UK arm of Sungard Availability Services goes into administration – what does this mean for its customers and their business contingency plans?

Escrow London
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Three years after the US parent declared bankruptcy, it was announced last week that the UK arm of Sungard Availability Services has been placed into administration. Offering IT production and recovery services that include IT infrastructure, Cloud computing, Disaster recovery and Workplace recovery, Sungard blamed its insolvency on a high rise in energy bills and failure in renegotiating landlord rental rates. Sungard had contacted customers in December to "recover increased electricity costs" related to colocation kit or other services in its UK facilities, however they were met with some backlash from some who refused to pay these increased costs.

With this news comes a glimmer of hope that customers using Sungard had appropriate business contingency plans in place to ensure that if something like this situation ever did occur, their IT services would not be impacted. As a software escrow vendor, this news speaks volumes of how important it is for businesses in the UK, and worldwide, ensure they have robust business continuity plans in place for their critical software applications. Software escrow agreements are set up to provide comfort to the end user that if the software developer is unable or unwilling to support the software, the source code, deployment scripts, databases and other vital components can be released to them and business operations can continue as normal.

Sungard clients or companies that rely on solutions hosted by 3rd parties within a Sungard data centre still have time to coordinate a recovery plan while Teneo, the appointed insolvency administrators develop a restructuring plan to find a buyer for the business.

There are a number of software escrow agreements that are available to businesses today, these include:

  1. SaaS Escrow Agreement
    A SaaS Escrow agreement is used for SaaS hosted applications within AWS, Microsoft Azure, GCP or private hosting vendor. Solutions typically include replicated environments with 90 days of live continuity, deposit of production environment access credentials and the deposit of all the components that are required to spin up a SaaS environment (i.e. source code, deployment scripts, databases).
  2. Single Beneficiary Agreement
    A Single Beneficiary agreement is made up of the depositor, beneficiary and the software escrow vendor as an independent 3rd party. A software escrow service agreement of this type is usually used when a client is licensing software from a developer. The agreement clearly outlines the release events and a guideline for the process should a release occur.
  3. Multi Beneficiary Agreement
    Multi Beneficiary agreements are used by a developer to provide comfort to their clients that they have a standing software escrow agreement in place. By having a Multi Beneficiary agreement in place, under a single agreement, the developer is able to add an unlimited number of beneficiaries to the master agreement.
  4. Data Holding Agreements
    Data Holding agreements are used when a company is using a developer to create a bespoke application and the beneficiary owns the intellectual property.

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