As we begin a new year, I thought it was a good time to reflect on where the Govtech industry stands.
Despite more money from VCs, Private Equity, and Wall Street, I would assert that things are actually getting worse for customers.
How can this be? Every time there’s a major merger or acquisition, the press release always says that the transaction will allow more resources to be invested in the business. Unfortunately, what actually happens is there is more pressure to “monetize” the company to provide an immediate return for the new investors. Since companies are selling and trading at unprecedented price-to-equity multiplies, it takes a lot more money to keep investors happy.
The fact is that local government Customers have never been as much of a “cash cow” for large Govtech companies as they are today. Maintenance is the biggest area of abuse by large companies. They have increased support fees more rapidly while failing to modernize their systems. This is called technology debt and if companies were required to disclose the deferred development costs, it would far exceed their available cash.
Customers are trapped because moving major systems to a modern platform (even if it were available) is disruptive, time consuming, and prohibitively expensive. With all the Mergers and acquisitions, the vendor you leave often buys the vendor you like.
Because of the value of recurring revenue, Govtech vendors are very protective of their customers. They don’t work together. One large vendor gets 70% of credit card transaction fees so they won’t support other payment processors. Customers lose.
I believe that customers, staff members, and vendors themselves would greatly benefit from better collaboration. Established companies could greatly benefit from working with innovative new companies. Platforms need to be modernized and migrations need to be simplified. Competition needs to be encouraged through procurement based on innovation and results.
The current state of Govtech is unacceptable. Instead of using innovation to achieve better efficiency and lower costs, we have become less effective and more expensive.
At TownCloud, we challenge the status quo every day. We engineer our software for efficiency and simplicity. While others have monetized obsolete platforms, we continue to invest in the technologies that make customers more effective. We don’t accept mediocrity.
If you want a better future for Govtech, talk to TownCloud. We are here to help everyone…even our competition.