For twenty years, the Australian local-government technology market was defined by stability. Not innovation. Not transformation. Stability. A handful of ERP providers held entrenched positions, councils cycled through the same replacement patterns, and vendors priced their products with quiet confidence that switching costs alone would do most of the defensive work.
TechnologyOne was the standout beneficiary of that era. A broad suite, accessible delivery motion, a maturing SaaS platform, and a customer base with limited alternatives. The company earned its premium ASX valuation because the environment allowed it. Low churn, predictable growth, and high margins built a defensible ANZ footprint.
But that world no longer exists.
And this shift exposes a deeper truth about TechnologyOne. It has always been a market leader in the ANZ local-government ERP space, but a laggard when measured against the global SaaS and ISV curve.
Within its niche, it has been the dominant incumbent for decades. But in a world now defined by platforms, ecosystems, and AI-native workflows, councils aren’t benchmarking their core systems against Civica or ReadyTech anymore. They’re benchmarking them against ServiceNow, Microsoft, Salesforce, and the global SaaS pattern-makers. The category has changed, and suddenly regional leadership is no longer the same as architectural leadership.
Over the past five years the gravitational centre of local-government technology has shifted. Albeit quietly at first, now more rapidly. And irreversibly. The ERP is no longer the centrepiece of the enterprise architecture. The platform is. The workflow layer is. The integration spine is. The AI-enabled service environment is. Councils are moving beyond monolithic system thinking and entering an era where capability matters more than modules, orchestration matters more than ownership, and outcomes matter more than suites.
This is the great decoupling. It is the loosening of ERP gravity and it has caught some vendors mid-stride.
TechnologyOne now finds itself navigating a transition at the exact moment the market it once dominated is fragmenting. Not collapsing mind you. Just fragmenting. The shift to SaaS-Plus is strategically sound but financially heavy because it front-loads delivery costs in a business that previously enjoyed the luxury of high-margin licence revenue. The company is still growing strongly, but it is a smaller software organisation (intenrationally speaking) facing the long, expensive part of a business-model transition without the decade-long cash reserves of the global platforms.
And the ground is moving beneath its feet.
Salesforce Public Sector Solutions is inserting itself into licensing, inspections, and citizen engagement workloads. ServiceNow, barely a footnote in the sector five years ago, is now fomenting customer service, regulatory workflows, and internal case management across councils. Microsoft and AvePoint have effectively captured the information governance and records landscape.
ReadyTech, newly consolidated through OpenOffice and CouncilWise acquisitions, is refirming for a push into property, regulatory, and rating workloads across the bottom third of the sector, while CouncilFirst, built entirely within the D365 platform, is moving with a clarity of purpose not seen in that portfolio for years.
Even Datacom is re-articulating itself around platforms, services, and outcomes rather than modules. And Civica, the vendor that has drifted in and out of competitiveness for decades, following periods of stagnation, under-investment, leadership churn, or customer dissatisfaction, is now rising again, because the structural shifts in the market have created openings that didn’t exist during the era of ERP monoliths.
This new ecosystem adds depth, competition, and architectural diversity, which naturally softens ERP’s old dominance. And even if you don’t buy that argument, the shift is significant enough to warrant some serious reflection.
In this environment, premium pricing for ERP requires more than historical position. It requires platform alignment. AI strategy. Integration maturity. Workflow extensibility. It requires a clear role inside a multi-system architecture where councils expect SaaS interoperability, PaaS capability, and the freedom to assemble their own service experience.
The margin pressure we now see in TechnologyOne’s financials, reflected in a 17% drop in share price yesterday1, is not the story. It is the signal. It is a symptom of a market recalibrating to the reality that local-government technology is no longer structured around a single vendor.
SaaS-Plus is not the problem. It is simply the cost of competing in a world where modern councils expect the implementation experience to be part of the value proposition. But when that model shift happens at the same time the sector is re-wiring itself around workflow platforms and AI-driven service layers, investors start asking harder questions.
Can a mid-sized Australian software company absorb multi-year delivery investment while global platforms target the same budget lines?
Can a legacy ERP maintain relevance in a market where the workflow engine, not the finance or rating or asset modules, defines customer experience?
Can councils justify premium ERP spend when the modern architecture is a federation of best-fit platforms with rich APIs and low-code extensions?
These are structural questions, not cyclical ones. The likely outcome is not collapse but correction. ERP will remain a very important part of the stack, but not the anchor. Councils will continue to modernise, but not around monoliths. Vendors will need to articulate interoperability, extensibility, and platform partnerships as clearly as they once articulated module roadmaps.
The winners in the next decade will not be those with the broadest suite. They will be those with the strongest gravitational pull towards the platforms that help councils orchestrate services, manage data, automate work, and integrate seamlessly with specialised line-of-business tools.
Local government has already shifted its centre of gravity. The procurement language has changed. The architecture diagrams have changed. The conversations with CEOs and CFOs have changed. The expectations placed on technology leaders have changed. A vendor can hold its place when it’s the sun. But not when the whole solar system drifts into a new region of the galaxy.
ERP is still in the room. It is just no longer at the head of the table. And that change, not yesterday’s share-price drop, is the story I’ve been tracking for nearly two years.
That occurred on 18 November. It is too early to assess whether the margin drag of SaaS-Plus growth (more wins leading to more implementations leading to more short-term labour costs) is temporary or structural. They are starting from a very high margin base (~40% is very high by global SaaS standards). They will probably need to shift more delivery capability offshore in the longer term. So TechnologyOne is in the middle of a textbook SaaS transformation curve. The difference is that the market factors that defined such transitions over the last twenty years have now changed.