Software Escrow Predictions for 2023
An increase in business insolvencies results in companies seeking software escrow solutions
In a recent blog of ours which looked at the increase of insolvencies in IT related businesses, stats taken from The Insolvency Service from 2020 to 2022 showed a 74% increase in insolvencies for businesses in computer software, consultancy and related activities as well as information service activities. We reported on a similar situation also happening to businesses in North America, where according to an article published by ABL Advisor, bankruptcy filings in the US during August 2022 across all chapters totalled 35,355, a 10% increase from August 2021.
IT related business insolvencies have swamped the news headlines this year, notably the cloud and datacentre service provider Sungard Availability Services which filed for bankruptcy both in the US and for its Canadian subsidiary, just weeks after its UK division was forced into administration. More recently we reported on the public sector cloud specialist, UKCloud who also fell victim to the insolvency crisis and was placed into liquidation, resulting in its customers being hit with sevenfold price increases and rushing to mitigate their data from the collapsed company.
Other businesses have also hit the headlines this year, namely Fast Radius, a Chicago-based advanced digital manufacturing company, who filed for bankruptcy due to “recent turbulence in the capital markets, which severely hampered the company’s ability to set up the required capital structure.” Similar to Fast Radius, B3i, a technology company based in Zurich with an ambition to see the market deliver better insurance enabled by frictionless risk transfer, failed to raise new capital in recent funding rounds. Ibeo Automotive Systems GmbH, a global provider of LiDAR sensors, also failed to secure further growth funding, resulting in filing for insolvency in October this year.
As a global software escrow vendor, we are experiencing both an increase in companies triggering their software escrow agreements due to a software/cloud provider insolvency and companies wanting to invest in new software escrow agreements to protect themselves from the potential risks of their service provider going bust.
As economic uncertainty and financial pressures to businesses continue, we expect the number of insolvencies in software and cloud providers to continue to increase in 2023, putting more emphasis on the importance of businesses making sure they have robust business continuity plans in place to protect themselves against data loss.
Increased SaaS and Cloud Uptake calls for more SaaS Continuity Escrow Solutions
Demand for SaaS (Software as a Service) applications are still increasing at a rapid rate, brought on by increased remote working after the covid pandemic and the continued demands for modern working. SaaS applications offer improved accessibility and cost-effectiveness with around 80% of companies today using at least one SaaS Application. This increase is also due to more SaaS providers offering UBB (Usage-based Billing), allowing companies to steer away from fixed price subscription plans to only being charged for what they use. In these uncertain economic times, this really adds value to a business who is trying to cut costs and extend their spending budgets as much as possible, so you can see why this method of modern working will carry on being a popular strategy for businesses in 2023.
Similar to SaaS applications, Cloud adoption for businesses today will also not slow down. Companies across all markets are making use of the speed and agility cloud platforms and solutions can provide. As legacy hardware comes to end of life and with the growing availability of IaaS (Infrastructure as a Service), PaaS (Platform as a Service) and SaaS services, companies are shifting the responsibility of managing the day to day running of hardware to the main public cloud infrastructure providers – such as Amazon Web Services (AWS), Google Cloud and Microsoft Azure. Cited in an article published by Zdnet, they found from KPMG’s 2022 Global Tech Report, that nine in 10 businesses consider their adoption of cloud systems to be ‘advanced’, and almost three-quarters (73%) are in the process of migrating strategic workloads to the cloud. Cloud computing is now seen as a fundamental pillar of tech for many businesses.
With more companies turning to SaaS and Cloud providers for their IT operations, more are putting their data in the hands of these third-party providers. They are therefore having to find suitable, cost effective and easy to deploy solutions to mitigate against the risks associated with these modern service delivery methods and the growing responsibility of the SaaS/Cloud providers. As a result, there will be a continued need for SaaS Continuity Escrow solutions in 2023. As demand for these types of SaaS Continuity Escrow solutions continue to rise, requests from businesses wanting upfront information on pricing for these solutions has become more apparent. Software escrow vendors will need to further educate and create awareness of SaaS escrow solutions as well provide transparent pricing on their websites to meet the needs of these businesses now and in the future.
Software Bill of Materials – SBOM– Identify and avoid security risks
Malware and ransomware attacks have by no means disappeared this year with such intrusions occurring every few minutes around the world. Earlier on this year, we reported on a serious vulnerability hitting the headlines named Log4Shell. First detected in December and known as a zero-day vulnerability, it was found in the popular Apache Log4j open source logging library which is used in nearly every enterprise app and service from vendors including Microsoft, Twitter, VMware, Apple and Amazon. This vulnerability enabled a remote attacker to take control of the device on the internet if it is running certain versions of log4j. Attackers can easily feed Log4j with malicious commands from the outside and make it download and execute dangerous code from malicious sources, putting organisations around the world at a huge risk.
These were concerning times for many global companies who at the time were not aware the products they were using contained such vulnerabilities. However, a growing number of companies are now seeking help with Software Bill of Materials (SBOM), enabling them to understand exactly what components are part of the software they use, helping them keep a close eye on any dependencies. If future vulnerabilities such as Log4Shell came along, they would know what is in their code base and what needs to be patched. The importance of SBOM has already been expressed in America with the US government now mandating SBOM’s for government agencies stating that all organisations seeking to conduct business with either the Department of Defence (DoD) or the Department of Energy (DoE) are now required to provide a Software Bill of Materials (SBOM) for every new and existing software contract.
With an increase in these types of attacks, businesses will have to ensure they continue to safeguard themselves from what could be a catastrophic consequence for their IT environment if not protected and SBOM can help mitigate against these attacks. 2023 and beyond will see software escrow vendors offering SBOM as part of their software audit services, providing businesses with an added layer of transparency needed, keeping their networks secure and aiding peace of mind.
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About Escrow London
Escrow London is a global SaaS escrow vendor headquartered in the United Kingdom. Our global coverage is provided across our London office, Escrow London North America Inc in Atlanta, and our Australian office in Sydney.
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.
