Retailers warned to protect business-critical software
20/05/2009 00:00:00
In an economic climate where high street giants are fighting to remain solvent, NCC Group plc warns that even the smallest retailers must assess which of their suppliers could be a weak financial link - starting with their software providers.
Jon Leigh, Escrow Director at NCC Group, comments: “The retail sector is, arguably, one of the most heavily reliant on specialist and bespoke software, with applications supporting business critical systems such as supply chain management, point of sale processes, merchandise planning and stock control. While most retailers are rightly vigilant with the security of their data, many fail to consider the ongoing availability of business-critical applications and, should these applications be compromised and become unavailable, how they would recover.”
Recent statistics released by the UK Insolvency Service noted a 129 per cent increase in the number of businesses in the IT sector in England and Wales going into administration in the final quarter of 2008. In 2009, this number is expected to rise further and could put many retailers at risk.
Escrow agreements protect the business critical software that retailers depend upon but do not own, or control. Under the terms of an escrow agreement, a trusted third party provider securely holds a copy of the source code of the business critical software application on behalf of the retailer and at the agreement of the software provider. Should the worst happen, the escrow provider can legally release the material held in escrow so that the retailer can continue to operate and maintain the software application with minimal disruption to their business.
Leigh concludes: ”The devastating effects of the downturn are well documented, and for businesses suffering during the ‘retail recession’, losing essential software could be the final nail in the coffin. The potential for software companies to become bankrupt is very real and now, more than ever, escrow should be considered as an essential facet of a wider disaster recovery strategy.”
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