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Summary

Emerging enterprise resource planning (ERP) providers are increasingly incorporating software-as-a-service (SaaS) as part of their managed service to public and private sector organizations. One such is Tyler Technologies which provides end-to-end IT services to the US public sector. The company's ERP integrates procurement, payroll, human resources, financials, and revenue, and is increasingly delivered as SaaS.

The rise of the cloud-based ERP software market

Our IT Service Contracts Analytics (ITSCA) database shows that Tyler Technologies has been supplying ERP in both city and state tax/finance departments and circuit courts through a SaaS model for 10 years. That business accelerated in 2019, with year-on-year (YoY) growth rates in quarterly revenue reaching 48% for SaaS, culminating in an $85 million contract with the North Carolina Administrative Office of the Courts (NCAOC) in July 2019. The heat has lessened this year, but the SaaS deal count has continued to rack up, with deals signed in the first quarter of 2020 including:

  • A SaaS agreement with Jefferson County, Texas, for Tyler's Odyssey Case Manager, Odyssey Attorney Manager, Tyler Corrections, and SoftCode civil process solutions, which we have valued at $9 million.

  • A five-year SaaS agreement with the city of Oxnard, California, to replace the city's 30-year-old legacy system with an integrated solution of enterprise-wide modules from Tyler's Munis ERP solution, EnerGov civic services suite, ExecuTime time and attendance applications, and Socrata Open Finance public data access and analysis portal.

  • An agreement with Winston-Salem/Forsyth County Schools (WSFCS) in North Carolina for Tyler's Munis ERP and ExecuTime Time & Attendance solutions. We estimated this to be a three-year, $4.8 million deal based on historical sources.

  • A new 10-year, SaaS agreement valued at approximately $14.5 million with NCAOC and North Carolina Judicial Branch for the vendor’s Brazos electronic citation traffic safety solution for mobile devices.

SaaS is part of managed IT

SaaS is mainstream IT, and companies like Tyler Tech are showing the way to managed service in the cloud. Tyler works with Amazon Web Services under a strategic collaboration agreement for cloud hosting services. The company is optimizing its products to match the cloud and transitioning some clients hosted in its data centers to AWS. As ERP providers try to understand the need to offer migration technologies to move users from legacy ERPs to SaaS, they should not be afraid of the commercial implications. Tyler Tech says the average term for contracts (SaaS and transactions-based included) has been narrowing over the past few years, from 5–7 years, and is moving to a range 3–5 years, but its quarterly term averages have been pretty constant at 4+ years through 2018–19.

Appendix

Further reading

Omdia IT Services Contracts Analytics

IT Services Contracts: Quarterly Analysis, 1Q20, ENS002-000137 (June 2020)

Author

Anushree Agarwal, Analyst, IT Tools & Insights

[email protected]

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