Nobody Ever Got Fired For Buying ...
Transforming City Government Software Starts with These Two Issues
When you look past the competitive brand rivalries in the local government software market, the superficial business requirements often outlined by executives, and the hype surrounding the latest digital trends and marketing strategies, two fundamental challenges stand out: integration and Name, Address, and Register (NAR) management. Resolving these challenges could revolutionise operations for hundreds of local government entities both nationally and globally. These are not merely technical hurdles but foundational issues that, if addressed, have the potential to unlock significant efficiencies and transformative improvements in service delivery across the sector.
The inability of incumbents to solve these persistent challenges lies at the intersection of business priorities, technical debt, and market dynamics. Many traditional vendors have focused on expanding their market share through acquisitions, prioritising quick integration of new products over the fundamental restructuring or refactoring of underlying systems. This approach has often left the back-end architecture fragmented and unwieldy, a patchwork that hinders innovation and interoperability.
Moreover, legacy vendors tend to focus on meeting minimum compliance requirements or delivering incremental updates rather than pursuing transformative solutions. Their business models, which rely heavily on licensing and support contracts, disincentivise large-scale overhauls that could disrupt revenue streams or demand significant upfront investments.
As a result, the local government software market has reached an inflection point. After decades of acquisition-driven growth, many systems remain ill-equipped to support the seamless workflows and analytics that modern councils need. This creates an opportunity for emerging platform-enabled service providers to step in.
Problem 1: A Fragmented Landscape
The journey of local government software solutions has been one of expansion without cohesion. Acquired systems often operate in silos, with limited attention paid to aligning databases or harmonising underlying data structures before on-selling to customers. This has created fundamental roadblocks for councils attempting to streamline processes or consolidate insights. Data remains fragmented, and even basic reporting can require time-consuming, manual workarounds. [I wrote more about that here: Pause That Purchase]. Further compounding the issue is underinvestment, or in some cases, a total lack of investment, in integration.
In the local government software market, integration is often presented as a solved problem but the reality is far more complex.
Integration is most often treated as an afterthought, left to the discretion (and budgets) of individual councils. The absence of robust middleware or integration platforms, both across the sector, and in the incumbent market, exacerbates inefficiencies and leaves councils grappling with patchwork systems.
Vendors will frequently assert that their software "can integrate with others," creating the false impression that seamless data sharing and workflow automation are inherent capabilities. It’s a half-truth.
This claim usually refers to basic compatibility, requiring customers to manage the actual integration process through external tools, middleware, or custom development. This misrepresentation obscures the difference between systems that merely allow integration and those that are designed to manage it effectively.
In everyday operational environments, where workflows span multiple functions and systems, integration must be a built-in capability, not an afterthought. True integration requires the software to natively support seamless data flow, process continuity, and real-time interoperability, along with tools for managing and troubleshooting integrations within the platform itself. Without these capabilities, councils are forced to rely on fragile, patchwork solutions that are costly and inefficient, and that introduce significant operational risks and discontent.
This distinction is critical because in cross-functional workflows, relying on external fixes for integration shifts accountability away from vendors. By blurring the lines between integration compatibility and robust integration management, vendors muddy the waters and often leave customers to deal with the complexity another day.
Problem 2: The NAR
The widespread reliance on Azure Active Directory (AAD) in local government systems might seem unremarkable, just standard practice even, if not for the fact that it belies a much broader issue: the overdependence on AAD as a panacea for identity management and system integration challenges. This reliance often masks deeper shortcomings, such as the absence of a high functioning Name, Address, and Relationship (NAR) management solution.
While AAD excels as an identity and access management tool within its intended scope, it is often misapplied to compensate for broader data governance shortcomings. This approach creates systemic inefficiencies that hinder councils from achieving their strategic objectives.
AAD is often tasked with managing fragmented, inconsistent data originating from a myriad of disparate systems outside its core platform. However, it lacks the specialised capabilities necessary for a comprehensive NAR solution such as rigorous data validation, relationship mapping, and deduplication1.
These capabilities are inherent in master data management (MDM) solutions. This other classic misalignment problem places an undue burden on IT teams to patch gaps with custom fixes, while leaving critical functions unresolved.
For executives and technology leaders in local government, this highlights a fundamental challenge: to rethink data governance and invest in purpose-built MDM solutions for NAR management2.
Continuing to rely on AAD as the sticky tape and glue stopgap not only limits its effectiveness but also perpetuates disjointed workflows and poor reporting from an integrated application portfolio, and therefore, missed opportunities to improve citizen, community and employee experiences.
While identity management and NAR management are closely related, they are fundamentally distinct needs that require specialised approaches. Behind the scenes this cascades to an overburdening of under-resourced IT Teams that have to build custom extensions or integrations to cover functionality gaps of the core enterprise system(s), diverting resources from other strategic priorities.
The Opportunity for Platform-Enabled Service Providers
To move forward, councils must shift their focus from short-term fixes to long-term strategic solutions. That means thinking beyond simply going to market for core functions like Finance or Human Resources or Property and Rating. It is not enough.
Only by addressing these systemic data challenges, can local governments unlock the potential for more seamless service delivery and better decision-making through the elusive "golden record" that is central to enhancing both operational efficiency and community outcomes.
As it becomes increasingly clear that traditional vendors are unable to address these challenges, largely due to a lack of economic incentive, a new generation of players may emerge to disrupt the local government software market. These newcomers have the potential to cannibalise existing market share and reshape market dynamics.
Unlike independent software vendors (ISVs), whose focus often revolves around selling functional licenses and maintaining support contracts, Platform-as-a-Service (PaaS) providers can take a more holistic, workflow driven approach. By leveraging modern architectures designed from the ground up for integration, data harmonisation, and automation, PaaS providers can deliver solutions that legacy systems were simply not built to offer.
The end-result for the end-user customers is:
Better End-to-End Integration: meaning the ability to unify data and automate workflows without replacing their entire software stack.
True Golden Record NAR Solutions: meaning customer and relationship management under-written by proper MDM solutions to deliver better services and make data-driven decisions.
More Flexible, Modular Offerings: meaning the opportunity to continuously and incrementally modernise, to both spread out the licensing uptake for new customers and address the most critical pain points first.
Improved Focus on Outcomes, Not Licenses: meaning more discreet propositions tied to tangible service outcomes not software license values.
For this shift to take place, local governments must fundamentally rethink their current approaches and embrace innovative delivery models. This begins with acknowledging the limitations of existing practices and being willing to explore alternative solutions.
Driving this change will require bold leadership, particularly from those willing to challenge the status quo and the prevailing market dynamics.
It's reminiscent of the era when the adage "no one ever got fired for buying IBM" stifled innovation and bold decision-making. For years, organisations defaulted to safe, well-established brand choices, even when they weren't the best fit. Local governments today face a similar challenge: breaking free from reliance on legacy vendors and outdated paradigms that no longer serve their evolving needs.
In practical terms, this means prioritising integration as a strategic objective rather than relegating it to a "nice-to-have." It involves reimagining identity management, data governance, and Name, Address, and Relationship (NAR) solutions with a clean slate.
Most importantly, it demands a shift in accountability. Local governments must hold vendors to higher standards and insist on integrated, interoperable solutions. Regardless of where it comes from, it needs to be costed within the solution proposal. And where vendors fail to deliver, councils must have the resolve to look elsewhere, even if it means stepping outside the "safe" choices that have long defined the sector.
Bold decisions now will set the stage for transformative progress.
AAD can associate users with groups or roles, but it cannot track nuanced relationships (e.g., between a customer and multiple council services).
Only one major local government software provider offers a Master Data Management (MDM) solution. However, the majority of their local government clients are either unaware of its existence or do not utilise it, as it is not integrated into their core, enterprise-wide council management solution. That is bonkers!