More organizations than ever before are operating within digital cloud computing.1 world. Sourcing and procurement professionals incorporate software resilience, including SaaS escrow and verification, into their risk mitigation and business continuity plans. As organizations embrace digital transformation, procurement and procurement professionals can ease their transition to the cloud by adopting a resilient approach from the start.
Careful security measures must be taken to protect business-critical applications and data, as well as comply with applicable industry regulations. Our research shows that as business models shift to cloud computing, you must continue to build resilience within your processes. The following deepens and clarifies this point of view.
Migrating business-critical applications to SaaS
Looking at our large enterprise customers, about half have already moved to software as a service (SaaS) or are moving business-critical applications to the cloud, while the other half are considering SaaS. We rely on on-premises computing equipment to host our applications and data.
Industry statistics bear this out. According to Flexera’s 2022 State of the Cloud report:2 Enterprises run 49% of their workloads and store 46% of their data in the public cloud. We also plan to increase this by 6% and 7%, respectively, over the next 12 months.
Gartner’s cloud shift research3 — This focuses on spending — shows that nearly two-thirds (65.9%) of spending on application software will go to cloud technologies by 2025, up from 57.7% in 2022. I’m here.
We all know the many benefits SaaS offers, from flexibility to ease of use to scalable infrastructure and cost models. But moving to SaaS isn’t just a matter of flipping a switch. They are complex and require careful planning to ensure success. Especially in large enterprises, it adds complexity and often higher risk.
A question arises here. How can SaaS escrow be used as a solution to mitigate this risk and comply with third-party vendor regulatory requirements?
SaaS escrow has evolved from traditional on-premises escrow, but is still a three-way arrangement between the software purchaser (or subscriber in the case of SaaS), the software developer (or SaaS provider), and the escrow agent. SaaS escrow is designed to allow access and use of applications in the event that the SaaS vendor is no longer able to support them. Industry regulations increasingly address third-party risks as well, and escrow can also help meet these compliance obligations.
With SaaS, escrow protection extends beyond your application’s source code to your data. This is because the data now resides in the cloud. As such, SaaS applications require expert operational knowledge of the production environment, or an exact duplicate of the environment. snap shot of a live cloud host environment.
Regulation and compliance – Know issues and solve risks
An evolving and complex issue that must be considered surrounds the regulations that apply to operational resilience.
All companies work with outside vendors, and in many cases it is new and innovative start-ups that have developed SaaS applications that bring significant benefits to the company. However, outsourcing IT comes with challenges and risks. These risks include operational, regulatory, Or it could be a reputational risk. Meet delivery expectations.
Some countries have national laws that specifically regulate outsourcing. More generally, regulatory bodies in certain vertical industries, such as financial services, have introduced extensive rules or guidelines governing how they should work with third-party vendors. Compliance with IT outsourcing and third-party risk management regulations is essential for businesses that rely on third-party software.
For example, the UK Prudential Regulatory Authority (PRA)Four Published guidance for businesses across the banking and financial services sectors on how to mitigate third-party risk and ensure business continuity in the event of third-party supplier failure.
This means that under the PRA, companies will need to have a pre-written “stress exit plan” in place. This means that the company has a certain method or methods to maintain business continuity in the event of his IT failure within the supply chain. These plans should also be tested to ensure they work, and the results of this testing should be presented to the appropriate regulatory authority.
One way companies can demonstrate compliance is by including the implementation of robust onboarding and procurement policies that ensure software escrow agreements and validation tests are built into supplier contracts. Software escrow agreements make more sense than ever, as regulators now mandate how companies comply with requirements and expectations related to outsourcing and third-party risk management.
As this type of regulation becomes more and more common, global and international organizations tend to look at the broader picture and how it affects them on a wider scale. They are compelled to adhere to the highest standards within their global network. They strive to meet the most stringent regulatory requirements of the specific jurisdictions in which they operate and apply those requirements across all jurisdictions across their businesses.
digital adoption Transform Use SaaS – use smart strategies but be prepared for risks
Partnering with a SaaS application provider is a smart strategy, but you need to be prepared for risks, from unexpected supplier failures to developer acquisitions. You can take advantage of these partnerships while minimizing your risk by entering into a SaaS escrow agreement.
The regulatory environment is just one aspect of business that is changing the way organizations effectively evolve and adopt new technologies.
As collaboration tools and a move to the cloud have allowed businesses to adapt to the new reality of remote work, it’s hard to overlook that the impact of the pandemic has further accelerated digital transformation. As a result, spending on IT and digital transformation has skyrocketed, with a portion of that budget now allocated to investments in enterprise software, specifically the cloud.
Anticipate significant challenges when creating applications When your data is in the cloud
Most procurement and procurement professionals and legal counsel are familiar with traditional software escrow (also known as source code escrow or technology escrow), especially new business from small or unproven vendors. We often recommend this as a safety net when onboarding critical software solutions. Essentially, an escrow agent keeps a copy of the software source code safe as a kind of “insurance” and also protects the vendor’s intellectual property.
In the event of future vendor problems (such as bankruptcy, acquisition, lack of support, or other conditions specified in the release terms), the escrow agent will release the software source code to the purchaser (including all build steps and along with other information). This allows you to recreate your application and ensure business continuity.
SaaS escrow is very similar in concept, but there are three major differences. For SaaS applications:
- you own nothing – SaaS does not require physical ownership of software applications, data, operating systems, or infrastructure.
- your data is more vulnerable – As SaaS adoption grows exponentially, the risk of data loss increases exponentially. SaaS tools may also restore storage snapshots of your data, but they may not be in a business-usable format.
- Responsibilities are shared in the cloud – Cloud Service Providers (CSPs) such as Amazon Web Services (AWS) and Microsoft Azure are not responsible for interruptions or losses due to outages.their shared responsibility The model means that CSPs are responsible for security management. of Service subscribers are responsible for securing the public cloud. of Cloud. Fundamentally, having critical assets hosted in the cloud does not guarantee resilience.
one of the most common misconception When adopting third-party cloud services, the assumption is that the SaaS provider is responsible for ensuring application continuity, data availability, application security, and regulatory compliance. Unfortunately, it doesn’t. The truth is that every time you onboard a new third-party SaaS vendor, you are introducing an additional element of risk to your organization, and you should have a strategy for operational resilience in place.
So how does SaaS escrow work to provide operational resilience? When How do you mitigate cloud risk?
That’s where SaaS escrow comes in. SaaS escrow agreements protect business-critical applications and data for SaaS subscribers by preserving source code, critical data, and other critical materials necessary for long-term application support . Provides a means to quickly and accurately redeploy and maintain third-party applications and critical data..
With SaaS escrow, you can support your cloud strategy wherever you are in the migration process.
SaaS customers must consider how they will operate if their business-critical applications become inaccessible due to third-party vendor outages or lack of support. SaaS escrow provides business continuity and operational resilience when such situations arise.
As organizations increasingly operate in a digitized, cloud-first world, procurement and procurement professionals need to use SaaS escrow and Building software resilience, including validation, should be considered in risk mitigation and business continuity planning. provider.
Other resources:
end note
- What is cloud computing? of Investpedia article
- Flexera 2022 Cloud Report Status
- Gartner “Cloud Shift” Study
- NCC Newsroom article on UK Prudential Regulatory Authority (PRA)
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