Assessing Impact of New Microsoft-Mandated Escrow Requirement for Partners, to Protect ISVs

Effective November 1, Dynamics partners have to meet a new software escrow requirement to be part of Microsoft's "Certified for Microsoft Dynamics" (CfMD) program.

Business solutions that are CfMD are thoroughly tested and proven to meet Microsoft's standards for partner solutions to reassure customers that their licensed software will perform as promised.

According to Microsoft, the escrow process will protect the ISVs' intellectual property (IP) and give customers an added assurance about the long-term viability of the software they purchase.

"Customers working with third-party software vendors in CfMD want to know that the IP assets developed by innovative startups will be protected," said Ray Wang, a partner at research firm Altimeter Group. "Software escrows are a key tool to provide an assurance that these assets will exist well beyond the life of some of these companies."

Marc DiGiorgio, vice president, JustFoodERP, said his company has been using a software escrow service for five years-long before Microsoft made it a requirement for certification. JustFoodERP was one of the first NAV solutions to receive the CfMD certification, he said.

"The CfMD certified program says, ‘Hey, prospective customer of Microsoft Dynamics, this product has been certified by Microsoft and it's written in the standards that we state it should be written in and there are ten customers running this product,'" he said. "And Microsoft has tested it and called the ten customers to make sure they're actually running the product and it fulfills all the documentation and coding standard that it wants."

There are only a small selection of products that are CfMD certified and now Microsoft is going one step further and increasing the certification requirements, DiGiorgio said.

"Microsoft is ...