In early January, the Chief Economist and Executive Director for Monetary Analysis and Research at the Bank of England described the challenges facing the UK economy as unique.

Huw Pill said while many countries are facing higher interest rates, higher inflation, and a shortage of workers, the UK is unusual in facing all of them at once. 

If UK households and businesses continue to feel the intense pressures of a cost-of-living crisis with high inflation in the first half of this year, what might the impact be on technology firms, SaaS providers and you as a customer?

If you depend on a vulnerable software or company for your business-critical applications, what’s your recourse?

We’ll explore how software escrow (for on-premises software applications) and SaaS escrow (for cloud-based applications) can provide safeguards against business disruption when vendors are no longer able to support their applications.

For smaller businesses looking to maintain their business, these escrow strategies could offer smaller vendors a way to minimise risks for their customers and compete with the larger vendors.

In a TechMonitor article published in August 2022, Tom Seal, senior research director at analyst company IDC, said IT spending overall may not necessarily shrink if the UK enters a recession.

The move to cloud computing, especially SaaS applications, means much of IT spending is now a fixed cost. “You are very reliant on SaaS applications so switching any of those off is unlikely.”

With today’s uncertain outlook, the pressures are intense though and SaaS start-ups are concerned with cash-flow, churn, building lasting relationships, and achieving sustainable growth.

As SaaS providers enter new business agreements, they may be thinking about proactively embedding SaaS escrow services into their offerings as an added assurance for their customers and a way to create value to build those customer relationships.

If you are a subscriber to SaaS services, you need to be even more vigilant about building-in safeguards for your business-critical SaaS applications in a down economy.

SaaS escrow is a risk mitigation solution that gives you access to your application and data, operational knowledge of your production environment, or a replicated snapshot of the live cloud-hosted environment in the event of vendor failure.

As you assess the resilience of your supply chain, look at the financial stability of your third-party SaaS vendors. Seek out suppliers that proactively deliver risk mitigation and business continuity assurance.

This can include implementing robust onboarding and procurement policies that include escrow and verification as part of supplier contracts. SaaS escrow serves as an extra layer of protection in case your SaaS vendor declares bankruptcy, becomes insolvent, or otherwise cannot support your application (as outlined in your escrow contract’s release conditions).

SaaS growth has been on an upward trajectory, and the pandemic provided a further push for cloud services to support collaboration tools around remote work and remote health services.

The worldwide public cloud services market (including Infrastructure-as-a-Service, Platform-as-a-Service, and SaaS – System Infrastructure Software, and SaaS – applications), grew 29% year over year in 2021 with revenues totalling $408.6bn, according to market intelligence organisation IDC.

Rick Villars, group vice president, Worldwide Research at IDC said: “For the next several years, leading cloud providers will play a critical role in helping enterprises navigate the current storms of disruption (inflation, supply chain, and geopolitical tensions), but IT teams will also focus more on bringing greater financial accountability to the variable spend models of public cloud services.”

As this uncertain economic environment plays out, consider SaaS escrow and verification as safeguards for the applications and data you depend on to run your business.

Or, as a SaaS vendor, consider the benefits of an up-front discussion about resilience to get all the concerns on the table. In addition, be certain that your software escrow agent is an expert in security and has the experience, longevity, and stability to withstand tough economic times.

Read NCC Group’s blog: What to look for in a Software Escrow Agent

Download the guide: De-risk your SaaS Applications

For more information on cyber security services, visit NCC Group.

This article was written in collaboration with NCC Group Software Resilience, the world's largest Software Escrow provider. Visit their insight blog for actionable resources and helpful information.