Another One Bites the Dust - The Demise of Softrax

I'd been hearing rumors for a while that Softrax was in trouble and up for sale, and when we started receiving resumes from Softrax employees last week I knew it was a done deal. This Monday, AFS Technologies announced they had acquired "certain assets of Softrax Corporation" for a presumably small amount of cash.

Softrax was an early innovator with deep expertise in revenue management. They had lots of smart people and for a long time really dominated the scene around revenue recognition and deferred revenue - even today revenuerecognition.com is a great resource. But the combination of the recession and the shift to the cloud was just too much for them.

The synergy between Softrax and AFS isn't immediately obvious to me - the AFS website says that AFS are focused on food and beverage companies, while Softrax clients were concentrated in technology, software and and services. From the number of resumes we are receiving, my sense is the former employees of Softrax don't see too much synergy either. I just heard this morning that the webex accounts and conference lines for their sales and marketing team have been turned off by AFS - which says to me Softrax is no longer on the market. Update: Learned from comment to this posting that AFS and Softrax shared a common investor; this appears to be the link between the two.

What do I take away from this? It's another piece of evidence that 2nd tier on-premises application software vendors are having an incredibly difficult time in the recession - sales have dried up and they aren't big enough to live on 23% maintenance like Oracle and SAP can.

I think it also reflects that cloud-based financial applications like Intacct have really raised the bar - we've got very deep and highly automated revenue management, billing and lead to cash capabilities - and because we are cloud based we can offer both a lower TCO and higher ROI than old school on-premises software like Softrax. Given our track record in head to head competes with Softrax over the last year, I can't imagine they were winning much if any new business.

For any current Softrax users who may be reading this - Intacct has a formal lifeline program in place with substantial financial incentives for switching from Softrax to Intacct. We also offer Softrax clients our exclusive 100% satisfaction money back guarantee - if you don't successfully switch over to Intacct and go live you pay nothing. We can afford to offer this because Intacct has such a high customer satisfaction rate and track record of successful implementations for Software, SaaS, hardware, services and other companies that need really good lead to cash, revenue management and billing capabilities.

I never like to see good companies and good people go under - so this isn't a fun post for me to write. But I do think it's an important milestone along the transition from on-premises software to cloud computing - and I expect we'll continue to see more stories like this as more and more companies make the shift to running their business applications in the cloud.