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Right now, a lot of change is happening in the market for local government solutions. ERP software vendor boardrooms are flat out determining strategies to shift customers from their on-premise software to their cloud hosted platforms in order to secure their customer base for the next 5 to 10 years.
This is both an opportunity and a risk for Local Governments who are currently or soon to examine the future of their ERP solutions due to an approaching end date of current contracts and/or pressure from vendors to move platforms. The opportunity is knowing that the key ERP market players are in this position of fierce competition of attracting customers, and that the risk is facing the formidable sales machine of the software providers alone or without a plan!
In no way is this article intended to be negative. In fact, an ERP refresh or upgrade can be a fantastically positive process for a Local Authority to go through, however it just requires a considered approach. That is an eyes wide open, with all the facts laid out, before making your purchasing decision and project approach.
ERP solutions have a big impact on the operations of Councils in Australia. There has been a lot of movement in the past, but we believe there will be a significant change in the future. Refer to the graph below which shows the movement in ERP solutions for the last 10 years. For simplicity, we have presented this data based on Property Solutions as some Councils are using a best of breed combination of products.
Despite these ERP marketplace changes, there are likely to be many more over the next 5 years. This is based on significant changes across two aspects. Firstly, the rush to secure Council clients onto ERP cloud-based platforms under multi-year contracts, and secondly, in the priorities for Councils shifting including;
Many ERP software vendors are scrambling to ensure they meet the changed expectations of councils and retain the customer base that they have, whilst others are working to grow the number of councils they serve. There is likely to be some significant pressure for Councils as they are faced with decisions on whether to upgrade the solutions they have now, or go to market as they plan strategically.
What is important to understand for Councils, is that many of these “upgrades” involve the same effort, cost and risk as a new implementation. The cloud solutions do inherit significant changes to the software itself, as well as ensuring the upgrade will future-proof the organisation and meet the four key priorities mentioned above.
Building a business case steadily for change is critical to aligning the organisation with the project approach, benefits and implementation approach.
Almost all Councils will be impacted by this Council ERP crunch, as detailed by our analysis of the current marketplace below;
TechnologyOne Councils must decide whether to do the upgrade to CiAnywhere. There have been a few that have done this upgrade and many Councils will need to decide whether they go on the CiAnywhere journey.
Civica has had a number of Councils move over the last number of years and are looking to remedy this situation with the new Altitude Suite that is being built to replace Authority.
Infor have a large client base, although they have lost a number through amalgamations and other reasons. They have signaled a move to a cloud solution for many customers.
Open Office have gained market share and have significant funding based on the acquisition by Pemba. They have signaled they have significant portions rewritten for the cloud.
Magiq have gained a foothold in Australia and have a number of customers now with a developing base in South Australia, as well as in other regions. They have said they are cloud enabled, and are positioned in a number of smaller Councils.
Datacom is building a new product called Datascape. They have gained a number of Councils across Western Australia, South Australia, and Victoria. They have built from scratch and have a strong partnering philosophy.
IT Vision has grown over the years and made traction in Queensland and New South Wales after their significant success in Western and South Australia. They have embarked on a program of building their Altus suite and have Financials live. They have a lot of Councils using their software so how this rebuild goes will determine when Councils will need to upgrade to new software.
Councilwise are in an interesting position as they have just been acquired from Brighton Council. They have gained a good reputation for good and quick implementations and have a strong partnering strategy. They will certainly be looking to have more Councils using their software.
As this summary highlights, there will be a requirement that many Councils either implement the solution that their current vendor is proposing (depending on sunset dates for existing software), or they may look at a longer-term strategy, to replace their solution entirely.
The good news is there are many organisations making these decisions at the same time, and others who will have gone before them.
From our experience, Councils have had varying experiences with whatever vendor option they ultimately choose, so it is important to prepare well considering costs (both upfront & ongoing operational costs), the change management to ensure you get the key buy-in from your people, contracts and their terms specifically around security, ERP project execution, managing stakeholder expectations, and finally the key governance.
It is also important to understand the differences that cloud-based solutions bring into your ICT operating and architecture model compared to on-premise versions, which will include supporting resources, internal skillsets, vendor management, available bandwidth, risk management, disaster recovery, ability to integrate, ownership of data, and that key one now, the cyber-security risks.
Strategic Directions has significant research which will assist any Council or organisations either thinking about or underway in their ERP journey. Reach out if you want to further understand considerations, options or next steps.
Partner
David has experienced over 20 years’ leading private, commercial operations and government authorities in best practice ICT Strategies, Business Processes and Project Management Methodologies.
