Government technology doesn’t always move at a lightning fast pace, but the past month has brought on some significant developments. A few weeks ago, we wrote about how tech giants Amazon and Microsoft were snapping up former State CIOs at a rate we’ve never really seen before.
Now we’re seeing government technology giant Tyler Technologies spending $2.3 billion on a top government digital services firm, NIC. A deal of this magnitude is practically unheard of in the govtech space, and will require approval from regulators before becoming final. NIC has about 7,000 customers to Tyler’s 11,000 and brought in just under half a billion dollars last year to Tyler’s billion.
This type of acquisition isn’t something that happened overnight. Apparently high-level talks between the two companies have been on and off over the course of the last 15 years. Despite both the longevity and size of the two companies, they don’t overlap much in terms of their customer base. Tyler has been focused more on services for local governments and courts while NIC tends to deal more with states, providing them with things like payment processing and other digital services.
Because of the way NIC’s contracts are structured, there’s going to be plenty of room to grow for this new technology goliath. It should be much easier for Tyler to add some of their services to the existing relationships that NIC has than to start from scratch trying to develop relationships and contracts with state governments. There should be a lot more offerings that states will be exposed to through this acquisition because of the wider range of solutions that Tyler offers.
There are obviously red flags that can appear when a deal this large occurs, and people might worry that it makes things more difficult for other companies to compete. Government Technology interviewed Jeff Cook, a managing director at the M&A firm Shea & Co., who viewed the acquisition as promising for the govtech space.
He believes that a megadeal like this opens people’s eyes to investment opportunities, and will help bring more investments to the space. Digital services were the fastest growing area in government technology last year and he thinks that the investments in them are just getting started. He also pointed out that an acquisition of this size will keep Tyler and NIC busy as they work on a fruitful integration, and nimble companies may be able to use it as an opportunity to push product development and get new technologies into the hands of government customers.
The pandemic has certainly accelerated digital transformation as many walk-up services were moved online. If transactions or record requests can be at the convenience of citizens while also freeing up government employees, it’s a win-win. The NIC acquisition certainly changes the landscape of government technology vendors, but will hopefully lead to further investment and innovation in the space as well. If you’d like to learn more about how Extract uses technology to automate manual tasks in government like redaction or indexing, please reach out.
About the Author: Chris Mack
Chris is a Marketing Manager at Extract with experience in product development, data analysis, and both traditional and digital marketing. Chris received his bachelor’s degree in English from Bucknell University and has an MBA from the University of Notre Dame. A passionate marketer, Chris strives to make complex ideas more accessible to those around him in a compelling way.