10 Head-to-Head Distinctions in Local Government Software Selection
Within Australia and New Zealand’s multi-billion dollar local government software market a number of key technology companies regularly vie for selection across over 700 Councils. Replacing core business systems is a significant and costly undertaking not to be approached lightly and Councils must consider that no single vendor has a dominant strategy in what I would describe as a purely cyclical market. Despite regular consolidation through mergers and acquisitions, the overall revenue and growth numbers of the top 10 providers supports a view that the local government software market operates as a Nash Equilibrium which describes “a stable-state in a multi-person situation where no participant gains by a change in their strategy as long as the other participants also remain unchanged”. Under these conditions assessing technology partners purely on written tender responses and presentations can lead many Councils to the erroneous conclusion that all software does the same thing. While that is correct to some extent procurement processes can often obfuscate the real differences that have a material impact on the alignment of vendor technologies to business outcomes. Independently assessing enterprise software is a large part of what we do as a business. It is unsurprising then that even through this current period of TechnologyOne dominance we still see every vendor in every combination chosen by Councils. But not everyone gets it right. Rather than focusing on “technology trends” I’ve pulled together a list of ten (10) head-tohead distinctions that make a real difference to highly-aligned vendor selection. Ignore them at your own peril.
Digital Customers vs Engaged Staff The “digital” trend remains high on the agenda of local government executive management and vendors continue to address the concept of “customer” in a number of ways. Delivering true customer-driven processes means providing software that is focused at two-ends of a spectrum with staff at one end (via self-serve staff portals and mobile applications) and customers at the other (through front-end registered-user services portals). But it is in the middle office where clear differences emerge. Therefore Councils should look carefully at the level of interface and process change throughout the application including in the often neglected data processing middle office.
Automated Workflows vs Business Processes Business process support is not a strong area for any local government software vendor (despite the hype). Ironically, devolving business process responsibility to them has become the norm. This is a big mistake. While vendors can be easily differentiated on great workflow capability for automation, and proprietary schema mapping for reporting, real business process management in any set-and-forget kind of way is non-existent. You’ve all been fooled. For example where a system will come with out of the box workflow and approval for a booking process: Search -> Reserve -> Pay -> Approve -> etc. etc., the system itself will not dictate the necessary variations to that process whereby it is the variations that ultimately determine a solutions alignment to the requirements of the customer. Think hard on this difference: workflow is not process.
Data Management vs Management Data The fabled “Single NAR” of all local government software is a myth. To be fair, it is technically possible but no vendors offer it. The reality of this marketing phenomena is that the underlying data model for the majority of systems is based on either Single or Multiple Relational Databases with Multiple Data Field Associations. In layman’s terms that equates to master data management complexity which is most evident – not in workflow or integration – but in reporting capability. Understanding the difference between data management and management data is a key point of difference especially in relation to ongoing investments in skills and complimentary technologies. The vendors know this is a problem and we see evidence of this in the slow march away from Crystal Reporting as vendors invest time and money on improving reporting visualisation for their customers. They fundamentally understand that you, the Council, do not have the skills. This combination of a lack of data management and report writing skills within local government, and the lack of published data models for local government enterprise solutions means that simplistic system reporting remains a road-map function at best but probably a marketing work of fiction.
Pretty Interfaces (HTML 5) vs Smart Applications (Core Processors) The transition to dashboard, mobile and natural view HTML 5 interfaces has been underway for a number of years and will continue for many more. For the customer that means that today’s integrated solutions have a number of different user interfaces based on the particular vendor’s development road-map – typically an older Windows Client, a newer Browser Client and an emerging Mobile Client.The challenge for Councils that are assessing change today is to ensure that informed decisions occur based on functional and data capabilities over and above the visual appeal of newer Browser and Mobile Clients that may in reality be a reskinning of an old piece of software. This is not happening enough. Furthermore, the current application boom is not just about a new pretty interface. An important part of the redevelopment journey is driven by the opportunity for modern applications to maximise use of innovative computing processors (that Intel or AMD sticker on your laptop). When compared to the old “distributed processor models” that required computing processes (based on system transactions) to be queued for execution, modern i5’s, i7’s etc. allow for parallel processing based on improvements in core volumes. But faster and smarter processors only work with smarter and re-coded software. Put simply, old software on new technology will still run like old technology. Beauty is more than skin deep.
Integrated Systems vs Best of Breed A local government requires a number of key software solutions to operate: Finance, Asset Management, Customer Management, Property, Planning, Regulatory, Web Content Management, Records Management, Spatial, HR, Payroll and more. Until very recently a true integrated solution from a single vendor was not a possibility. As a result today there is a clear movement away from best-of-breed system architectures and towards multiple functional systems from a single vendor within an overall integrated solution. This presents some benefits for Councils in reducing the number of vendors to manage but also provides challenges and considerations for business owners who are used to the deeper functional capability of a best-of-breed solution provider. Therefore if Councils continue to under-invest in internal IT integration capabilities, in order to move towards true east-west process integration, Councils must be prepared to move backwards in some functional areas. But Councils must be acutely aware that while all local government enterprise management software vendors now offer a range of “modern” web services and “legacy” ODBC integration options, I believe that ALL are incapable of supporting the business integration requirements of their customers. Furthermore, even when Councils choose to procure an integrated enterprise solution from a single vendor, the vast array of deliverables and loosely coupled products are commonly obfuscated in the contract or statement of work as vendors seek to monetise on individual product lines. For the customer that means being prudent in asking questions or seeking assurances on software scope to be sure of the details (i.e. how many reports / registers / modules / mobile apps / users etc. am I getting?)
Best Vendors vs Market Leaders Despite a number of local government software vendors having a golden run over the last 2years our independent perspective is that no single vendor is right for every organisation; which partner is right depends more on business requirements than technology. Far more than questions like “how much will it cost?” or “can you do it all?”, good Council decisionmaking requires executives to go deeper and look for clarity around business capability that can often be hidden well below the shiny marketing veneer of demonstrations and conference presentations. The style of business questions we find tend to elicit better fit-gap selections include “Is rating revenue a majority percentage of overall income?”, “Will Council frequently restructure its operational environment?”, “Is council in a rural or regional location?”, “Does Council have adequate technology skills outside of its blue collar technology staff?” and “With which other companies does Vendor X partner?”. In any case, the best vendor may not be the market leader and the market leader may not be the best vendor for any given Council in any given year.
Cloud Computing vs Outsourcing True software-as-a-service cloud remains limited in the local government software market. The majority of providers are still offering hybrid versions of cloud, managed services and outsourcing. Some BPO exists but robustness is not assured. Regardless of the service delivery model, cloud (or versions of it) is not an approach that absolves Councils of their poor systems training approaches. Rather Councils need to provide better investment in ongoing staff training at all levels from system administration to system super users to system reporting and information hierarchies. Cloud is not the panacea that will improve bad management practices. Generously allocate training budgets to existing vendors. Send finance staff for budget retraining on systems ahead of the next annual cycle. Consider carefully the capabilities of potential cloud-enabled shared service provider models not underpinned by adequate system skills in the providers own staff base.
Financial Management vs Chart of Accounts Many (most) demonstrations begin with a discussion around the Chart of Accounts – a mindnumbingly vacuous but critically important part of the assessment journey. It is important to know that today there are key differences in the way each software vendor presents the best way to implement “The Chart”. Yes there are competing views. In our view the Microsoft financial platform vendors are becoming increasingly significant and will seriously challenge the old-guard in the coming years as Councils seek to devolve financial management capability throughout the organisation. To be effective this practically means functional redaction in the account strings to allow lay-person accountability and improved data entry quality (i.e. addressing the “what account is this?” problem). Filters, Dimensions, and Skinny GLs are the new word in Cost Centers, Tasks and Activities.
Demonstrations vs Implementations In MBA speak post-purchase dissonance is the feeling experienced by people or organisations following the acquisition of a product or a service. For example you see something and just have to have it and then once you have it you wonder why it doesn’t feel as great now you have it. Have you made the right decision? Why did it look better in the shop or sound better in the review? We see this a lot in local government software procurement and a major reason for it comes down to the fact that vendors most often do not implement what they demonstrate. Even more than that, as Councils look beyond the technology and to the people and culture behind the software company it is critically important to understand that great demonstration consultants don’t implement and great implementation consultants don’t demonstrate. We don’t see a lot of use of skills or RACI matrices in assessments but if they are used as a point of analysis provide clear insights into the consulting capability of each vendor’s consultants against the vendors overall solution – the capability of real people to implement the stuff you bought. The A-Team-B-Team adage is as real in your software vendor as it is within your own Council. The fact is that great system consultants are rare. Not every vendor has them in every functional area and without careful assessment it is more likely that some consultants will know little more than your own staff about parts of the overall solution.
Marketing Roadmap vs Innovation Every local government software provider has a road-map. Not every local government software vendor shares their road-map. If they did we or someone like us would measure performance against achievement of that road-map. Anecdotally, performance in this area is very weak. Our advice is: Even if there is an incredibly powerful development team and platform behind the product; and Even if your preferred vendor invests a significant percentage of revenue into R&D (which by the way is a tax optimisation structure); and No matter how good it looks in the demonstration environment or screen shot or PowerPoint presentation; NEVER procure on the basis of road-map functionality from any software company. If innovation and transformation is a driving agenda item then make sure it influences the buying decision. Road-maps are not indicative of innovation. Marketing is not indicative of innovation. Merger and Acquisition is not innovation. In fact a lot of the road-map functionality presented as innovation is banal and mundane. You need to go much deeper to assess innovation. And in our view it is not the leaders that are innovators in this market. It is the up-and-coming software providers that are the disruptors; and today’s leaders have taken their eyes off them. And finally, Council’s don’t build major infrastructure without consulting engineers. They don’t defend claims without seeking legal advice. And they don’t operate with impunity without oversight from financial auditors and tax advisors. In the same way, more and more Council executives are realising that technology is a profession no different from engineering, law, or finance; or any of their other significant specialist business disciplines. Yet of all these, it is the one area where many Councils continue to roll the dice. In fact it is probably the only area within the whole business where we see under-informed, best-effort decisions continue un-questioned, or where unfair expectations are placed on internal hardware technicians to have all the answers, or worse still, where peer-endorsement from other Councils is seen as an acceptable operational approach to procurement and risk management.
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