Amidst the software industry’s crazy unicorn valuations and hot buzzword-compliant startups, one software business model remains tried and true: buy the rights to a mature enterprise software product (or the whole company) and then milk its customers for ever-dwindling maintenance dollars.
To keep the company going, continue to buy more such products and companies, thus maintaining a growth trajectory in spite of the downward trend each product takes individually.
The result can provide a lucrative revenue stream, in spite of the fact that customers will inevitably get fed up with products that aren’t keeping up with the times.
Sometimes, however, the risks inherent in such a model overwhelm the advantages, and the company goes down the drain.
That’s what happened to Allen Systems Group. Arthur L. Allen, Jr. founded Allen Systems in 1986 and built it into a $300 million company over the next 29 years by completing over 60 acquisitions.
By 2012, however, Allen Systems had come upon hard times, in spite of its 1,100 employees, 70 offices, and 5,000 customers, including blue chips like Coca-Cola, General Electric, and Toyota.
It eventually defaulted on its debt, leading to the exit of Allen in 2014 and a bankruptcy filing.
Read the entire article at https://www.forbes.com/sites/jasonbloomberg/2018/10/05/asg-technologies-enterprise-software-phoenix/.
Intellyx publishes the Agile Digital Transformation Roadmap poster, advises companies on their digital transformation initiatives, and helps vendors communicate their agility stories. As of the time of writing, none of the organizations mentioned in this article are Intellyx customers. ASG Technologies covered Jason Bloomberg’s expenses at ASG Evolve, a standard industry practice. Image credit: Jason Bloomberg.