Fail to prepare and prepare to fail

Burying your head in the sand when it comes to business continuity planning is just not an option today. CXO hears more about this critical function with industry expert Herman Meuldermans.

CXO. In the current economic climate why is it so important to have business continuity systems in place?

Herman Meuldermans. Escrow is a legal, technical and administrative arrangement in which an asset (e.g. source code) is deposited into safekeeping with a trusted third party - the escrow agent. If contractual conditions are met, the escrow agent will deliver the asset to the party prescribed by the contract, mostly the user of the technology. These days, trust between business partners tends to be institutionalised. Past few months we've seen that the complex business relationships as we know them, essentially are based on mutual trust. What happens if trust suddenly disappears ? The thing collapses. Business partners still like each other, and want to continue doing business with each other. But they are carefull, more than ever dependencies have to be secured. That's exactly what we do. We could state therefore that the current economic climate is in favour of products as ours, offering security and garanteeing business continuity.

What business continuity challenges are businesses currently facing?

HM. There are a lot continuity challenges, of course. The one that's very often forgotten, or that's being thought of too late, is the dependency of a supplier. When it comes to IT systems or technology in general, this dependency can be very, very critical. As well as any other company, suppliers are due to the economic game, can win, can lose, and can fail in delivering the expected service. This can have very nasty consequences. Realistic suppliers are aware of their position and take pro-active action. Together with their service agreement, they offer an escrow contract to their clients. Thus they show themselves as a reliable partner, they turn their weakness into a strength. We help them doing this.

What common mistakes do companies in Europe face when it comes to business continuity?

HM. I wouldn't call it a mistake, rather a lack of awareness. When it comes to continuity, a lot of company issues are almost naturally thought of. On top, of course, management teams think about financial conditions, including shareholders perception. Production and service issues come next, followed by marketing and sales. People are important too and a huge effort is put in human resources programmes. In this context, also knowledge management is very often mentioned. All of this is administrated by huge and sophisticated IT systems, costing immense amounts of money in both development and support. Is continuity of this critical infrastructure assured to an acceptable level? Is there an escrow-arrangement in place?

Even a company relying on it's own personnel when it comes to IT or technology development is essentially dependent from them. If the team disappears, what happens to the knowledge of the system? Escrow services reach beyond the safeguarding of a depot. The technical team will always verify if the depot is what it's supposed to be; the administrative support team will update the depot at least once a year, thus continuously guaranteeing maximum usability to the user. Whether technology is created internally or externally, due to the structured and updated verification service, continuous use of the system is guaranteed.

You talk a lot about dependency between users of technology and the suppliers of it. What's the use of escrow services for suppliers? Aren't they considered to give away their intellectual property.

HM. Indeed we speak of beneficiaries when we mean users. If something goes wrong, they receive the deposit, including source code.

But I don't agree with the statement that suppliers give away their intellectual property. They don't. On the contrary, they secure it by depositing it.

Our contract very clearly states that the IP remains property of the supplier, whatever happens. When a deposit is given to a user, he obtains the right to further develop the source code for it's own purposes, nothing else and certainly no commercial objectives. A very significant penalty is foreseen in the contract.

Herman Meuldermans, General Manager of Escrow Europe, holds a university degree in Social and Political Sciences from the Catholic University of Leuven. He started his career as an account manager for ING Insurance in Belgium and later worked as a principal consultant for almost six years for a Dutch consultancy bureau.