GovTech’s Second-Hand Market:

The Aggregation Game in Local Government Software

There was a time when the local government software market wasn’t a market at all. It was a collection of small, independent vendors solving problems for councils in niche ways. Over time, through a steady process of mergers and acquisitions, these companies were absorbed into larger entities. What was once a collection of distinct solutions has morphed into a landscape dominated by aggregators. Those companies that have built their portfolios by acquiring software providers and consolidating their market share. You’d recognise their names for sure. After decades of consolidation, it’s worth asking: have councils reaped the benefits, or has this growth by aggregation primarily enriched shareholders?

This isn’t unique to Australia either. It is part of a global equities playbook, with the same consolidation dynamics unfolding in the U.S. and beyond. In fact, I could swap out the company names in this article for their American counterparts, and the story would remain largely the same. Govtech will be a booming business for decades to come, but will today’s incumbents shape its future, or will new challengers redefine the market?

The Story of Aggregation

This pattern of consolidation is visible across all the major players in the sector. TechnologyOne started as a finance software company and expanded through strategic acquisitions, including ProClaim which became their flagship property and rating product, Avand which became ECM, ICON Software, Digital Mapping Solutions, and Jeff Roorda and Associates and so on. Each purchase added new functional capabilities, but at the cost of increasing technological complexity.

MAGIQ Software, originally Napier Computing Systems, has evolved under various ownership structures and is now controlled by private equity interests via Springbrook Software in Portland. Similarly, Infor, another key player, acquired Geax Computer Corporate, Datastream, and Hansen Information Technologies, building an empire that many councils recognise today as Pathway and Infor CloudSuite Public Sector.

ReadyTech is the latest to pursue this well-worn path. Since 2021, they have aggressively expanded their local government footprint in Australia, acquiring Open Office, IT Vision, and, most recently, announcing the acquisition of Tasmanian-based CouncilWise in 2025. The impact? Hundreds of council clients have been absorbed into their ecosystem. With each acquisition adding yet another financial system and property and regulatory system under the same banner, a fundamental challenge looms as to which technology will emerge as the standard, and at what cost to councils?

In my conversations with clients of all these software providers, acquisition announcements rarely draw much interest. What they care about, often urgently, is the architectural and operational and financial impacts on their business systems.

For example, while customers have been advised that the acquisition of CouncilWise will enhance ReadyTech’s overall Property and Rating solution, it remains unclear whether this signals a full consolidation of Property and Rates under a single platform. And what that would entail. And over what timeline. Basically, without clear answers on long-term product direction, integration strategy, or timelines.

This reflects a broader industry dynamic. That while acquisition announcements are swift and well-publicised, architectural clarity often lags behind. This timing gap raises an important question as to who is the primary audience for these messages? Customers looking for a clear product roadmap, or investors tracking market expansion?

Given this, and considering the broader functional solutions within the portfolio, customers have a justifiable expectation for a clear and decisive product strategy in the near term. But this expectation presents its own dilemma. That bringing a truly unified solution to market means grappling with all the challenges of the aggregator model itself.

The question is whether vendors are ready to confront the realities of legacy architectures, integration complexity, and competing technology stacks, as decisively as they announce their acquisitions. History says no.

The Aggregator Dilemma

The challenge with aggregation is not just technological. It is also strategic. When companies grow through acquisitions, they inherit an array of older technologies, disparate data models, and deeply embedded process logic. The expectation, and indeed go-to-market message, is that these systems will eventually be harmonised or integrated. The reality, however, is that financial incentives often discourage meaningful consolidation. Instead, aggregated companies continue to operate multiple legacy systems, offering councils an illusion of choice while maintaining a fragmented backend.

History shows that aggregators often optimise for short-term profitability rather than long-term product innovation. That is the business model. This is a game of market positioning rather than service improvement. The customer logo is as often treated as a tradable asset, rather than a partner in digital transformation. Councils, as customers, are left with aging systems, mandatory upgrades, and reimplementations. Not because they seek better technology, though often they do, but because their software provider dictates it.

That is not to say that some vendors don’t try. But in my long-standing sector research and direct client advisory engagements, a number of practical challenges consistently emerge when vendors attempt to modernise their technology portfolios through acquisitions.

While the press release and general theory suggests a seamless consolidation of solutions, the reality is often far more fragmented. The acquiring companies inherit not just systems but incompatible architectures and deeply entrenched process logic that resist harmonisation.

One of the most persistent issues that I have written about previously, is the lack of a true integration strategy. Many aggregated systems remain stitched together with legacy database transfers and outdated synchronisation methods rather than modern, API-driven interoperability.

This can result in delays, errors, and misaligned data, forcing councils into workaround-heavy operations rather than enabling streamlined workflows. The expectation that an acquired system will eventually be re-engineered into a cohesive whole is often an illusion and one that councils experience with persistent frustration.

Compounding this problem is poor software release and testing management, a recurring issue in aggregated environments. With multiple acquired systems operating in a single client environment, even the most capable architects struggle to anticipate the full impact of changes across interconnected platforms. Without rigorous testing, new releases frequently introduce regressions. These are issues that should have been caught in quality assurance but instead make their way into production. The cost of these failures is borne by councils, who must delay deployments, implement costly patches, or endure prolonged instability in their operational environments. Yet this complexity is the responsibility the acquiring vendor takes on even though the responsibility too often falls back on the customer.

In 2022, Pacific Equity Partners (PEP) saw the financial potential in ReadyTech’s growth, offering nearly half a billion AUD for the company. The deal didn’t proceed, but the bid highlighted an uncomfortable truth to tech analysts. In the aggregator business, software isn’t the primary product, market control is. The objective is often less about providing best-in-class solutions and more about positioning the company for future buyouts. That’s fine if you’re an investor or a financial analyst. Councils risk becoming passengers on this journey, subject to shifting priorities driven by investor returns rather than software innovation and municipal needs.

While I applaud the success of the companies in this sector, some of whom have executed long-running masterclasses in marketing and influencing buyer psychology, I would like to see the pendulum swing back to really solving the technology problems created by that success.

The aggregation model has driven market expansion, but in many cases, it has done so at the expense of simplicity, agility, and true customer-led innovation. That is the current vacuum in this market into which new leaders can emerge.

Councils don’t just need platforms backed by financially stable companies; they need solutions that reduce complexity, modernise workflows, and improve service delivery. If consolidation continues to prioritise financial outcomes over real technology investment, the sector risks stagnation at the very moment it should be evolving.

Another often-overlooked consequence of aggregation is the loss of institutional knowledge, as workforce reductions and consolidation, key efficiency strategies in aggregation models, lead to the departure of experienced staff.

Many acquired solutions were originally developed by highly skilled, mission-driven teams with deep expertise in their domain. However, if key developers and support-staff are not retained post-acquisition, the product roadmap stagnates.

Councils may expect continued innovation (as every acquisition PR promises), only to find that the very people who built and supported the software have moved on leaving behind a system that receives little meaningful investment or modernisation.

What Comes Next?

While aggregators have shaped the market through acquisitions, councils themselves are not without responsibility. Procurement decisions, often driven by budget constraints and risk aversion, have reinforced the dominance of cost over performance. For too long, councils have prioritised short-term affordability, a pattern that has played directly into the hands of aggregators. But as the local government technology landscape evolves, there is growing pressure to rethink this trade-off.

Market creators, those developing modern, PaaS-based solutions, are moving in one direction, while market aggregators continue to pull in another. The old aggregator model still generates a lot of revenue for investors, but I think its strategic relevance is fading. The 20th-century govtech market is running out of time.

The real challenge ahead is for councils to recognise their agency in shaping this evolution. Many local governments continue to cling to legacy systems out of habit, not necessity.

Change is difficult, and procurement cycles often default to incumbents, but the risk of inaction is clear. As aggregation continues, councils risk being forced into costly migrations with little say over their future digital infrastructure. It is not unheard of, but it is rare, and I mean mythically rare, that roadmaps are worth the paper they are written on.

In the short term, aggregators will benefit from the inertia of local government procurement. Just as people are reluctant to switch insurance providers, councils hesitate to move away from familiar platforms, even when better alternatives exist. But long-term, the landscape is shifting.

If local governments are to make smarter technology investments, they must start distinguishing between shareholder value and customer value. They must challenge the notion that consolidation inherently leads to better service. They must question whether their rates revenue is funding innovation or merely propping up a corporate buyout strategy.

Aggregation has defined the local government software sector for decades. But history all but lays out that consolidation is not a substitute for progress. Councils need to stop being passive participants in their own digital futures. The real winners in this space will be those who recognise that technology is not just an operational cost but a strategic asset. And the time to take control of that asset is now.

Bottom Line

The forces shaping the city govtech market today are clearly driven by investor interests, but as new players enter the space with modern, flexible, and genuinely PaaS-native solutions, councils will have opportunities to break free from the aggregation cycle. The question is: will they take them?

My perspective? This doesn’t have to be a zero-sum game. Aggregators don’t need to replace or recode their entire stack to remain competitive. But they do need a new playbook. I respect wealth creation and believe in building on what works rather than destroying value for the sake of it. The challenge is not about tearing systems down. It is about evolving them in a way that benefits both customers and long-term market stability.

Partnering with platform providers like ServiceNow, Salesforce, or even forming a deeper alignment with Microsoft could allow them to lock in their solutions (databases) as the customer’s core systems of record for decades to come, while solving the enduring architectural problems they currently have no incentive to fix. It’s about being better together. For the customer. Without these PaaS partnerships, I’m just not sure of their technical role.

From within the sector, aggregation-driven acquisition announcements feel outdated. But if an aggregator were to announce a strategic partnership with, for example, ServiceNow or Salesforce next week? That would be a real signal of long-term intent. Not just another acquisition, to achieve relatively short-term stock market success. But a move toward a sustainable, scalable future in what is clearly a global growth sector.