NCC: Businesses must protect against IT supplier bankruptcy

Businesses must take steps to protect their software in case any of their suppliers goes bankrupt, the NCC Group has said.

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Businesses must take steps to protect their software in case any of their suppliers goes bankrupt, the NCC Group has said.

With a 129 percent year-on-year increase - in the final quarter of 2008 - in the number of IT businesses in England and Wales going bankrupt, clients needed to protect their access to key software code, the company said. This would enable them to update or even rebuild software when needed.

NCC said firms should use escrow services, which allow them to place the software code with an independent company. Under standard agreements, escrow firms would allow clients access to the code if suppliers went bankrupt or failed to fulfil contractual obligations.

NCC offers its own software escrow services. Jon Leigh, escrow director at the firm, said: “We are urging companies - especially those reliant on using or delivering bespoke or tailored software - to carry out an escrow audit as part of their best practice procedure to identify the applications most at risk.”

Even though businesses were focusing on cost cutting, Leigh said, “it is essential that escrow arrangements don’t get forgotten” and that firms invested wisely to protect code.

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