Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're Inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership and vision and global business, the dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans, create jobs and harness the engine of capitalism. Right here, right now at the NYSE and at ICE's exchanges and clearing houses around the world. And now, welcome, Inside the ICE House. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
The little town where I live, New York City, has about 8.5 million residents and a municipal budget of nearly $100 billion and nearly a billion of that will be earmarked for the New York City Department of Information Technology and Telecommunication. Which, according to its website, is responsible for maintaining the core IT infrastructure and systems that touch every aspect of city life. From public safety to human services, from education to economic development, crossing the full spectrum of government operations. And it makes sense that, to keep a city like New York running in the modern world, that millions, if not billions, of dollars are needed to provide the technology to keep government services on par with the population it serves. The efficiency of our city's bureaucracy can be saved for the topic of another episode, but at least I can say that gone are the days that a simple interaction with the local government required hours spent in line, paper forms filled out in triplicate, manual processes requiring fleets of city clerks rubber stamping documents.
Josh King:
That's for the folks who live in a big city but listeners of this podcast also know that I spend a lot of time up in a hamlet in Upstate New York, the little burgh of Windham, gem of the Catskills whose year round population probably doesn't eclipse 2,000 people and has a slim budget of just around $6 million. No one would expect a small town to provide the same level of services and infrastructure as a metropolis but the need to modernize is still the same. Increasingly, local governments are expected to provide levels of transparency, data protection and digital accessibility of, not just the largest cities of the world, but of tech companies like Google or Amazon.
Josh King:
And our guest today, Tyler Technology's chief financial officer, Brian Miller, has been the person making sure the ledger for the government software giant has been solid for 25 years. He's overseeing dozens of acquisitions that transformed his company into a single source of solutions for the public sector. Joins us remotely today from the great state of Texas, our conversation with Brian Miller on Tyler Technology's Connected Communities, the future of municipal and state government technology and looking back at the biggest merger in Tyler's history. It's all coming up right after this.
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Josh King:
Our guest today, Brian Miller, is CFO of Tyler Technologies. That's NYSE ticker symbol TYL. He's been with the company since 1997, he's held several leadership positions. Prior to joining Tyler, Brian worked for Metro Airlines, Inc., a regional holding company operating as American Eagle, began his career with E&Y. Welcome ,Brian, Inside the ICE House.
Brian Miller:
Thank you, Josh. Great to be here.
Josh King:
So, there's no fonder memory for me than making a connection at Dallas Fort Worth Airport from an American Airline 757 to a de Havilland Twin Otter operated by American Eagle bound for Little Rock in one of my many visits to the great state of Arkansas. Let's start with just a moment to reflect on the great aeronautical tradition connecting through DFW.
Brian Miller:
Well, I began my post public accounting career in the airline industry, in the regional airline industry with Metro Airlines which was the original American Eagle provider at DFW. So, we were the pioneer in that code sharing arrangement. As public company was done, NASDAQ grew to be the largest regional airline in the country and, eventually, after a long series of twists and turns, was acquired by American. But certainly, massive differences between the airline industry and the software industry, most of them in favor of the software industry.
Josh King:
Any thunderstorm or tornado coming down at DFW is going to screw up your business for a couple days. Do you miss the airline business at all?
Brian Miller:
It's a super interesting business and it was during a period of a lot of growth, that was post deregulation, a lot of activity, just really fun business. Different every day, super interesting but an awful lot of challenges and a lot of things that are out of your control. Contrasting with software, they're capital intensive, software isn't. You have unions, commodity pricing, specifically, fuel is one of your biggest costs, pricing is generally determined by your most irrational competitor. So, a lot of differences compared to software. I really enjoyed my 10 years in the airline industry but I've been very happy with my 25 years in the software.
Josh King:
So, Brian, you've been with Tyler Technologies since 1997 which was still known as Tyler Corporation back then, still a year away from moving into the government space when you joined. What brought you to the company from American Eagle?
Brian Miller:
As I had mentioned, American was in the process of acquiring the assets of Metro Airlines. The regional airlines went through stages where they were, basically, as Metro was a franchisee although it was a separate public company operated under the American brand. And then, they entered a phase where the major airlines decided they wanted to acquire all their regional airline partners and so there was a big wave of acquisitions and I was caught up in that. So, American already had a CFO, so I was ready to do something different. Tyler was just going through this transition from being an old '70s, '80s industrial conglomerate to entering the government software space. And one of our independent directors at Metro, a guy named CA Rundell had been a longtime board member at Tyler and had stepped into an interim CEO role during this transition.
Brian Miller:
So, they were looking for a chief accounting officer, someone with M&A experience as M&A was going to be core to Tyler's strategy and CA knew me well and the opportunity sounded really intriguing. Even though I didn't know much about software, the business model sounded really interesting and the strategy that they laid out sounded like something that made a ton of sense and, really, was something new in the market. And so, I joined Tyler as chief accounting officer, stayed in that role for a few years and moved into VP of finance and then had been a CFO for about 15 years.
Josh King:
Curious what you found when you got there. This company that is headquartered in Plano, really, not Tyler, Texas. How was it segmented at the time you joined? What did you see when you walked in the door?
Brian Miller:
Tyler, from the mid-'60s through the mid-'90s was a classic industrial conglomerate. Its origins as Saturn Industry was as a spinoff of the old LTD Corporation which is a big Dallas conglomerate. They had spun off some businesses into a separate company and that became Tyler and then went public pretty quickly after it was formed. So, Tyler, for 30 years, was a very successful conglomerate, was a Fortune 500 company, had a billion dollars in revenue, so that was a lot, bought and sold lots of different businesses. The core business through that time was a company called Tyler Pipe which was founded in Tyler, Texas and was an iron pipe foundry, basically made cast iron sewer pipe. So, that was really the core of the company.
Brian Miller:
They owned companies like a company called Atlas Powder that was an explosives manufacturer, a plastic coatings business, a metal building business, a chain of auto parts stores across the great lakes. And so, it was very successful, but then, in the early '90s, conglomerates fell out of favor and, ultimately, the parts were determined to be worth more than the whole. And so, Tyler went through a period where they divested businesses, fund them off, sold them, dividend a lot of money out to the shareholders, so did very well for the shareholders. The founder, a guy named Joe McKinney, retired in, I think, 1995, the mid-'90s. And so, Tyler was a little more than a shelf company but had some cash, it was a New York Stock Exchange listed company but really only had a couple of businesses. And really, by the time I got there in 1997, what was left was the chain of auto parts stores called Forest City Auto Parts.
Brian Miller:
But the company had, as I mentioned, the guy named CA Rundell had come in as interim CEO from the board to help the company figure out what to do next. Another guy named Lou Waters who was the founder of BFI, the waste management company, came on as chairman and they really formulated the strategy of creating a national brand company to serve the very wide range of software and IT needs of governments. Primarily local governments at the time, we've since expanded well beyond local governments. And CA had had some peripheral experience in this space but recognized that this was a very fragmented market. A market served by a lot of local providers, niche providers, generally, that served a narrow functional area of government like property taxes or financials or courts and often focused narrowly from a geographic perspective. So, companies that did court systems in New York and New Jersey or tax systems in Texas. So, a lot of fragmented competition but no real national leader, no one company that had a broad portfolio of products that's scaled to serve a wide range of sizes of governments.
Brian Miller:
The business plan looked a little bit more like a roll up, which were also more popular in the late '90s. So, we had this plan to bring together leading providers which were those very successful regional companies in different product areas, to bring those together under Tyler, initially through acquisitions to grow them organically and to continue to broaden the portfolio and to create value by having multiple products and services available from one provider. And so, that was when I joined the company, we had, I think, struck the deals to buy the first three companies, all of which were located in Texas, one in Lubbock, one in Dallas and one in Plano. But those deals were not completed, we had to go get shareholder approval because we were shelling a lot of stock and we had to negotiate debt facility. We also were working on selling the last of the legacy businesses, which we did, I think, shortly after that.
Brian Miller:
And so, we did the initial three acquisitions in February of 1998, those businesses served as the cornerstones. And then, I think, over '98 and '99, we did a total of 13 acquisitions so we were busy. We had a credit facility, we issued a lot of stock, most of the deals were half cash, half stock. So, the founders of those companies, we wanted to stay at Tyler, to be thinking as owners of Tyler, to grow those businesses within Tyler. And so, we executed on that and, if you look at our investor deck or look at what we do today, it would be very similar to what we would've had in an investor deck, if we actually had such a thing, in 1998. The strategy, it's had some twists and turns along the way but, really, what we've achieved over that timeframe is what we set out to do 25 years ago. It's very gratifying to look back on it and say, "Hey, that's what they sold me on, that's what the plan was and, even though we didn't quite get there in a straight line, that's what we've achieved."
Josh King:
December will mark your 25th anniversary with Tyler Technologies. And, as you were describing, all of the build through acquisition deals that you did in '98 and beyond, I guess one of those deals was Brazos Technology Corporation based in College Station, a municipality that uses Tyler's software. And going back before you looked at Brazos, curious what brought you to College Station to do your education? I guess you were one of the President's Endowed scholars a few years before you came to kick the tires at Brazos. What was your experience at A&M like?
Brian Miller:
Yeah, I had a great experience at A&M. If you know much about Texas A&M, you know Aggies are a somewhat unique group of people and have some interesting traditions and differences, we think very different from a lot of schools. Yes, I came to A&M primarily because of the scholarship, the President's Endowed Scholarship, which swayed me to looking at it but, certainly, one of the best decisions I've ever made in my life. Great place, great spirit and built relationships there that have lasted a very long time. I'm still very involved in A&M, I serve on the board of directors of the 12th Man Foundation which is the foundation that supports A&M athletics also been involved in some other activities down there.
Brian Miller:
So, still spend a lot of time there, pretty much every home game on Saturdays I'm at, a lot of road games but, yeah, it's a great institution. And yeah, we were happy to make an acquisition in College Station, we still have an office there that supports that business unit which has grown really nicely under Tyler. So, it's nice, when I do go back there, I drive past the Tyler sign in front of the Brazos office.
Josh King:
I'm not sure if any of the scholars that you've sponsored have joined Tyler but, in a LinkedIn search we did, it shows this steady stream of Aggies moving the 200 miles to Plano. How is your headquarters, which I think includes a former YMCA building, helped you attract and foster technology talent down in Texas?
Brian Miller:
We recruit from a lot of institutions, we're a growing company. This year, I think we're around 7,000 employees, we'll look to add about 600 new heads, so almost 10% growth. And so, we continue to hire talent, especially in the technology arena, as you'd expect. Software developers, professional services people make up a lot of our new hires. We do hire at a lot of institution, A&M is certainly one of those, that's the target school which is a very rich in technology talent. But our headquarters here in Plano, it's not actually even the largest office within Tyler. We have probably around 800 employees that would normally now, I say, work in Plano. And now, I would just say based out of Plano because so many people are working remotely. Our largest facility actually, in terms of number of employees, is in the Portland, Maine area in Yarmouth and Falmouth, we have two major offices there.
Brian Miller:
So, we recruit people, not only in Texas, but throughout the country. We have major offices in Troy, Michigan, Dayton, Ohio, Seattle, Lubbock, Texas is one of our larger offices, I'm sure I'll be leaving some off but most of those have come through acquisitions. And so, that's one of our advantages is that we hire throughout the country and have a lot of diversity in terms of where our business units are located. I would say that Tyler is typically seen as an employer of choice, particularly in those smaller markets, as opposed to being in the Silicon Valley or Seattle, although we have a small presence there. So, in terms of places that are attractive to live, the Portland, Maine area, for example, is within two hours of Boston, very attractive place to live. And so, we really, I think, have an advantage when it comes to hiring people, we typically make a lot of the best places to work lists around the country.
Brian Miller:
And so, I think we recruit well. Obviously, now with remote work being a significant part of our model, we're able to recruit nationwide. People don't have to work full time in an office so we're a lot more flexible around that. But yeah, we're, I think, a very, very good place to work and I think that shows through our recruiting efforts and the awards we win. About 40% of our employees have worked in the public sector in the past and, obviously, that's the customer base we serve. And so, our employees really have that deep domain expertise but also the connection to our customers because they've done their jobs before.
Josh King:
Brian, a recent article by a veteran corrections officer, Philip Swift, talked about the value of having what he has, real time offender information at his fingertips through Tyler's Enterprise Corrections Solutions. I'm curious how corrections facilities using your software and what other capabilities are you exploring to get valuable information into accessible databases for law enforcement?
Brian Miller:
Yeah, public safety as well as courts and justice broadly are two major product areas for Tyler, functional areas that we serve. So, when you think about public safety, it's police, fire and ambulance, we do 911 systems, computer dispatch, police, fire and ambulance records, a lot of mobile applications around that then we move over into the correction space. So, you think about the cycle of an event, there's a 911 call, there's an event or an incident, there may be an arrest then that moves over to the jailing. And so, then, that's the correction space where we have software for, what you were just referring to, jail management software and then you move over into a trial. And so, we have systems that manage the prosecutor's office, the actual court. So, the court case management, managing all the aspects of a trial, whether it's civil or criminal or family, so all the parties and events. We have systems that manage the jury, that manage the prosecutor then into probation. Potentially, back into corrections and then into probation.
Brian Miller:
So, we are really the only company that has that full breadth of software covering the entire public safety and courts and justice function. So, we're able to have integrated solutions so that the data flows throughout that entire process, the workflow goes across all of those different functional areas of the process. In corrections specifically, we're a major provider of jail management software, mostly at the city and county level so we don't really do federal prisons or state prisons. So, you're mostly thinking about a county jail or a city jail but we have systems that really manage all the aspects of running those facilities, managing the interactions with the inmates. And we've added a lot of mobile tools, not only to our correction software and public safety software, but across all of our applications.
Brian Miller:
But in this space specifically, we've made big investments in mobile tools and applications. So, the jail management software, for example, tracks inmate movements, it alerts the employees in the jail of security issues, manages threat groups, gangs, for example, manages who should be separated and it shares information and workflow between the courts, the jail and law enforcement. It automates tasks to make the jail run more efficiently but, as that article described, in the old days, it was a notebook in the jailer's pocket where he would go around and take down notes about what was going on, what potential incidents or someone needing attention or medical attention. And now, all that takes place on a mobile application on a handheld or a tablet all collected in real time, provides audit trails and so there's a lot of transparency and a lot of information.
Brian Miller:
We also really made a major expansion in our offerings for the correction space last year through the acquisition of a company called VendEngine which is very specific provider of services for the corrections market, added additional capabilities for Tyler in that space. And so, VendEngine really provides a number of solutions for the jail space but they provide, whether it's through kiosks, handheld devices or tablets, video visitation which became much more important during the pandemic. So, providing access for incarcerated individuals to have access to text or have video visits or email friends and relatives, it's been really important during COVID but even ongoing to provide those kinds of virtual visits. And there have been a lot of studies that have proven that, to the extent that inmates are able to stay more connected to friends and relatives, that they tend to be much more successful after they're released and so recidivism is reduced. So, it really has a positive impact on the population.
Brian Miller:
In the last two years, VendEngine's provided more than 50 million free connections between inmates and their family members through text, emails and video visitations. Through that solution, we provide access to free educational programs, life skills programming, GED programs, provide access to law libraries, a solution for inmates to submit grievances and have those go to the management of the institution. And then we also manage the commissary, manage their funds, so enable them to buy things in the commissary and accept funds from outside individuals. So, it really not only provides efficiencies and cost savings for the institution but makes life better for the incarcerated individuals and ultimately leads to more success once they're released.
Josh King:
You get in a car in Plano, you drive about 375 miles down Interstate 35 past San Antonio, you get to Uvalde. You look at a tragedy like we had last week and the role that a 911 system plays into that, is that an opportunity to look at it in retrospect and understand what technology was used, how it could be better and how it could be deployed better in municipalities around the country?
Brian Miller:
Yeah, I think that's definitely the case. We believe that, by having better technology, one of our major objectives is to make communities safer, not only for the citizens, but for the first responders and the law enforcement agencies and technology is certainly one of the ways that that can be accomplished. I don't know specifically what kind of technology they had and how it played into it but one of our initiatives is certainly a lot more mobile technology. So, officers having access to data and communications, whether it's on a wrist device or a handheld device or a tablet, so outside of the car or outside of the office, having access to the same information that they could have otherwise on a timely basis. So, technology certainly can improve the responses around significant events like that.
Brian Miller:
For example, at our user conference a couple of years ago, we had the police chief from San Bernardino, California and that was another place where, a few years ago, there was an active shooter event. And he talked at length about how they used Tyler's computer aided dispatch and a number of systems from Tyler and about how our system performed and helped them deal with that situation. So, I think we may even have on our website some of his comments from ... It was a really moving talk that he gave. So, when you hear the first responders ... So, we just had our user conference two weeks ago and I attended the public safety session and it's really interesting to hear their stories and how they deal with some of these events and how they use technology to do that. And so, we think that's one of those areas where we make a real impact on how citizen's lives are affected.
Josh King:
After the break, Brian Miller, CFO of Tyler Technologies, and I are going to discuss how Tyler is leveraging cloud and scalability to offer municipalities, both large and small, the ability to connect with their citizens. That's all coming up right after this.
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Josh King:
Welcome back. Before the break, Brian Miller, CFO of Tyler Technologies, and I were discussing the evolution and growth of Tyler since he joined the government tech company back in 1997, celebrating his 25th year with the company this year. Brian, before the break, we were talking about the company's growth, both organic and through acquisition. Tyler Technologies surpassed a billion dollars of revenue again back in 2019 leading to its inclusion in the S&P 500 in June of 2020. Where does this place you among government tech companies and how large is the sector as a whole as an addressable market?
Brian Miller:
Yeah, we believe that we are the largest company that's solely focused on the government technology space. There are certainly companies larger than us that serve the government market as part of their business among one of many vertical markets. But in terms of companies that are focused exclusively on government software and services, we believe we're the largest and particularly in the local government space. The TAM is very, very large. Historically, we've been primarily focused on local governments, so cities, counties and school districts, and the TAM for application and vertical specific software in the local government space is about $30 billion a year. So, us, we'll be somewhere around 1.8 billion in revenues this year. So, we still have a lot of runway ahead of us, it's still a very fragmented market.
Brian Miller:
Now, in recent years, we have expanded our presence in the state and even dipped our toes into the federal markets. So, those expand that TAM by a significant factor. Today, including business acquired through the NIC acquisition a year ago, state makes up, I'd say, around 15% of our business, maybe close to 20% of our business and federal is still single digit percentage of our business but much bigger presence in the state and federal business than we had five years ago.
Josh King:
NIC, I think, was the largest acquisition in the sector's history. I'm curious, what was the initial value proposition for Tyler in doing that deal and how does adding all of this extra state government expertise to your arsenal open up additional opportunities for the company?
Brian Miller:
Yeah, NIC, as you said, was our biggest acquisition to date, it was about a $2.3 billion acquisition. Also, the first time we've acquired a public company and we've done over 50 acquisitions during the time I've been here at Tyler but that was our first acquisition of a public company. It really had a couple of major strategic advantages to us. As I said, Tyler pre-NIC was about 85% local government, maybe a little over 10% state and less than 5% federal. NIC, by contrast, is about 95% state and about 5% federal and almost no local presence. So, very little overlap in terms of our customer base and also we provide different things to government. So, even though both companies were solely focused on the public sector space, we did different things.
Brian Miller:
Tyler provides the back office software solutions that power all of these mission critical, essential functions of government like public safety or courts or property tax or financials and payroll. NIC, on the other hand, is really providing the digital access to those back end government systems mostly at the state level. So, NIC provides the digital access to government, really providing state websites and then building these connections to these backend systems, which could come from Tyler or from some other provider, many of them homegrown systems, so really providing access for citizens to transact business or obtain information from government. NIC is about 30 state enterprise contracts where they provide a wide range of digital government services.
Brian Miller:
But you think about things like renewing your driver's license or your motor vehicle registration or getting a hunting or fishing license or applying for unemployment benefits, all those kinds of things you would do with government and very often would have to go down to the DMV office which is never high on somebody's list of fun things to do or mail in a check and a form. So, NIC digitizes all that, builds those connections to the backend systems and provides the ability for citizens and businesses to transact business more efficiently with government or obtain information. And then, they also have a very large payment processing business which, generally, if those transactions involve a payment, NIC is doing that processing. So, the year we acquired them, they processed about $24 billion of payments for state governments. We've added some significant contracts including payment processing for all of the state of Florida government. So, we now probably are approaching $75 billion in annual payment processing.
Brian Miller:
So, those things really balanced out or complimented what Tyler already did in the government space. And so, the combination is very powerful and it creates a lot of cross selling or sell-through opportunities to leverage each other's strengths. So, Tyler has dozens of software applications that have applicability at the state level but we have not had those relationships, the sales organizations, really, the focus on the state market. NIC does and so we believe that we can accelerate the penetration of Tyler products into the state market through these NIC relationships and contracts. And then, Tyler, it had strategic initiatives around payments but it was in the very early stages. So, a lot of our systems at the local level facilitate payments particularly traffic tickets through our municipal court system, utility bills, we're a big provider of utility billing systems, licensing and permitting. So, a lot of things at the local level where our systems facilitate payments but we haven't participated in those payment streams.
Brian Miller:
And so, with the NIC acquisition came a very robust payments platform that was designed specifically for government. Great reporting capabilities, a great mobile platform called Gov2Go and so a lot of capabilities that Tyler would've looked to build out over coming years that came ready made through the NIC acquisition. So, we believe that we can take their really strong payment processing capabilities that they're providing at the state level and drive those into the local government space, into cities and counties through our relationships. And so, we've seen some really good early successes in sell-throughs in the first year but the opportunities in front of us are really exciting. And both the NIC team and Tyler's are working together to pursue those opportunities and they continue to grow well beyond what we envision when we made the acquisition.
Josh King:
Talking about the opportunities in front of you, Brian, at first blush, with a certain number of states that it serves, NIC's core business might seem capped. But how does things like the legislation that would legalize cannabis provide for potential growth?
Brian Miller:
Cannabis is certainly one of the areas, actually, that NIC has a focus on. NIC, in addition to providing their online access, has a handful of software products that are used at the state level and one of those is a system that is used around the regulation of cannabis. So, NIC already has a product there, has been able to expand that, I think recently signed a significant contract with the state of Mississippi to provide that solution really around managing all the aspects of the cannabis regulation that's new to a lot of states. And so, those kinds of opportunities where we can build something in one state and then expand it across a number of other states that have similar needs is one of the exciting opportunities around having such a broad set of customers that have, often, very similar needs from state to state that historically approached these things with one-off, custom builds and make that much quicker and more efficient with less internal support needed as we provide these systems like a cannabis regulation solution.
Brian Miller:
We're really excited about having added those capabilities. NIC provides campground reservations for a lot of the national parks and the payments that are associated with those. So, that's been an area where we've really think we've gone from being one of a number of providers to being the leading provider in the space. And, as I said, with the uptick in outdoor recreation activities that came during the pandemic, it's very timely for us.
Josh King:
You were mentioning before the break, I think, that you had now resumed, I think, after a couple of years hiatus because of COVID, your Tyler Connect conference, held this year in Indianapolis. And we see this as well, we have our own experience conference where we get to meet with our customers and clients face to face, take a lot of learnings back. Conferences are a great place to have the dialogue between client and provider. What are some of the takeaways that you wanted customers to take away from Connect '22 after finally getting together with them again?
Brian Miller:
Yeah, after a two-year hiatus and going to virtual conferences, which we think we did a really good job of and had really strong attendance virtually, all of the Tyler team as well as our customers from across the country felt really good to be back together in person. It was a really high-energy event, very positive, I think people really appreciated being back together. A lot of our focus was around our move to the cloud, updating customers on what that means for Tyler and what that means for them and what those advantages are, what our timetable is and what they should expect to see from us. So, Tyler is as we've talked about and, publicly, over the last couple years, is really accelerating our cloud transition. Moving from what years ago was primarily an on-premises business where most of our customer base still has systems that are installed on site, on their servers and they're managing that infrastructure.
Brian Miller:
And so, we're increasingly moving those systems into the cloud and our partner, AWS, our primary public cloud hosting partner going forward. So, we're not only moving our on-premises customers over time into AWS but we're moving customers that are currently hosted in our data centers to AWS over these next few years. A lot of benefits for customers and particularly local governments who often struggle with managing complex IT resources. Going back to what you talked about in your town and the Catskills at the beginning, it's really hard for governments, particularly smaller governments, to hire, retain, pay market rates for people who are highly technical in the IT space and so they struggle with the infrastructure, they struggle with security. By us providing a path to the cloud for them, we think we can solve a lot of those problems, make their operations more efficient and make Tyler's operations more efficient as we move through that transition.
Brian Miller:
So, a lot of our updates were around that. There certainly is a growing enthusiasm for systems in the cloud in our space. Last year, more than 80% of our new customer contract value came to us through the cloud and, just three years ago, it topped 50% for the first time. So, we made tremendous progress in the last couple of years and really have a big push over the next couple of years as we move to, almost exclusively, providing systems in the cloud.
Josh King:
Talking about moving into the cloud, maybe you and I can just zoom in on a particular case study for a second because Harrisburg, Pennsylvania recently announced that it had selected Tyler's Enterprise Resource Planning Solution to replace several of the providers that they were using. What is Tyler's Connected Community's vision and is Harrisburg a perfect example of the streamlining that you're hoping to bring to local governments across the country?
Brian Miller:
Yeah, it really is and we've really talked about Connected Communities starting back in 2017 as, really, a vision that we felt that Tyler was in a unique position to help communities fulfill. So, when we look at what we call a connected community, we really think that that is achieved when residents and governments are active participants in making a community work and thrive together. So, technology interconnectivity is one piece of that puzzle but, when people feel like that they're partners in the community in driving public safety and participation, openness, then they feel a sense of ownership, they feel confidence, they feel more peace of mind. And so, we think that this is a noble goal, we think, being able to connect citizens in a community and it's really moving from a vision to a practice.
Brian Miller:
As I said, about five years ago, we first started talking about this vision, we've made a lot of progress. And so, it's really about connecting departments within a jurisdiction, so a lot of data and systems and governments are very siloed today. So, governments are being able to use data out of these multiple silos to make good decisions, to drive safety in the community, to provide more transparency to citizens and to be able to engage citizens. So, we want to connect departments within a jurisdiction, we want to connect jurisdictions within a region and then we want to connect different levels of government. So, connect local, state and federal, so enable them to share data, to have transparency across all those jurisdictions.
Brian Miller:
So, we've done a lot of work at the base level with the underlying technology. So, we've created a lot of common technologies across Tyler products, whether it's a common sign on in security or a common workflow engine or payment platform, to improve the citizen experience and to make the government experience more efficient. So, if you think about going to your city's website and you might have a number of different kinds of interactions you want to do, you might need to renew an alarm permit, you might want to apply for a business license, pay a traffic ticket, sign up to pay a utility bill, you might be able to do those things through your city's website but, once you get there, you'll get routed into different backend systems where you might have a different sign on and a different password and the screen looks completely different. So, the city doesn't really know you as a citizen on an overall basis.
Brian Miller:
Part of Connected Communities is providing dashboards and streamlining that access for the public to their cities and counties and then tying those things together to make data more available to decision makers, to make smarter decisions around how they run a government and, ultimately, provide a better experience for citizens and provide greater transparencies. Again, we think that Tyler is in a very unique position to execute on this vision and we've made a lot of progress over the last five years, we still have a lot of work to do but we're really finding that our clients are enthusiastic about what that vision can provide and what those benefits are for both the internal operations and for their citizens.
Brian Miller:
Again, we think Tyler's really the only company with the breadth of products and the kinds of technologies that can make that happen. And so, yeah, Harrisburg would be a great example of that is they replaced multiple legacy systems with an integrated system on the Tyler platform. And, as we continue to make progress on the underlying technologies and as we continue to broaden our portfolio products, whether it's through acquisitions or internal builds, that we only create more and more value to that proposition of being able to bring things together on a unified platform.
Josh King:
Creating more and more value to bring things together on the unified platform of connected communities. What a great tour through what is going on at Tyler Technologies. Brian, thanks so much for joining us inside the ICE House.
Brian Miller:
Thank you, Josh.
Josh King:
That's our conversation for this week. Our guest was Brian Miller, CFO of Tyler Technologies, that's NYSE ticker symbol TYL. If you like what you heard, please rate us on iTunes so other folks know where to find us. And, if you've got a comment or a question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet at us @ICEHousePodcast.
Josh King:
Our show is produced by Peter Asch with production assistance from Steven Ramanchik, Ken Abel and Ian Wolf. I'm Josh King, your host, signing off from the library of the New York Stock Exchange. Thanks for joining us, we'll talk to you next.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE nor its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the information and do not sponsor, approve or endorse any of the content herein. All of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security or a recommendation of any security or trading practice. Some portions of the preceding conversation may have been edited for the purpose of length or clarity.
