When the vendor fails: Why B2B buyers need escrow as a priority for their software stack

"Channel partners and managed service providers (MSPs) have always been on the front line when things go wrong with technology, and none more so than with third-party software. A vendor failure - whether through insolvency, acquisition, resource withdrawal, or a critical failure - can trigger immediate disruption to businesses, resulting in missed SLAs, lost data, and reputational damage. Yet many partners still underestimate how fragile the digital supply chain has become."

"Vendor instability is now one of the biggest hidden threats facing both end customers and the partners who serve them. Supply chains that were once linear now span multiple cloud providers, open-source components, and small, specialised vendors. This complex digital web is made even more fragile by the fact that many suppliers are early-stage businesses, often operating with a lean team and limited financial buffers to weather a corporate storm. A single resignation, compliance issue, or loss of funding can bring operations to a standstill."

Channel partners and managed service providers (MSPs) face immediate operational burdens when third-party software suppliers fail. Vendor failures — including insolvency, acquisition, resource withdrawal, or critical defects — trigger missed SLAs, data loss, and reputational harm. Reliance on SaaS platforms, niche vendors, multiple cloud providers, and open-source components has made the digital supply chain fragile. Many suppliers are early-stage, under-resourced, and vulnerable to single points of failure such as resignations, compliance issues, or funding loss. Customers contact their trusted partners when failures occur, exposing partners to reputational damage, unresolved security gaps, data access problems, and potential legal disputes. Vendor failures often stem from financial stress, untested dependencies, and lack of oversight.

Read at ChannelPro