IT AND SOFTWARE THE BACKBONE OF A HEALTHY BUSINESS

Even diligent and hands-on executives may find that they could be overlooking critical aspects of the company's business and its supply chain. This may unintentionally expose the company to a high level of operational risk, cautions Terry Booysen, CEO of the well known governance research organisation, CGF Research Institute (Pty) Ltd.

“Any company which is reliant on intellectual property (IP) belonging to third parties exposes itself to potential risk that needs to be appropriately managed”, says Booysen. This is particularly relevant where the use of IP (such as proprietary software and systems) is related to critical business processes, functions and services.

“Prudent risk management processes and procedures which must be vigorously implemented and followed”, are critical in keeping a business healthy. These risk management ‘ingredients’ are, amongst other, the basic foundations for a sustainable, well governed business. However, cautions Booysen, “…many companies … unwittingly expose their company to unnecessary risk because they have limited or no control over the IP, which is owned by third parties, and which is necessary for the ongoing generation of their revenues”.

In this context, technologies and software are not merely another component of the business. “The reality today is that IT and software indeed have become the entire backbone upon which business operates across the world”, says Booysen.
The practice for underwriting technology dependent risk through what is known as an Escrow Agreement serves to safeguard the continuity of mission critical applications. It furthermore helps to mitigate the potentially devastating consequences of such risks materializing. The guidelines in ISO9001 confirm source code escrow as a process whereby access to maintainable information systems can be guaranteed, irrespective of:

• the stability of the commercial status of the software supplier, or
• whether certain predefined commitments such as warranty, support and maintenance are not honoured.

The process of mitigating against these risks requires companies to take specific actions when they procure technology systems or software. Such actions must be able to withstand the scrutiny of an audit to provide the assurance sought by the company’s key stakeholders. For further information, please contact Andrew Stekhoven: Managing Director Escrow Europe (Pty) Ltd, Tel: (021) 852 9365, e-mail andrew.stekhoven@escroweurope.co.za or visit Escrow Europe’s website at www.escroweurope.co.za

(Source: Terry Booysen, Chief Executive Officer, CGF Research Institute (Pty) Ltd, Tel: (011) 476-8264 / Cell (082) 373 2249, e-mail: tbooysen@cgf.co.za)