with our website visits up 100% in the last 24 hours. This surge in interest reflects a growing awareness and proactive approach towards safeguarding operations and a demand for reliable software escrow solutions.”
The Growing Reliance of Third-Party Software and How Software Escrow Can Help
As this story disseminates around the world, it comes with it a remarkable reminder on how modern businesses today, are increasingly reliant on and integrate third-party software and platforms within their critical operations. This reliance on external vendors can enhance efficiency and innovation, but also introduces significant risks. As highlighted in this story, when a software provider experiences a failure, it can cascade into widespread operational disruptions. Such incidents reveal the fragile nature of this dependency, making it crucial for companies globally to prepare for various potential failures and ensure business continuity.
Different software delivery models possess differing challenges. For example, having the software deployed on premise, say within a client’s own data centre, typically means a software provider is solely responsible for the functional requirements of the software and not uptime of the supporting environment. However, with expanding take up in outsourcing arrangements, SaaS and the preference of organisations to move away from managing their own infrastructure, vendors are increasingly responsible for both software and platform layers. Additional dependencies on a supplier means an end user or licensee should consider and appropriately mitigate their exposure to risks such as incidents or technical failure but also business failure.
One effective strategy to mitigate associated risks with supplier failure such as bankruptcy, unresolved loss of service, sale of IP, discontinued services or other agreed situations is the use of software escrow agreements. Software escrow agreements (also known as source code escrow) and SaaS escrow agreements can provide a safety net for organisations relying on third-party software providers and outsourcing partners. By depositing the software source code, infrastructure as code, documentation and other critical assets such as databases with an independent software escrow vendor, businesses can mitigate risks associated with vendor failure or software discontinuity. Here’s how software escrow and SaaS escrow can assist:
- Ensuring business continuity – By having access to the software’s source code or other critical assets and even access credentials to a production cloud environment, businesses can continue their operations if the software provider can no longer provide their agreed services.
- Meet internal or external governance and compliance requirements around risk management and outsourcing – Software escrow mitigates risks by providing a safety net that ensures critical applications remain operational, safeguarding against disruption based on agreed potential events.
- Regular testing and validation of software – Software escrow and SaaS escrow typically includes regular verification and testing services which are important to ensure the source code deposit will be accessible and usable if ever required with supporting documentation that can assist with recovery.
Conclusion
The recent global IT outage serves as a powerful reminder of the importance of preparing for the unexpected. As companies continue to rely on third-party software, establishing comprehensive continuity plans, including considering supplier failure and software escrow, is vital. By doing so, businesses can safeguard their operations against disruptions, ensuring stability and resilience in an increasingly digital dependant world.
If you would like to learn more about software escrow and SaaS escrow, please do not hesitate to contact us.
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About Escrow London
Escrow London is a global software and SaaS escrow company with offices in London, UK and Sydney, Australia. Our North American division called The Escrow Company, is based in Atlanta, US.
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 continuity escrow solutions, visit our YouTube channel.
