We're going to go ahead and get started here. I'm Brian Miller, I'm the Chief Financial Officer of Tyler Technologies, and I'd like to welcome you to Tyler Connect 2017 to our Investor Day. First, I'm going to go through the Safe Harbor statement. During the course of this session, management may make statements that provide information other than historical information and 1995 and
are
subject to certain Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties that could cause actual results to differ materially from these projections. We refer you to this slide and to our Form 10 ks and other SEC filings for more information on those risks. Also, I'd like to remind you this session is being webcast today and recorded May 8, 2017. This is our largest and most attended Tyler Connect conference in our history with some 5,000 Tyler clients in attendance, representing all of our product groups for the first time, with more than 600 Tyler personnel. For those of you with us here in San Antonio in person, we appreciate you making the effort to come here and we encourage you to take this opportunity to interact with our clients and our staff and learn more about our products and services.
For those of you participating via the webcast or a replay, we hope you can join us in person at a future Tyler Connect, including next year, which will be in Boston. We put together a program today that we believe will provide better insight into the topics that are of particular interest to our investors today and will allow you to hear from a wide variety of our senior leadership team. First, John Maher, our CEO, will have some opening comments, then I'll provide a brief financial overview and discuss our investor communications and then Len Moore, our President, will talk about Tyler's evolution, providing a historical perspective and our vision for the future. Then our program will have 5 sections. 1st, Bruce Graham, our Chief Strategy Officer, will discuss Tyler's Connected Communities initiative, which is at the core of our growth strategy.
Then Jeff Green, our Chief Technology Officer, will provide a product development update. Following a break, we'll hear from the leaders of our 2 product groups. Following the acquisition of New World Systems in 2015, we organized Tyler into 2 groups. Our enterprise group led by Andy Teague, includes our ERP and financial products as well as our schools, planning and regulatory, appraisal and tax and recording products. Our Justice group led by Brett Dixon includes our Courts and Justice and Public Safety products.
Andy and Brett will each provide a deeper dive into their groups, including our competitive positions and key growth strategies. Finally, we'll have a Q and A roundtable session with an extended group of our senior management team, including the division leaders as well as corporate management. We ask that you hold your questions until we get to this part of the program, and we'll also be able to take questions from the webcast audience at that time. We appreciate your interest in Tyler Technologies and hope you find this session valuable. If you need anything while you're here, please contact me or Patty Hall, our Director of Corporate Communications.
With that, I'd like to turn it over to John Marr, our CEO.
Thanks, Brian. And I'd like to welcome you all here as well, and as well as those on the webcast. I think the purpose of this meeting often is to give the investment community an opportunity to have a little more access to the rest of our management team than they typically get, usually seeing Brian and I on investor trips as well as listening to us on the call. So I'll just welcome you here and offer a couple of observations and then let the other guys present and look forward to answering your questions in the roundtable. Just a few kind of observations.
I mentioned in the general session that Tyler traditionally really isn't about much change. And these kinds of things come up every year very quickly, and we're usually just reinforcing kind of the same old message that we've always had. And those of you that have been around the story for a long time know that it really has been a kind of a sustainable grind, what we're trying to do. We want to have products that are a wide breadth of applications that address all the essential enterprise needs of local government. And after 20 years of this grind, I'm sure some of you could wonder, with your exposure to high other industries that maybe, have more resources available to them, how come a lot of these things haven't already happened that we're starting to talk about?
But it's obviously been a big challenge over the last 20 years to take some products that were, maybe in some cases, weak and in other cases, strong in certain geographies, but very few of which had a national presence and are a strong leadership position in big segments of the trying to achieve that. And we're careful not to drive a stake in the ground and say, hey, we've achieved that now because that can be a temporary thing if you take your eye off the ball. So we'll continue to have the biggest part of our resources focused on the individual product groups and the competitive markets that they play in, and we track very, very closely what all our competitors do and take that very seriously. And again, the majority of those resources will continue to be focused on extending and defending the leadership positions that those products are in. But I think today, in this meeting and as you saw, I'm sure most of you attended the general session, there's a little bit of a pivot in kind of introducing new objectives that we'll talk more about as we go through the session, that in our view really can differentiate Tyler in a way that won't be easily responded to by our competitors.
Obviously, in any competitive software market, vendors are leapfrogging each other all the time with the introduction of new technology and whoever got it integrated discover somebody's made a move on us, and we go back and we put it on the board and we figure out big that to us as well. But when you think about it, this is kind of the big objective at Tyler, our ability to take the fact that we have this broad breadth of applications and nobody else does. We have very good competitors, but it's somebody different in public safety and somebody different in finance and somebody different in taxes or courts, and nobody that really has that grand scheme. And our ability to put a layer over that that kind of Tylerizes it and adds value through what we're calling nexus and alliance and the connected community initiatives, in our view, will deliver something to the marketplace, that hopefully is well valued by the marketplace, and again, is just simply not easily responded to by our competitors. So it's a big part of our strategic competitive future.
It's something we're focused on. It's in a way somewhat incremental resources like Jeff's team that you'll hear from, but it's also those teams pushing it back into the divisions where it isn't really even more work, it's just different work and everybody leveraging the same technology and achieving a lot of the same things. So that's a big part of what we have going on. We have some organizational changes this year. That's different for us.
John Yeaman's been Chairman of the Board since, I think, 2,004, and I've been CEO since 2004. And Lynn's been General Counsel. And I think Brian, would you get elevated in 2006 or something? But had a pretty constant team for a very, very long period of time. John is 75 years old and retired at the end of the year.
So I've moved into the Chairman role and the CEO role, and we've elevated Lynn. I think a lot of you that are close to the company know that Lynn's certainly been a lot more than a general counsel to us. Every major strategic deal that's certainly occurred in the last 10 years, he's been a very big part of that analysis and those decisions. As I mentioned in my comments to kick it off, Our customers see the products, they see the services, that's what they're interested in. They're public sector clients.
They're not that interested in the business itself, maybe the way commercial markets would be. And sometimes, it's even hard to get them to appreciate how important it is to do business with a company that's strong and has a strong future, things that you folks appreciate. But I think that's part of what Lynn's value to the company has been is to help us run a very strong and build a strong company that enables developers and our service providers to face the clients and deliver what they're looking for. You shouldn't look for significant changes in the way the company is operated. We've created the 2 new positions with Jeff and Bruce.
We want some people coming to work every morning focused on these additional objectives because it's pretty easy for everybody else to get consumed by the urgencies of the day. So we've taken a couple of our strong leaders with a lot of experience in our business and asked them to focus on that and to drive it throughout the company. But generally, while on paper, it could look like big changes in the company, I've really characterized it as it's almost changing the org chart to reflect the way we already operate. This is the way we've operated. Lynn's been a big part of the senior executive team outside of the legal world for a long time.
John's been a Chairman that's been less active. And so I don't think it should signal much more than that as you look at this. And then lastly, just real quickly, and I'm sure we'll talk about it in the roundtable, is level of investment that's going on at Tyler. We had a couple of very good growth years organically over the last few years, probably above our historical rates. We continue to reinforce what the historical growth range has been, and that's certainly our objective to continue that.
This year, it's a little lighter growth, and you can see the investment that's going on into the products, the core products that we have and the markets that they serve to continue to drive win rates and market share higher as well as the extensions from that. So if you went to the munis general session, there's a lot of focus on EAM, Enterprise Asset Management. And if you look at the jail commitment on the court side of the business and the designed to get the growth rate back into that range and have this hopefully be more of a one off year in terms of growth. We won't be throwing the playbook out the window. We'll continue to execute on the strategy that we've had, but we'll also endeavor to find other opportunities to find those incremental growth percentages that really make Tyler perform very well.
We perform very well in our historical growth range. It gives us the kind of growth to support all the initiatives we need, treat employees well, treat the customers well, and still get the margin expansion that we look for over the long run. So thank you very much.
And I'm up next. I have a handful of slides. For the most part, this session is forward looking. We're going to talk a lot about our strategies, our product development initiatives and things that drive our future growth. But I have just a couple of slides to kind of set where we are today and remind people most of you guys in the room are pretty familiar with this, but just to reset some of the things.
As you know, Tyler has what we believe is the broadest set of solutions for local governments. This chart shows the breakdown. About half of our business is ERP and financials, including the regulatory and permitting products, about 5% with schools, a couple percent from land and vital records, 10% from appraisal and tax. So that group of products collectively is what's now our enterprise group. And the balanced public safety at just shy of 15% of our revenues in Courts and Justice, around 20% make up our Justice group.
We're about 62% recurring revenues now. If you look backwards over the last 10 years, we've averaged about 158 basis points a year of non GAAP operating margin expansion. And our cash flow from operations has been about 1.6 times our non GAAP net income over the last 5 years. Consistent revenue growth has certainly been a hallmark of our story. If you look back over the last going back to 2012, we've had a 14% compound annual growth rate over that period.
Certainly, there have been periods 10 2011 when we had a flat year and a single digit year following the recession and 15 when we were in the high teens in terms of organic growth. But we've averaged about 11% organic growth over that time period and about 3% from acquisitions. And certainly, 2016 had a much bigger acquisition component following the New World acquisition. Again, looking back, since 2010, we've averaged about an 18% compound annual growth rate in non GAAP revenues, little better than that on the recurring revenues at about 20%. We've grown EPS at 25% a year over that same period and free cash flow at 29% a year going back to 20 10.
Looking at our long term targets, they're generally in the range that we've talked about historically. We look for revenue growth in the low double digits. And to be more specific, we kind of set the baseline in the 10% to 12% range, certainly with opportunities that we believe will occur from time to time for us to do better than that. Gross margin, looking for if we're in that low double longer periods of time. And we believe there's a long runway left of that.
Longer periods of time. We believe there's a long runway left of that. Earnings growth, we look for 20% earnings growth and free cash flow growth of higher than that. 2016, looking backwards, revenues grew almost 30%, certainly significant contribution from the New World acquisition. And diluted EPS grew 37%.
Look at Q1, which we just reported recently, 8% revenue growth. As John mentioned, we're a little bit on the lighter side, although our guidance calls for a little bit more than that for the full year and diluted EPS of just north of 12% in the Q1. And the guidance that we reiterated for the full year, really basically unchanged after Q1, other than a slight change to CapEx. So we're looking for revenue growth this year in the 9.5% to 11% range for the full year and earnings per share growth in the 10% to 12% range. I just want to talk for a second about our communications with investors.
As you guys know, we are pretty prolific issuers of press releases. We although we do more than 200 new contracts each quarter, we do announce fairly regularly new contract wins, particularly. We try to have those generally be reflective of the tone of business and the mix of business. But we do issue a lot of press releases and I know that some people sometimes have difficulty judging the relative importance of some of those releases. We did a survey recently of our investor group and had pretty good responses, found that most of the respondents did say that they like e mail communications, that they look for news from Tyler frequently.
And I think to some extent, we've trained people to expect that. And that people are interested in other ways of communicating as well and the things that they're interested in. So we're going to continue to issue press releases, particularly with respect to more material contracts like some of the recent ones we've had in Cook County, Illinois and the State of New York. But probably a little less frequently with respect to some of the less individually significant contracts. We're also going to initiate a new investor newsletter that we'll be distributing via e mail and on our website each month that will provide a little bit more information for you.
We're going to have a section where we're going to try to expand beyond just new contract announcements, talk more about industry trends, thought leadership, provide some executive interviews to, again, get more insight from some of the other leaders within Tyler and to go a little bit deeper into product overviews as well. We'll also have a more in-depth recap of significant new contract announcements, new wins and other news around Tyler. So you'll still get a recap of that as well as more than just the press release as financial highlights as well and then our schedule of upcoming NDRs and conference appearances. So look for that to come out in the next month or so and to be a regular feature going forward. Now I'm going to turn it over to Lynn for a little bit of insight from him.
Thanks, about
19
about 19 years now. Still settling in the new role, been doing that for now 4 months. I was to put together a little presentation, just talk briefly about Tyler's past and present. I know most of you are familiar with the story. I've had an opportunity to meet many of you over the years.
Those that I haven't had the opportunity to meet, I certainly look forward to meeting you on a break or certainly anytime, feel free to pick up the phone and give me a call at the office. I'm in the Plano office, the corporate headquarters there where the Courts and Justice division is. And so I'm going to spend a few minutes of time talking just briefly because again, you guys know the story, most of you all do, really about what we call the phases of Tyler. And there, I'm really looking at 3 areas, sort of the early years, which is what when we sort of put Tyler together, then really and I call those really the years the idea with a promise. The last 15 years or so, which I call building a market leader.
And then I'm going to segue into Bruce and his vision of connect our vision of Connected Communities in the next 15 years, and that's an area where I call us really becoming the market standard. So early years, idea with promise, building a market standard or building a market leader and then transitioning to a market standard. So for those who aren't familiar with the story, a little bit of Last year, we celebrated our 50th anniversary. I think our 50th anniversary on the New York Stock Exchange is next year. But Tyler is a software company, has only been around for about 20 years.
And really it started with a couple of guys who got together in the late 1990s and they looked at the local government space and they saw a need. They saw really that the space was a fragmented market. The players were generally small private companies and those that were really in the market, they really sort of focused on one market segment within the public sector. There was really nobody with a vision that looked to try to have leaders across all segments. And essentially, it was just an underserved market.
So from these guys, from there, an idea was born. And the idea really was to build a national company that was focused solely on serving the unique needs of local government. Now the guys that put this together back in the early in the late '90s, they were really deal guys. They weren't software guys. They didn't start a software company.
They didn't know anything. They didn't develop software. They didn't know how to code software. They hadn't sold software. They were deal guys.
And as deal guys, 1 had really made his stripes basically on he was very successful in doing corporate roll ups. Another guy, he was a guy who basically bought and sold companies. He'd buy a company almost like a little mini PE model. He'd buy a company, make it more profitable, work on the margins, turn around and sell it, go buy another company, do that. Sometimes he'd buy a company, sell it, buy it back and sell it back.
And their vision back then was to create this national leader in the local government software space by really doing a consolidation or a roll up. And these were the guys that actually hired me back in 1998. And my background at the time was I was on the corporate side, more M and A, mostly a lot of M and A background, financings, IPOs, tender offers and stuff like that. And so they brought me along to sort of help them with this initial strategy. And in the 1st couple of years, 1998, 'ninety nine, Tyler really embarked on a pretty aggressive acquisition strategy.
We acquired 8 companies in 2 years, and that was just in the software space. We did some things in the non software area. And out of those 8 acquisitions, really the foundation for Tyler was born. We acquired 4 companies that are, I call, really the 4 cornerstones of Tyler today. In 1998, we acquired the Software Group, which is now our Courts and Justice division.
We acquired Encode, which is now our local government division. In April 'ninety nine, we acquired Munis, which was John Marr's company, which is now our ERP division. And in November of 'ninety nine, we acquired CLT, which is our appraisal and tax division. A couple of A
couple of interesting stats, and
I don't really know why
I pulled these. As I said, in 'ninety eight, 'ninety nine, we were in actually multiple different businesses. These were just where we were on the software side. So in dollars 1999, we were about $71,000,000 in revenues. I dollars 1999, we were about $71,000,000 in revenues.
Our EBITDA was at $8,000,000 And you can see our recurring revenues were just under 28% of total revenues. So moving forward with these kind of foundational pieces in place, we move to the next phase of Tyler, and that's what I call building a market leader. And that really began in 2003, and it really occurred with what I call a change in leadership and an evolving strategy. So by 2,003, the original founders, they had sort of moved on and moved on to different businesses. They were no longer involved in Tyler.
John Marr, he emerged as the leader for Tyler. He was named COO in 2003 and President and CEO in 2004. And with John Marr becoming the leader of Tyler, as I said, it was really we really had an evolving strategy at that point. The core strategy was still the same, which is we wanted to dominate the local government software market, but we were going to go about it in a little bit different way. See, John did grow up in the software business.
He grew up in the software industry. He's as a young man out of college, he drove up and down the East Coast and sold Munis out of the back of the car. He handled difficult customer calls. He knew about tough implementations. And so with John taking over, the focus really shifted while still going for becoming the national leader.
It shifted from really more of a consolidation or roll up to really building a business, building an organically growing business from the ground up. As part of that, obviously, John applied a lot of disciplines over the last 15 years. I think one thing that really stood out is when he took over was really the emphasis, I'd say hyper focus on what is the true Tyler model, and that's the focus on recurring revenues. In fact, I remember John used to have a joke where he used to say he had 4 daughters, Stephanie, Andrea, Jenny and annual maintenance and support, and he loved them all the same.
But it is true.
So with this new strategy of really trying to build an organically growing software company that's still going to be supplemented with targeted acquisitions, we weren't going to not do acquisitions, we were just sort of going about it in a different way, We moved forward. And so how did we build this national leader over the last 15 years? 1st and foremost is we spend a lot of money investing in Tyler. Obviously, if you're going to grow organically, you got to put a lot of money
back into your products.
Focuses on product investment, becoming best of breed, really with the goal of every year, you want to become more and more competitive in the new business market. In addition, investments in building out the sales and service channels. Also, we invest in our customers. Another goal each year is that we want our we want to become more and more indispensable to our clients. And if you were there at the opening session, you heard us talk about creating clients for life.
And that's really what we want to do at Tyler. When we create a client for life, what does that do? It both builds and protects the Tyler financial model, which is recurring revenues. So how do we go about creating clients for life? Well, first, it starts with initial project execution.
And this is really probably the untold secret of Tyler. We talked about the press releases. We talked about we got Cook County last month and we for our Courts and Justice and our Appraisal Division got New York State, but that's really just the beginning. I mean, all the work starts from there. And our entire business is really based on having referenceable clients, and you're only as good as your last referenceable client.
So our goal, and I think we probably do it as well as anybody in the industry, is to get our clients up, referenceable, get them on time, on budget, which then makes them gets them on the annual recurring maintenance rolls. Once we get them up on time and once we get them live, we have to continue to deliver ongoing value. We can't ever take for granted our recurring revenue streams, whether it's maintenance and support or subscriptions or e file. We have to continually pump new value into these maintenance streams. We've got to continue to deliver new features and functionality, and we do that through our Evergreen initiative.
So that each year, when a customer gets an annual maintenance bill, and it's a little bit more than the year before, they've got the value. They realize that they're getting something for that. And that's all about trying to keep the customers for life. Another way we've grown into the market leader in the last 15 years is we have done selective acquisitions. While we are no longer pursuing a roll up strategy, in the last 15 years, we've still done over 20 acquisitions, including recently New World Systems in November of 2015, EnerGov, tons of other acquisitions, too.
There's Brazos, Executime, Softcode, VersaTrans, our SIS, Eden Systems, Infinite Visions, a lot of acquisitions in the last 15 years. And I think we've done we've been pretty successful with our acquisition strategy. Finally, this is what I call bringing it all together. So in that's not really a technical term, but in 2,003, Tyler both looked, I would say, organizationally and functionally very much like a roll up. Tyler Corp.
Sat as a holding company and really just had corporate G and A and sitting below it was each operating subsidiary. And they really operated independently back in 2003. And one of the things that John and the team has done over the last 15 years is very slowly but deliberately bring certain pieces of the business together. Another thing we've done is really invested money in creating and capitalizing on a national brand. Nobody had gone out there and placed a flag in the sand and said, We're going to own this space.
And in December of 2,008, we hired Samantha Crosby, our Chief Marketing Officer. And in 2,009, we embarked on our initial branding program. And we've continued to invest in marketing, and I think it's paid really huge dividends over the last 7 or 8 years. So that sort of brings us to today. And we're now about to enter what we call the next phase, where I look forward to the next 15 years.
And those that were there at the opening session, you heard us talk about it with our vision of Connected Communities. And here is what I call the next phase is becoming the market standard. And what do I mean by that? Really, it's the opportunity to capitalize on everything that we've done to date and then extend it in a way that no other company can do. It's the goal to me is 5 years from now, 7 years from now, when people say the phrase, local government software, just one thing comes to mind, and that's Tyler Technologies.
How are we going to get there? It's our vision of connected communities. Those that were there heard Bruce talk about it this morning. He's going to get up in a few minutes and share some more with you about it. It's the work our Enterprise Development Group is doing.
I think last year at this meeting, we introduced the concept of the Enterprise Development Group. Jeff Green is going to get up. He's going to talk about some of the things we've done in the past year, which continues to lay the foundation for the vision of Connected Communities. Next is our Tyler Alliance and Tyler Nexus initiatives. I think Bruce talked about these earlier.
The really core foundation of these is, 1, you have to a family of best of breed products. That's what we do. That's what we're focused on with a common foundation, connected apps and personalized portals and data exchange. So before I turn it over to Bruce, there's, I think, 2 things I want to emphasize. First and foremost is these are long term strategic goals.
These things are not going to happen overnight. We started work on them last year. We are actively working on them. We're rolling out pieces of them today. But the goal of connected communities is something that's going to take time.
Secondly, I want to reemphasize something that John mentioned, which is these are sort of in addition to what we already do. Our core fundamentals do not change. Our core fundamentals of investing in Tyler becoming more competitive. Our core fundamental investing in our customers becoming more indispensable, continuing to do strategic acquisitions, continuing to build a strong organization. That's all going to stay the same.
But on top of that, we're going to add this extra layer, this extra layer of value that no other company can do. And that's what's exciting. And I think the right person to talk to about that is Bruce.
Okay. Good to see you all. A number of you have come through Dallas over the years and it's been nice to get some time with you. It's nice to have you here. Can I just ask how many saw the opening session?
Oh, Lord, you're going to love this. This will be I'm going to do a condensed version. I promise I'm not going to talk for an hour on this. But I wanted to give you kind of the maybe a little bit more we can talk in a different way, I think, here in terms of what we're trying to do and give you a sense of where we're going with this Connected Communities initiative. So this should be very much like what John talked about when he said, we've been on this strategy for a number of years.
This is the same thing we discussed last year. It's just deeper and richer and broader, and you'll see what Jeff comes up that it's just following through on that. And it'll be our strategy for several years to come, we would say, measured in a very extraordinarily complicated problem that we're trying to work on. And what we're trying to do here, we think, is unique and has an opportunity to make a kind of unique impact. So we talked about that if you're a citizen and all of you have to interact with local government in some way, that you kind of think, well, how hard can this be, right?
There ought to be some kind of magical way that this all ties together and it just doesn't really work that way. These systems are very unique. They tend to be agency driven. So the reality for us is that every one of those different solution areas, at least everyone has an independent agency that's making those decisions. They're typically operating independently.
And when you bridge that out and look at the city, county and regional level, the truth is you're dealing with hundreds of these agencies. And again, they deal with an independent elected official or someone who might be independent, growing their whole career in that area. And they're operating and they're paid to operate to have the absolute best solution for their particular area. They often don't operate with kind of an enterprise view and it's not the same as a corporation in that way. In a corporation, you can go to a CEO and you can get them to follow the way it ought to be.
But in this model, they're all able to operate independently. I spoke in the main session about the reality of how this actually plays its way out for us, That the problem is how disconnected these communities are. The data is there. A lot of times they're high performing systems. As you know, we operate a lot of these systems and we are the company that is everywhere in this, but they're typically very, very disconnected.
And I spoke at the in the other conference or the keynote, Cook County was interesting to me because I was I'm part of Cook County, each operating with its own little independent decision making process. It's an extraordinarily difficult job for somebody in that position. And consequently, guess what, the left hand doesn't know what the right hand is doing over and over. And if you're a citizen or you're a developer and you're trying to develop something in that area, well, you've got to navigate all these different agencies to try to get your work done. And so we've looked at that and said, all right, well, we've got a very unique position in this market and there's an opportunity for us to serve it uniquely.
Now, what we've historically done is competed for each one of those independent agencies. And as John said, that isn't changing. We believe they're going to operate and make those decisions on their own just the way they always have that, that sheriff is going to want the best jail solution and that chief of police is going to want the best public safety solution. They don't care about Tyler's grand strategy, how all this works together. So we have to have the absolute best of breed solution.
And we measure this with our sales ops teams, which you're going to hear from in a bit. And we track win rates at a very fine grained level, and that isn't changing. And so it's not a subjective level of we think we have best of breed products. We know whether we do or not based on whether we're winning at least 60% of the deals in the market. So with that kind of in mind, what we've looked at though and said, well, if we could have both or you have the best of breed solution that's available, and yet we're able to start to cross these boundaries that exist, we think that creates a really compelling and differentiated strategy.
And you might kind of think, well, this doesn't seem like that big an idea, but it's again kind of a hard problem. We're trying to get them to operate independently and yet be able to cross across city, county, regional lines and be able to do some interesting things. So we shared some of these, call it, connected communities. And that's the phrase that we put around it. I want to just go back to that for a second because I can't tell you how many people in this job now have come to me with smart city initiatives and, hey, you ought to be doing smart cities.
And I get it and smart parking meters and smart street lights are interesting and but that isn't what we're talking about here. This is at a level much deeper than that. You're not I mean, that's almost trivial compared to what we're trying to do here. You're talking about the core essential services of city and county government that run everything that you and I experience as a part of being in a healthy functioning society. And now we're trying to figure out, can you do something with those in a way that's never been done.
And that's kind of the idea. So it's beyond that's why we came up with a different term. We didn't want to piggyback smart cities. We didn't truthfully think it was sufficient to describe kind of the idea. So we've taken the broad if you think about what's happening at a city, the broad areas that need to be served or delivered by a city, and this is what I discussed in the keynote.
So community development services, law enforcement, finance, emergency services, school services, those are the things typically residing in the city. At the county, there's a different set of things and those are touched on. You have to realize that that's the world we do. We work in both of those. So we've got things like land and property, the way taxes and appraisals are done, the way parcels are created.
On the justice side, you've got typically your trial courts, all of your kind of superior court activity that's done at a county level typically or a district court. So when we're talking about connecting these communities, there's 2 different kinds that we're trying to. 1 is the very obvious, just the geographic community that you live in, your city, cities that are close to you or adjacent to you and cities within a county. And then also within a region, we're just trying to connect it. Typically, we've got we're in a major metro area where we have multiple counties that then have they're all working together with multiple cities inside of those.
That's the one that when we think about connecting, that's what everybody kind of goes, okay, I kind of get it. But the truth is we're actually trying to go a click beyond that into this process community that actually begins to look at because the work is done from city to county lines, sometimes city, county to regional lines. And that's the part that we probably get more than most is that when we pull back and think beyond just one individual solution, we start to think, well, there's an essential process here that we need to begin to connect up. I'm not going to build all the way through this, but I mean, you get a sense of that if you had a CAD, they're actually dispatching local police. So you got a county authority or a regional authority working with local police.
And then the local police department, if it's a serious enough crime, guess what? They're going to go to the county. They're going to go work with the DA, they're going to work with the jail. And this process just happens 100 and 100, if not, thousands of times a day in every community that we serve. And we even, as we looked at it, said, wow, there's a lot more going on here that are crossing across these boundaries, and we have kind of a unique spot in terms of how we can address that.
When you look at it on the property side, when you look at it on we're calling this community development, community services, same kind of thing. So ultimately, we're trying to create thriving communities. Well, somebody's got to make decisions about how do I become more attractive to developers, to a developer who will want to develop in my community. Well, it's a way of making it have less friction to where it's easier for them to do work. And so in this case, we used an example of somebody who's doing city development.
They say, Oh, I want to develop this parcel. Well, they're going to come up with a plan. They're going to have to go get that approved by the county folks. Those folks are going to look up and work with the land records people and say, well, now we've got to create parcels. And then it begins to go back to the city where they start to permit it.
That's intergov in our model. And then they start to say, well, that's going to hopefully increase taxes there. Well, how do I begin to increase the taxes that go back? And eventually, that gets fed back to everybody in the city level. So again, if you think about it, you kind of go, well, of course, it works like that.
The truth is nobody has been able I mean, I'm saying across our whole spectrum, nobody has been able to address that entire suite of or that entire set of activities in that process community. And that's what we're trying to do. We're trying to connect that up in both the geographic side and the process side. You see it here, we think in terms of regions. So if you look at our customer base, it's kind of extraordinary the density that we have in places like North Texas or North Georgia or California or Chicago, and we'll show that here in a moment.
But if we can begin to connect it up geographically, but also then connect up the process, we think that's a very kind of unique position for Tyler and leverage is the position that we've got. So again, just on that last piece. So our goal when we talk about connected communities is to do both things at the same time. Find a model that takes all these independent agencies to connect up geographically and connect up in a processed way and over time create less friction across all of that. We think that again, remember, we're tracking this very individually every deal.
A little bit of differentiation goes a long way in terms of increasing our win rates, things that only we were able to say here. That's why it's not we're not it's not a whole new strategy, but it is an added value to what we're already doing and we think in that way compelling. So we've talked about this, but we talked about it last year. I think now you're starting to see it become a reality. The first thing is to say, do you have a family of products?
So that's approachable language for people. They can begin to think about, all right, how does this actually begin to work together? We have grouped those families into 2 big, communities, so to speak, 2 big families maybe. One is on the, what we call, Tyler Alliance. So it's safety and justice.
And it's everything you just saw there, the interaction between cities and counties and in some states, in cases states, in terms of how the justice and public safety community works together. Remember, in the backdrop is we got 311 separate applications that make up the portfolio of what Tyler is. Now they're grouping in these 2 broad categories of what's there. But these are the ones that we've placed inside of that. On the Development and Community Services side or Connected Development and Services, this is where you see IAS World and InterGov and Munis and our school's products.
Those are the ones that fall within this family. So the first piece of this, again, some of this you're going to go, I really can't believe it's not already there, but the it's just getting them to work like a family. Now remember that they were all purchased independently and the appraisal and tax assessor is he wants the best solution or she wants the best solution just for that area. But if we're beginning to be able to say, well, let's show you how it could work with an integrated permitting system down that's already in place at the city level or let us show you how that certain things you get out of the box because tighter applications are already there. That's the idea here.
And the first component that we focused on or one of the components we're focused on is creating the things you would expect in a suite to begin to occur. It's not where you will see these happen progressively. These are the kinds of things that have to get built into every product roadmap. They're happening now, but they will not quit. I mean, we can come up what's been interesting for our dev teams is as you start to lay out this vision, all it does is they go, well, yes, we could do that.
And here's another thing that we'd want to be able to do. And we do that as part of the new features we deliver in Evergreen that Lynn spoke about earlier. The other thing we spoke about was this family of applications. So, and I used a picture of my daughters, if you saw that and I hope you're impressed, but I mean, they it's a joke, sorry. I know we don't joke in the industry meeting, but so family of apps.
But part of what we do think there's real value if we can start to get these things to look more common, right, particularly when you think about portlets, the ability to navigate, think about when we add another application in this area. So one of the things we've invested in as part of Jeff's teams has been a user design team. And it's not hard. This part is one of the easier things we can start to do. So you'll start to see our applications have more of a common look.
This is ENCODE's old product. This is kind of the again, ENCODE Express doing the same things. There's rich functionality behind this, but it's all in how you actually present it. The and you can start to see that that's true across the portfolio. Remember how many apps we have.
So given that range of applications, this will be something that we're delivering. But for our customers, they feel this. I mean, this is one of the first things they begin to show and begin to they know they're in a Tyler app. And then what our belief is, is that when it's time to add another Tyler app, this begins to make it an easier on ramp. And if they're just adding one more feature and we do a lot of business that way, maybe Brett Kate could share that with you, the number of add ons that we do back to an existing client.
Well, if it already looks like a product that I have, well, that makes it an easier add on. It's not as big a hop in that sense. So the first is this family. The second and a harder area to focus on has been this idea of a common foundation. And we spoke about this last year.
I'm really pleased to see the progress because this is the kind of thing, this is down in the bowels of the apps. That you're talking about, if I'm going to change out my authentication engine, will I have to do that and then it's going to take me 2 or 3 years before you finally get that into the next version and that gets released out finally to clients. So this is something that I think will take into 5 to 7 years before you really see it going. That said, we're delivering it now. So Intergov is on this new service bus, I believe, is that right?
And the authentication agent I'm going to speak about, is now using that. So we're rolling it out. I'm just saying before you see it across the whole base of products, it's going to take some time. What it does though, it's this idea that there's a common foundation, a federated foundation across all our products. Very intuitive, but realize we've through the acquisitions over the years, we've had hundreds of development teams out building these independently.
So Jeff Green's role now has got, at least on a dotted line, every development team rolls up to Jeff, one way or the other. For the first time, I don't think you'll talk about it, but we're going to do a developer conference for the first time in Tyler, where all of our developers get together and they share these kind of best practices. I should have warned you, by the way, some of the I know that there's no numbers in my presentation. I know that's hard for some of you, but it's more conceptual. We're just trying to get you a sense of where we're headed with this, right?
And so the idea that we shared in the main stage is just like you have a highway system, well, that's our service bus. And that begins to be an easy way to connect these up. Just to give you one example, so when we competed for, it was Pinellas Jail, is that right, that we were connected to the courts, the courts to jail integration was $1,000,000 by itself, just that piece of the proposal. So if we had had our jail at that time on our court system using the same service vessel, that cost would be gone. And that gives us a very differentiator, very unique opportunity.
But you think about that across the whole portfolio, we think that's significant. It changes the dynamics on some of these proposals. We talked about common currency and that's what we're doing with the payment processing, something that you can begin to see a single payment processor across all Tyler apps. And then the Passport, meaning authentication. And really for us, this is one of the most significant ones.
It allows us to begin to move into the world of role based applications where we know you, we know the we know our internal users, we know the
external users like citizens. And then from
there, we can begin to authenticate authenticate across the entire Tydor portfolio. We think again that leverage is kind of the power that we have of all these apps. Okay. So common services across all the apps, you will see us continue to invest in this just in the way that we have with the 3 that I think are done so far and then you'll see us begin to slowly roll those into our normal versions and then those will go into our annual releases. It's the kind of thing that every time we do this, it unlocks a whole set of capability.
So think about workflow, and we get on a common workflow engine across all of our products. And now our clients don't have to come to us to redesign the way a flow goes. But that city PD working with the County DA, we can do all the changes in workflow and we can do it in app. We can do it inside of this framework. That's the kind of vision that we think that we have here.
Okay. Shared data, I think you've seen us talk about this. This is, I think, important just to get clear on what's unique here. There's a lot of shared data ideas. There's all kinds of databases and data warehouses, and not what we're doing here.
What we're trying to do here is capture the existing data that is already in these systems that is publicly available. So this is not private data that necessarily has to be authenticated to get to. This is public data that is typically though within that silo or you have to go to someplace else to get it. And it spans across all these different kinds of areas. So ones that are easiest for me just on the justice side, it's parties, charges, warrants, bonds, all that kind of data exists and is available, but it's not readily accessible fire solution, moving through that.
Well, the whole beauty of that was that it's bringing it at the moment they need it. It's not something they have to go rekey. I can promise you, at that moment, he's not wanting to rekey in some kind of search criteria. He just wants you to give him the data he needs to go handle that particular issue. And that's what data exchange will be able to do, and it does it within every application.
So this is powerful. From there, you can go through the auth. You can say, oh, I've got it. I know you have it. I know you have a warrant.
Do you want to let me do I have the rights to see that and get into the detail? Well, we can provide that, but the first thing you want to do is actually just show that it's available, that they can actually see what's there. Okay. The last thing, and we showed some of the examples of this, was this idea of connected apps, personalized portal. So you've got to take all this foundational and kind of enterprise architecture type work and eventually make it something that differentiates the experience for the citizen or for the developer or potentially for the users within that.
And that is what we see with our clients. This is the part, they all serve citizens at some level or another. So if they can change that, they want to be able to do that. And that's something the elected officials can get excited about with us. So what we're talking about here because of what we're providing, now you can begin to see who they are, what they are, what they need, when they need it.
And kind of these 2 broad categories that we spoke about, personalized portals and the connected apps. So I guess we've got you've seen this and I'll just briefly, but just again, this is the example that I was speaking about and I showed there and they told me I butchered the demo. So I apologize for that. I think you kind of get the idea, right? This is a new application by the way coming from it's called Project Patriots coming from our New World systems, a pretty cool app.
I mean, it's a really cool app. And the idea here is that it's in app, they're actually able to begin to go towards the scene of the fire. It's routing them along the way. They've got the ability to switch roles within the application. So in this scenario, this particular they're actually saying, okay, I'm the dispatch officer, now I drop in and I'm going to be a firefighter, I'm going to step in and be a part of that.
And the part that I'm really trying to get to here is to show you the power of this idea of data the fire. When they're there, it's smart enough to say, okay, what data do you need at that point in the process. In this case, it's pulling up from EnerGov. So again, think about it, went to a whole another system, you pull up from EnerGov the particular plan and that allows them to design their point of entry. That's a differentiated feature that only we will be able to show.
And that's what we're speaking about when we talk about win rates because we'll have a demo and maybe the other guys got something this sexy, I doubt it, but maybe, pretty good. But there'll be things inside of that that they just can't do because they don't have this sense of connected communities. And that's why we think it's a winning strategy for our communities in the sense that it makes them safer and better. It's a winning strategy for Tyler and that we think it differentiates us in a way that leverages this very unique position and presence that we have. You guys with me still?
Okay. All right. So I talked about this that the inspection manager is not as sexy as a fireman, so we're happy to have the fireman role, but the basic concept is the same, that you would have a role based application that does the things the role based application normally needs to do, that's unique to that role, it's location aware, but then it begins to harness the power of what else is available to you in the network, in the community that are connected to that. In this case, a Judge. And this is we use this today.
We have data exchange. We have a product called Judge Edition. It as a someone's appearing in front of it, it's actually checking the cloud. Now it's not a rekey, it's just a tab the Judge said it hits. When he hits that tab, it actually checks the private cloud locally, pulls all the information that could be from disparate systems that says, oh, here's what you need to know about this individual as you're trying to make a sentence you might try to make a decision on that.
Again, you think or a lot of our citizens might think, oh, that all exists today, like something out of minority report. It doesn't, right? That doesn't happen. And that's what we're trying to create is a model that begins to be much more aware of the data that's available, but brings it to the people that need it at that moment, not something you rekey, but something that's actually within the app. And then the personalized portals, I think you're going to see more on this when Jeff gets up here in a moment.
So we spoke about this in the keynote, but this is what people expect is what you would love to have from your government. Nobody really has that today, and that's where we're trying to go, is beginning to create a more personalized experience that leverages we know who you are, we know where you live, we know a lot about you, well, let's give you access to the services that you need as part of that. And that's this idea. And we showed this Mainstage, but this is for a lot of people, this is kind of an moment. They go, oh, so that's what you're trying to do, right?
We're actually saying, look, we believe for a citizen dashboard now, because you're authenticated, we can begin to pull forward for you the particular information that's unique to you. So in this case, it's coming from ENCODE to pay their to see their water bill. A number of different systems that could be feeding notifications to them. Again, city, county, region, all of those are you don't care about that. You just need the information you need at that moment.
The IAS world, and it's showing show how that could go into a consolidated community calendar, everything you need, show how that could go into a consolidated community calendar, everything you need for that role. And then I think a really legit question, as you say, love TIDAR, love you guys, been a great investment over the years. But really, that seems like a lot for you. And I'm not sure we always show what 15,000 implementations look like when you see 15,000 installations of our software. I spoke about Chicago, and this is the view of this.
Did I mess that up or no? So was it going, Jody? Because we've had some issues. This is a huge video. All right.
I think you saw where that went before. In Chicagoland, just as that example, we have 440 implementations of our software across the Greater Chicagoland area, all different types, from IAS World Tax to now Courts and Justice will be there. When you think about our ability to, across each one of those, have a family of products that work together to begin to provide a shared data model across all of that with a common foundation, start to put connected portals and apps or personalized portals, connected apps into each one of those different products. We think that's unique and potentially something that is very, very differentiated. Okay.
With that, I'm going to turn it over to Mr. Green, show you some
of that.
Okay. Some of the stuff you'll have seen already, but we think we just kind of want to reinforce this message and I'm going to talk there we go. Okay, Here we go. Speaking of execution, yes. So Bruce has talked about our vision.
Those two things are it's really centered around these 2 primary strategic initiatives that we have called Tyler Nexus and Tyler Alliance. And those 2 cover the 2 main parts of our business, what we call our enterprise group, which the Tyler Nexus strategy is connected to and then our Justice Group, which is for Tyler Alliance. But really they share the same common threads, right? What we are trying to do is create best of breed applications that are built on this common foundation and have very high quality role based user experiences across the entire okay. Nobody's doing that right now.
And okay. Nobody's doing that right now. And we want to build these rich portal experiences that are going to seamlessly connect constituents to their governments. If you're a citizen today, it's very, very hard to do business with your local government. In many cases, you don't know where to go.
Do I go to the county website, city site? Do I go to the local water or park district? It's all kind of disconnected and we're going to try and bring all those things together because as Tyler, we have this big broad portfolio of applications in this huge footprint in the market. So we talked about this at the last investor conference last year. The graphics are a little fancier, but the vision is the same.
We have a core foundational architecture that we're building on top of and we're creating the shared set of services that all of our applications will uptake over time. We're surrounding that with this unified user experience. So over time, you're going to see our application start to become more and more alike, not just in how they look, but in actually how they behave. This is going to make it easier for system administrators, users, citizens, anybody who uses our applications. This is going to be a much better experience for them.
Obviously, we're using that same foundation to build out internal applications, encode and the core applications that people rely on every day. We're using that same foundational infrastructure to build these citizen applications, what we're calling our constituent portal that has a number of interconnected they can build custom applications that plug right into the Tyler infrastructure. So they can take advantage of these shared services. They can more readily develop their own applications that plug into the entire Tyler ecosystem. And even ultimately, we want to create, if you will, a Tyler app store, where we license ISVs to use our technologies to build applications in areas of the market that honestly don't move the needle for Tyler.
But for a small ISV, it would make sense for them to build an application. They could be very successful and could plug right into the Tyler ecosystem. We think that this helps make us a lot stickier, right, as customers start to depend more and more on our platform and on our foundation and other vendors start participating in the Tyler ecosystem. This is a ways off, but this is where we're headed. Okay.
I said one of the things that we're really, really focused on, and this is part of not really losing track of our core mission is building best of breed applications. We're still going to go out and win individual deals for individual functions within local government. And in the last year, we've made significant investments in both our enterprise group and in our Justice group, and these are just a handful of things that we've invested in. These are all geared to maintain our market leadership in these core functional areas of the application. Is like the 4th time I've seen it this morning.
I'm getting a little tired of it. But these are some of the services that we're building, that we're going to start building our applications on top of. And I'm going to talk about what kind of progress we're actually making in this, because this is no longer just a vision. This is actually an implementation and an execution story. So with the service bus, as Bruce mentioned, what it is, is a software component that enables reliable secure messaging between our applications.
If all of our applications are listening on the same service bus, it's much easier to do these inner application, inner jurisdictional scenarios that we've been talking about. So this is a very, very important part of our strategy. We've already implemented it now, as Bruce mentioned earlier in our app. It's actually implemented in Odysee, the constituent portal. If you saw the demo this morning that I did of the way the data gets in there is over the service bus for many Tyler applications as well as 3rd party applications.
So we're going to be pushing this into the entire portfolio. It really is the plumbing that's going to help the line, in line or whatever, we've had all of these different and complicated APIs that we have to use for different payment providers and all that kind of stuff. And each team goes in and does all that hard work over and over again. Instead, we've abstracted that a little bit. We've created something we call Tyler Payments, so that all of our teams have a single API and Tyler Payments manages all the complexity on the back end for them.
This also opens up revenue opportunities for Tyler, right? As we start consolidating all the payment flow through one single gateway, we're able to participate in that financial transaction. That's been implemented today in a number of products that you just saw up there. Another key piece, Bruce mentioned this as well is Tyler Identity. So this is our authentication solution.
It's built on all the latest standards like OIDC and so forth. You would think this would be a simple thing, it's not. What we have today are different authentication solutions built into each of our products. And it's not a great story when we go out and do a demo and you have to log in once to Munis and then you go over here and you have to log in to EnerGov and you're trying to show how connected these applications are. We're trying to get rid of that friction that we have out there by building this authentication engine.
So we have in EnerGov, in Odysee, the constituent portal, which I demoed this morning. And in EnerGov, in Odysee, the constituent portal, which I demoed this morning and coming soon this will be in our entire portfolio. This is a very high priority thing that all of our app teams have on their near term roadmaps. Another piece that we're working on, Tyler search. So again, we've got all these sort of disconnected applications today.
But as we start sharing the data across them, we're going to be able to search across them in a very seamless way, kind of like Google for Tyler applications. Single UI bringing back data from all these different Tyler applications together and then people can go from there to drill down into more details into the actual application that source the data. We already have we're currently implementing this on top of EnerGov, but we have other Tyler companies and products that are going to be participating in this soon. Tyler workflow, Bruce mentioned this. We already have this implemented.
It's in production in IAS world, but this allows design of workflows. So being able to model those complex inter application, inter agency scenarios by piecing together the different components of a business or software process and being able to do that visually, without any programming. That's what we're working on. We've got the designer implemented in a lot of different applications and the workflow engine in a couple. And we have teams that are actively uptaking this workflow engine right now.
And then on the messaging side, we have an application called Tyler Notify. So I showed earlier in the demo this morning how we're going to be able to do this alerting mechanism. Hey, what's going on in my neighborhood? I want to find out when a sex offender moves in, when there's been a fire in the neighborhood, right, what that new construction is down the street. This messaging platform that we build is going to enable those types of scenarios.
It's already implemented today in a number of Tyler products and there's more and more coming on board. So this is going to give us things like email, SMS, in app notifications and all that kind of stuff. So that's it on the foundation pieces. I want to talk a little bit about the role based user experiences because this is also key to our strategy. So what we call our UI now is called Tyler UI.
It's not very original name. But it is our name for these consumer grade user experiences that we're trying to build. It is already appearing and you'll see it throughout the conference if you go to any sessions in a lot of our applications. It's in the core Munis app. It's in EnerGov's new apps.
It's in the constituent portal, which I demoed this morning. In Code Express, which Bruce had up there, it's in the ODiSI portal and it's in this new thing from the Munis team called Tyler Hub. So actually by the end of this year, we're going to be shipping all of these applications. And when you look back last year where we were just starting out this effort, a lot of people told me this is absolutely crazy. There is no way we're going to have this common UI across Tyler applications.
We're proving that statement wrong. I mean, you'll see this actually shipping in a lot of apps this year. So we are making progress. Just on this, you've seen these, but they're so cool looking. We like to show them as often as we can.
So this is a shot from actually Tyler Hub, which is I just mentioned. It's kind of a dashboarding product that a team at our Munis organization has been working on. These are role based experiences. In that case, it was for somebody who manages service requests in an organization. This would be for a hiring manager or something like that.
Incode Express has the finance manager dashboard, which you're seeing here, which surfaces information throughout their application into a pretty easy to consume UI. You saw a sample portal for our recording application. This also is from EnerGov. This is not shipping. This is a prototype.
But this is what they're looking at for how to manage a permit, which is a very, very complex business process. And we're trying to simplify that as much as we can. And you've seen the inspection manager thing. So this just gives you an idea of how much penetration and uptake that we're getting throughout the Tyler product teams with some of these initiatives that we have. So finally, I want to talk about data exchange a little bit.
Again, this is something that started out in the Justice Group, but we are starting to use the same data exchange concepts in the Nexus strategic initiative and sharing even more than just this data. These are just a list of some of the types of things that we are bringing into this Data Exchange Cloud. So sort of on the Nexus side, it's all the data about properties, assets that are in the ground, utilities, permits, code violations, contacts, taxes, all these sorts of things are flowing into data exchange and supporting the Tyler Nexus initiative. On the Alliance side, Bruce already mentioned this, but things like parties, warrants, cases, arrests, be on the lookout for type things, citations. All those things flow into data exchange and now we can start to leverage that data across all of the Tyler application suite.
On the constituent portal side, I want to talk briefly about that. So here's the problem today, right? If you go to any county or city website, there's a number of things that you can do online. Cities have been doing this for a while. But in most cases, all of those different applications, whether it's apply for permit, register your kid for a class at the recreation center, pay your utility bill, look up your property information or whatever, Those are all different applications built by different vendors.
They have a different user experience. More than likely, you have to register with a different set of credentials for each one of them. And when you see this, it's really, really complicated and difficult for citizens to navigate. They don't know where to go. They know what they want to do, but they can't find how to do it, right?
And even when they get there, it looks different, it acts different than the last thing that they tried to do. So what we're trying to do is fix that. So we have this unified view of all of the ways that you could do business with your city or county or any other type of government. A single portal, we call the constituent portal that houses all these applications, provides a very consistent user experience, common authentication solution, common payment, all those kinds of things that we've been talking about. So when you look at this, again, we're leveraging the same foundational components that I talked about earlier.
And this is really a broad application area. It's not just paying your utility bill and your tax bill. When you think about it, there are a lot of citizen facing applications in government. Just on the citizen services side, that's what we call these here, things like utility billing, property information, accounts receivable, open data, transparency, incident management, all these kinds of things. It goes beyond just pure citizen services too.
The same technology we're going to leverage for employees. So these would be very casual users of our system where they have limited interaction with the application. So we want to make that experience as easy as we can. So all these kinds of things here where you have very low touch integration or interaction with the system for the 1,000 employees at a large county who barely use the system, we want to make it as easy as we can for them to use it. And then finally, we've got school services, right?
So I'd say schools, parents and students are particular kind of constituent. And we're building role tailored experiences for them in the transportation area, registration, grade book, attendance, all those kinds of things. And then businesses, again, another type of constituent. There are a lot of externally facing applications that apply to businesses, things like e procurement, permitting and so on. So this is a big application.
It's got a lot of moving parts obviously. And all of these things connect to different Tyler systems. We have 5 utility billing systems. We want 1 citizen facing utility system or citizen facing citizen self-service system for utilities. So that's how we're building these things.
So that ultimately customers and citizens get the same experience for every type of business transaction they need to do with their local government on any device. This is where we're going. Okay. I'm going to hand it to the break. Is that right?
We're actually running just a little bit ahead of schedule. So we'll take about a 15 minute break here. You can attend to their phone calls. If you haven't had a chance to grab something to eat, there's sandwiches over here. So we'll start up again at about 1 o'clock.
Thank you.
For for 1, 2, check, 1, 2, 1, 2. Can you hear me? Can you hear me? Yes, sir. Yes, sir.
Hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, hey, Check 1, 2, 1, 2. Hey, hey, hey, hey. Check 1, 2, 1, 2. Nothing. 1, 2, hey, hey, check 1, 2, 3, 4.
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So we're going to now hear presentations from the 2 leaders of our 2 business units. First up will be Andy Teede, who runs our enterprise group, which as we've mentioned before, it's really everything except Courts and Justice public safety. That's the easiest way rather than listing them all. So Andy?
Am I on? Hi, everyone. It's good to see you. I plan to cover 3 topics today. The first one, as you know, we have a new President at Tyler, Lynn Moore.
He's a tremendous individual. He's well respected throughout the organization. But I can imagine from your perspective from the outside looking in, it could seem as if that's a significant change. So I thought I'd spend a couple of minutes and talk about our culture, a couple of remarks about Lynn, few things about our leadership depth to give you the impression, at least the way we feel that it's not that significant of a change. It's more of a continuation of what's in place for some time.
Next, I'll talk about our competitive position and performance for 3 of our verticals within the Enterprise Group. And then I'll wrap up with the discussion about growth. And my growth remarks will be specific to the ERP and Financial vertical simply because of time, for the sake of time. But the broad thoughts that we have around growth related to that vertical are consistent with our other applications at Tyler as well. So I'll start by saying that we are all very fortunate.
And by we, I mean, we as employees, all of us who are shareholders, owners in the company, certainly our customers that we've had for the last 13 years and continue to have a remarkable leader in John Marr. John has done more than create a great business model here. He's created a very deep management team and a sustainable culture that I think will ensure our continued success for decades. All of us could probably talk for a long time about our culture. I thought I'd say just a handful of things.
First, we are a customer first organization. I think that's evident in our 98% -plus client retention rates. Secondly, we are a very scrappy competitive organization as well. We're very hard on ourselves when we lose. That ethic is what has driven, I think, our win rates that have steadily expanded over the years.
They do bounce around a bit quarter to quarter. But over the years, because of the focus that we've put on the product to make it more competitive on our messaging, on our delivery teams, we've steadily improved win rates over the years, and we believe that will continue into the future. We also have a very deep respect for our people, our peers, the employees that work for us to get things done every day. And I think that's evident in the fact that we have very low turnover across the company. And it's also evident, as you'll see a slide in a moment, that a lot of our leadership team, really the majority of our leadership team has been developed from within.
And then lastly, I would say that we as an organization understand who we work for, and we appreciate that our shareholders expect more than top line results from us. You expect bottom line results as well. So we're a very disciplined group in terms of where we invest your money. And we're also very disciplined in how we spend your money in terms of operating the business. You won't see Tyler employees flying 1st class unless we get lucky and get a free upgrade.
So we are a very, very disciplined group. Those ethics back up a minute, those attributes of the company are also attributes of John's personality and they are of Lynn's as well. John has talked about the years the 2 of them have worked together. Lynn is our in house counsel and Lynn has been a lot more than a lawyer to the company. John Game and our former Chairman has described Lynn as a great businessman that also happens to be an attorney.
I think that's very true. I know from my experience every major Lynn has been there providing great advice, and I'd appreciate it probably more than he knows. Our leadership team though, our leadership depth doesn't end at those 2 guys. So within the Enterprise Group, these are 4 key people who report into me. Chris and Dane are at the back of the room and they'll be part of the panel later.
They run our 2 largest divisions. Chris runs the ERP division, Dane runs the LGD division, Mark Hawkins runs our appraisal services I'm sorry, our appraisal and tax software operation, and DJ Johnson runs our appraisal services practice. All of these guys uniquely have spent, for the most part, their entire careers with the company. Chris started in an entry level support position. Dane and Mark started in entry level development positions and DJ started as a data collector on a project when he was still in school working for his father who was a project manager.
Beneath this group is a very deep bench of people who run major functions within our divisions or run business units that roll up under our divisions. This group, like the 4 prior, have spent the majority of their careers with the company as well. I think our average tenure for this group, I did some simple math, is about 17 years. I can only think of 2 people on this list actually that have come to us in the last 10 years or so from the outside. So and those two guys have been with us for 10 plus years too and have been immersed in our culture for a long time.
When I put this slide together initially, I had the names of all those folks listed and I intentionally took them off knowing that this was going to be on the website. I didn't want our competitors to easily poach. But interestingly, over the last 13 years, there's only been one individual that has attained this level of leadership with the company that's chosen to leave and go to work for a competitor. And I don't know with certainty, but I would imagine that there's a see I see some of our corporate leaders in the back of the room, Matt Berry, Brett Kate, Abby, Sam. These are world class people in their field, and we're really fortunate transition for us really wasn't that surprising and we think we'll just ensure the continued success of the company.
All right. So enough about the soft stuff. I'll get into some performance. I'll talk about 3 of our core product lines in terms of competitive position and market performance. And then after this discussion, I'll end with a little bit of discussion about growth.
So within the Enterprise Group, we have dozens of active applications today across all of our major verticals. Our largest vertical by far in the enterprise group is our financial ERP vertical, which represents almost 45% of our total revenues. That's followed by a distant second by our appraisal tax vertical, then followed by schools at about 5%. And then our planning, regulatory and maintenance vertical, which is predominantly our EnerGov application represents about 4.5% of our total revenues. So my remarks will be specific to ERP Financials, Appraisal and Tax and EnerGov.
I wanted to talk about EnerGov because it's been a great success story for us, a great growth engine. It has led Tyler in growth in chart to show you how we go to market today. So very simply, in large governments, large schools, we lead with our Munis application. In small governments, we lead with our ENCODE application. And in small schools, we'll lead with our Infinite Visions application.
This does vary a little bit state to state, given the competitive positions or needs of jurisdictions, but broadly this is how we go to market today. These applications don't compete against one another. So where we draw lines, we will go with one application above the line or the other below the line. With the acquisition of New World, we created what we refer to as swim lane for the New World application that overlays the bottom part of Munis in the government section and the top part of ENCODE. And in this swim lane, we will bid 2 applications.
We'll bid Munis and New World, for example, at the top end. And they don't compete against one another. While we will have 2 reps that are representing each application, they're not bad mouthing one another. We position the products at the highest level that Munis is more fully featured. The New World application is a little bit less expensive, generally about 20% less expensive and a little quicker, a little easier to deploy.
All right. So this is where the application sit in terms of market tiers. Munis predominantly is a Tier 2, Tier 3 application. It does reach down into the Tier 4, Tier 5 space in certain areas, but predominantly, mostly we're targeted at the Tier 2, Tier 3 space. Infinite Visions and ENCODE then are the Tier 4, Tier 5 space and then you can see how New World straddles Munis and ENCODE in the Tier 3, Tier 4 space.
From a competitive position at the high end, we see Oracle, SAP, In for from time to time. This is also where Workday resides in our marketplace. The jurisdictions that have a Tier 1 bias is where we see these companies have some success. The Sun applications, we still see there's still a meaningful competitor in the middle markets. And then at the lower end of the market, BS and A is a company that's received a lot of attention from our sales teams and our dev teams in the last couple of years.
They've made some inroads in the market and have had some success. All right. This chart will come with some caveats. I wanted to give you a perspective of the penetration that we've achieved in the marketplace. This represents just the city county market.
So if you were to look at the latest census, it would define the marketplace, the city county marketplace is 3,000 counties, 19,500 municipalities, which are predominantly cities and towns, and then 16,500 townships. Within the townships, there are some small entities that don't have their own budgets or aren't incorporated. We're going through a process right now of weeding through that. This is still pretty fresh information. So, I elected to give you the county and the municipal space.
And the intention of this isn't to give you data that's at an auditable degree of accuracy. It's more to give you perspective on how much of the marketplace we've penetrated. And this does represent the lion's share of the city county space. So as you can see in the Tier 3 space, we've achieved about a 31 percent share. And then in the 2 tiers on opposite sides of that, we're under 20%.
So the point I want to make here is despite decades of success of penetrating this market, there still remains a considerable market available to us to continue to grow. And I'll come back to this a little bit later. In terms of our competitiveness, this represents opportunities that we've actively to us. So these are opportunities that either haven't made a decision or haven't made their decision public. But during this time frame, we've won a little over 50% of the opportunities, which is substantial when you consider how fragmented this marketplace is.
In fairness to our competitors here, a good percentage of the 2 10 wins we have here, maybe 30% were 1 without an RFP. They could have had multiple bids, but a number of these, we have 1 in a sole source fashion. So there could be, with some of our competitors, some business like that, particularly competitors like SunGard that have legacy All right. I'll switch gears a little bit and talk about our appraisal and tax I'll switch gears a little bit and talk about our appraisal tax segment. We go to market primarily in this marketplace with our IES World application.
We have another national application that's called Orion. We tend to lead with IES World today. It's a little bit more feature rich than Orion. But the primary difference between those two applications is that Orion is written on a SQL Server back end and IES World is written on Oracle back end. What's unique about this marketplace for Tyler is that we really dominate the high end of the marketplace.
I guess not necessarily unique, Intergov is a Tier 1 to Tier 3 application. The Courts and Justice space participates very well on the high end. But the Tyler signs that you see on this map represent 9 statewide and province wide clients that we have in our appraisal tax marketplace. We have 2 competitors who each have 1 statewide deal. Thomson Reuters has 1.
And I think today it's part of Harris, but it's the old Colorado Customware another. So we tend to do very, very well in the large end with this product suite. So this is how it's represented in terms of the tiers. The top 4 4 market space in certain states. We've been successful developing a pre config model, Ohio, Georgia, North Carolina, and we have the opportunity in the coming years to perhaps do that same thing in other states and try to gain a larger share of the Tier 4 market.
From a competitive standpoint, if we were to go back 5, 6 years, we used to win about a third of the marketplace. We had a large competitor called Manitron, who was since acquired by Thomson Reuters, would win about a third of the marketplace and the rest of the fragmented industry would share remaining third. Thomson Reuters has been very quiet the last few years. And as a result of that, we have won an overwhelming share of the dormant. So we do still watch them closely assuming that they do come back into the marketplace in a big way.
At the bottom of this chart, you see a company called Vision. And I've included this. I had the same slide actually a couple of years ago when I was talking about this segment. In this marketplace, a number of small or a number of small companies over the years have penetrated a small region very successfully and then have tried move outside of that region and take the application national. It's a very difficult thing to do here because the legislative requirements state to state are very different.
And typically those applications are hardcoded to the one region where they perform very well. So I had mentioned a couple of years ago that Vision was making an attempt to do that. We had a little bit of skepticism in terms of whether they pull it off just because we haven't seen it successfully in the last 15 years. And in fact, they have pulled back from the new business marketplace considerably. So I say that just to emphasize that there's a very big barrier to entry for some of our verticals and this is an example of one.
It would take a significant amount of investment to get into this space. And I we don't see anybody new in the marketplace right
now attempting to make that
kind of move. So, the Tier 1, Tier 2, Tier 3 space is where this the Tier 1, Tier 2, Tier 3 space is where these products have done very well. We have a lot of room left in the Tier 4 space. That's why the pre config model that I mentioned earlier will be good for this product line in the long term. And in terms of performance, this product line as well is winning north of 50% of the deals that they're participating in.
However, if you look at the market value of what they're pursuing, they're winning about 75% of the value of the market that they're after right now since it's skewed to the higher end. So this business line is growing very fast today. And it's a little bit strange actually to attract talented people to help them deploy. So it's a very good story for us. All right.
Our planning and regulatory vertical, again, this is the EnerGov application. We've achieved a very nice footprint across the country in a relatively short period of time. We have 2 40 clients in the EnerGov group, 165, 170 or so are on our enterprise application and that crosses about 38 states today. And one of the reasons we've been able to expand footprint so successfully is because in addition to having the sales team that's dedicated to this vertical, we're also selling it through our financial verticals, both our new customer clients as well as our existing base. So it's grown nicely.
And as I said earlier, this has led Tyler in growth percentage terms 3 out of the last 4 years. EnerGov is also primarily positioned in the top three tiers, but we have had some success selling this into the ENCODE base. So we're represented as a Tier 1 through Tier 4 product today. We compete largely at the high end with In for and Accella. In for, in addition to having the planning and regulatory application, has a a strong enterprise asset application.
And in deals that are requesting both sets of functionality, they have competed well against us. As a result of that, we kicked off an initiative about 18 months ago to build our own enterprise asset management application. The first release of that will be available in the Q1 of next year. So I think we're doing good work today to try to mitigate that competitive advantage that they have. Accella, also a good competitor.
We feel that we're a little more functionally rich than they are. They're ahead of us a bit today in the user interface, but we do have an initiative underway. Jeff mentioned it earlier to rewrite our user interface, which is Silverlight based today in HTML5. And that will mitigate that advantage that Accella has had over time. From a market share perspective, despite the great success that we've had here in the last 7 or 8 years, this still represents our share still represents a very small percentage of the overall market.
So again, we have plenty of opportunity to continue to grow within our core segments. And in terms of wins, this group, even despite the challenges that I mentioned with respect to In for and Accella is winning close to 60% of the business that they're pursuing. All right. So in terms of growth, this is the graphic that you saw in the ERP slide earlier that shows our percentage of the tiers. We believe I'll talk about 5 different things.
We believe that we have great opportunity to continue to penetrate the 3 main tiers that we're in today. There's still a lot of share that's available us. And we believe just as we have over the last decade that we can continue to manage win rates upwards. It's part what we have been doing in terms of challenging ourselves based on our day to day performance in the business, but it's part what Bruce has talked about as well with the Connected Communities initiative. And that's not a small a small initiative for us.
That's pretty material. And it's largely about stickiness. It's largely about growing win rates. I don't think in next 12 to 24 months, we're going to see win rates expand 10 to 15 points. But as these applications roll out, as the store becomes more well known, as the title footprint continues to grow, this will be fuel for us to continue to grow win rates in our core space.
In addition to that, we've been successful with the Munis application in the last 5, 6, 7 years steadily moving up market. And we believe that we can continue to do that. Within the Tier 2 space, there is still some Tier 1 bias. Certainly, within the Tier 1 space, there is some Tier 1 bias. We're talking about strategies so that we can begin to penetrate that space a little bit better.
We want to be careful that we don't upset the core model that's been very successful for us in our core segments. But we do believe that there's a lot of share there that in time we'll be positioned to take advantage of. Again, these things that we're talking about related to that space, which are primarily pulling out the code stream for a particular project from a normal release cycle, doing heavy investment during the project cycle and then at the end of that bringing it back into the core segment. We think that if we do implement a strategy such as that, we can potentially in 2, 3 years begin to grow win rates in this segment. Next, we have within the financial space, I talked about the core suites that we have, but there are a lot of ancillary applications that we sell alongside those suites, which add 20% to 30% potentially to a deal size.
An example of a project product that we brought into the fold this past year was an acquisition with Executime. In 2015, prior to the acquisition, their licenses were roughly 50% of 17. So it's an example of the fact that while we do have a number of ancillary applications that we can sell alongside our core tiers, those applications by the way grow the win rates, help with the win rates of the core applications. They also grow the addressable market for us. And in addition to that, we have an initiative underway that we refer to as the white space initiative that Brett Kate is leading that is allowing us or at least is what we're driving towards, identifying the final thing that I wanted to talk about is, I'll talk about And then the final thing that I wanted to talk about is targeting the authority space.
So in this marketplace, this is a very large marketplace, but this has generally been maybe 10% to 15% of our license sales over the last several years and our win rates tend to be substandard here more in the 30% range. So we feel with a concerted effort here focusing the sales team a little bit more on that marketplace that we can grow our addressable market, drum up additional business that we wouldn't have otherwise been pursuing and also increased win rates in that area. So there are about 15,000 authorities that we currently identified as potential market. And again, if we can grow the number of opportunities we're responding to, historically, we've been more opportunistic in this space than we have aggressive in this space, then we think again we can grow the addressable market that we're pursuing. So I hope what I've conveyed in all of this is that we still have plenty of opportunity within the core segments we've been successful in, but we have an enormous market opportunity even outside of that that will allow us continue to grow at meaningful rates in the coming years.
Thank you.
Great. Thanks, Andy. So next up is Brett Dixon, who runs the Enterprise Group, Courts and Justice and Public Safety, Justice Group, I'm sorry.
Great. You're going to
turn it on? Great.
You all want to see some more slides? We got a few. Hey, I'm going to talk to you about 3 things in the few minutes I have with you. I'm going to talk about New World assimilation, how it's going, what we're seeing. I'm talking about future growth drivers to Course and Justice.
And if we have any time, I'll give you a guy from the field's perspective on Tyler Alliance, which is part of the Connected Community initiative that Bruce talked about today. Now if you just bear with me, I will show you some numbers here in a minute. Bear with me, I want to give you a little bit of a context to talk about New World. And I joined Tyler 8 years ago. Actually, Bruce Graham and myself came in together, and we were we came and took over Courts and Justice, the division.
Bruce and I did together. Bruce was President, I was the COO. What we found when we signed up with Courts and Justice is they had been remarkably successful at selling Odysee. There had been a strong adoption of that product. It was feature rich, and they had sold a lot.
But the rest of the division was being challenged to catch up with the success that they'd had with this product. And so we got together with John and Lynn and a guy named Dusty Womble, and we created a, what we call a multidimensional model, and it was the way we ran the business to get back to a place of growth and high quality. And this is the model. I'm not going to take you through it, but it's the concept is real simple. I'm sure you've seen things like this before, where you break the business down in certain segments, bite sized segments, and you focus intensely on those segments.
But then you're constantly pulling back and saying, the And the dimensions in all of them? You begin to move the business together without getting too far out ahead in one dimension over another. And so that's what we did 8 years ago with C&J. And just to give you the quick snapshot, we started with support. We put a lot of effort in getting our clients to be delighted with ODiSI.
You got to do that. You got to get your customers delighted if you ever want to start talking about new innovation within the product. I hate it when I go out to a customer and say, I don't want to hear about new stuff, just fix what you already have. That you don't ever want to hear that if you're in the field. So you get them happy, then is when you start igniting innovation.
And then, sometimes often overlooked, is you work the organization. When I talk about the organization, it's being very clear on what your mission is, what your goals are, but it's also creating a set of values, shared values within the departments. It's creating a culture of teamwork and urgency. So that and then ultimately, you want to develop leaders because you need if you're going to grow, you can't have one guy making all the decisions. It just gets too big.
So you got to push decision making down in the organization, but you got to to have the leaders that are there to do it. So those are 3 of the things that we did, amongst others, at C&J. And over about a 7 year period, 8 year period, the results were quite rewarding. And many of you have recognized some of you, you've seen what's happened at and J, and it was that model that really helped us get those kinds of numbers. Now why would I spend the time telling you that about C&J?
The reason is when we acquired New World in November of 2015, not only did it fit the strategy that we needed to move into Alliance and to expand what we are doing for our state and local governments, we looked at it and said, man, that looks a lot like C and J. That looks a lot like Courts and Justice. I mean, they were very successful, over 1600 clients implemented, but they were struggling to catch up with their success. So when we bought them and we brought them in, John asked me, he said, Could you go and run the same play that we ran at C&J and go run it for New World? And that's what we're doing.
And we're hoping, and I believe we're on our way to compressing the time. What took us 7 years to 5 years to achieve at C&J, we think we can compress that to 3 years or so at New World. So I'm not going to talk about all the dimensions in New World, but I'm going to talk about a few. So support, one of the first things that we did when we went to New World is we put resources in the support organization, over 40% increase. And we also just didn't put bodies out there.
We put training programs together. Again, remember when I talked about working with the culture, we not only train them in the products, but we trained them in how to partner with other divisions very well, in fact or other departments very well. In fact, their partnership really extended into development organization. So we're seeing the development organization and the support organization work hand in hand with their shared clients. And what we were able to do in 2016 is reduce the number of versions in production in the field by 67%.
That is remarkable that they were able to do that, to move clients to a smaller footprint of product in the field. That gave us a lot of tailwind, and our clients were actually delighted with that. The other thing that we did, that I really take my hat off to Greg Sebastian and his team, the executive leadership team, Greg Sebastian is the President of New World. His team, they picked out a number of clients, mostly the most complex clients that they had, And they said, we're going to go get after those clients specifically. And they developed plans.
This is just one for Snohomish County, which is one they went after. And from a support standpoint, they began to manage clients, not just at the IT level, but they managed at the executive level, they managed at the project level, the IT level and then at the end user level. And they I don't know if you can see this or not, but this wasn't just a support issue. This was everybody on deck. This was developers.
This was support. This was the infrastructure guys, even executives, names in boxes on lists assigned to clients. So we really moved the ball with our clients and earned us the right very quickly to begin talking about innovation, place, so we really firmed up how we test, how we QA, firmed up our release cycles, So they'll get a little more consistent. And then the big thing that we did is we created what I call R and D capacity. So that's the opposite of that is waiting for your clients to tell you what they want and then to fund it and you go build it.
It, that's a good way to run a business. We think a better way is to have an R and D capacity where you can actually get out ahead of your clients, begin to lead your clients in the things that you know that the market needs. And that's what we did, and that's what spawned the 3 initiatives that you've heard about and that are in progress. And these initiatives are not something that's coming in the buy and buy. These are things that we're already starting to deliver in the 3rd Q4 of 2017.
So this is happening today. The first one, the first major initiative is on the CAD product, computer aided dispatch product. Really, what we're trying to do is expand where we go sell this product. We want to move upscale. So we're targeting 3 upwards of 3,000,000 calls service a year, which would allow us to compete in the largest dispatch centers in the country.
And we haven't competed there before, but that's where we're headed with this. We also are continuing to build on I will tell you, New World, they were on the cutting edge of multi jurisdiction dispatch centers. So that's a trend in the industry right now, where cities are consolidating their budgets and having one dispatch center for multiple agencies crossing boundaries, just like Bruce was talking about. They were doing this before Bruce put his slide deck together, believe it or not, several years ago before he even bought them. And then the other thing that's happened is they're really driving advanced integration with mobile.
And you've heard us try to explain this. I hesitate to try to explain it to Jim. It's just so cool, this context aware workflow. Just you got to hear this. Again, I mean, an incident happens, the system knows who's on this incident.
It knows who's on it. It knows where they are physically. It knows where each person is in the life cycle of that incident. It knows what kind of device they're holding, and it knows what kind of role they are. That's what it knows.
And it is then going to multiple data sources, whether it's Google Earth or Esri or intergov or RMS to pull relevant data for that specific set of users and it sends it and the data is tailored to the user, tailored to the user where that person is in the life cycle of the call. It's crazy smart, crazy smart. So that's what CAD and mobile are doing together. The final thing, the other big project that they got going on is porting their RMS to a web based architecture. They still are the leader in the feature function records management system for police, fire and EMS, they're still the leader in that space.
So all we're doing is moving it to web based architecture, and we will put some advanced work flow capability in there, some management tools in there that are extremely cool. So taking the time to update that. So those are the 3 big product initiatives that we've got going on. Remember, we get our customers happy. Our customers are a lot happy with us today.
They have felt a difference between the time that Tyler bought them and now. You got some really, really interesting innovation going on that our prospects are going, yes, that's interesting to us. Our current customers are very happy. And that tends to really help us on the sales side. Here's some numbers that we're pretty proud of.
So what you're seeing in Q1 of 2016 to Q1 2017, extremely happy with the market reaction to the things that we're doing in the areas that we discussed. Our win rates from Q1 2017 are not even the same. But I'll tell you, similar to Tyler, they're all Tyler by now. They're not happy with that. They're pretty irritated that out of 10, they're not winning.
So we expect to see that go up even further. But some pretty good numbers for just a short period of time. So that's what's going on with New World. We'll have Greg up here in a little bit, and you can talk to him more about what he's doing, but couldn't be happier with the progress that we're making at New World, couldn't be happier with the purchase and then how it's going to play into the strategies that you've been hearing all morning. Okay.
So let's shift to Courts and Justice. All right. This is you heard a little bit about the story from Courts and Justice earlier. We're going to keep doing what we do really good. We've got a healthy backlog of contracts that we're still implementing that will continue to deliver new revenues to us over the coming years.
We still have a lot of room left in our e filing offerings. In fact, you're going hear me talk about innovation within the e filing ecosystem here in a minute that has even more revenue beyond just e filing revenue. We're still taking bids, still taking RFPs for case management, and we're still winning. And we'll talk about that as well, and then we'll talk about innovation within Alliance. So speaking of winning, you've heard this a couple of times, but we did land another whale, which is Cook County.
We'd actually been awarded that for quite some time and had to work through some of the political and contractual challenges that comes with an award of this size. But John Marr has got his daughters doing well there, another $5,000,000 a year of recurring revenue. So couldn't be happier with that one. That with that award, Odyssey, our case management system, now is present in the 3 largest jurisdictions in the country, 3 largest jurisdictions in the country and 7 of the top 10 largest. And what's an opportunity for us is there's still more to sell back into those clients.
There's new case types. There's integrated criminal justice offerings like prosecutor, jail, those kinds of things. There's e filing and mandatory e filing that we have to sell into all of those. So even the clients that we have already landed, there's more to go in and to sell to those clients. So speaking of e filing, I want to shift to that just for a few minutes.
Everybody, I think you guys have been following us, you understand that the best beachhead for an e filing contract is our case management system. Now you don't have to have our case management system. You don't have to have Odysee to buy our e filing solution, and we do have clients that don't have our e filing solution. But I don't know of a client that has Odysee that and is e filing that is not using our e filing solution. So first the first opportunity for e filing usually comes with a case management implementation that takes a long time.
When we get the case management system up and running, typically, our clients, e e filing program. And typically, it's permissive, which means you can e file or you can file the old way if you're an attorney trying to initiate a case. Our experience is, if you give permission or permissive e filing, that will be about you'll get about 10% to 15% of the cases will flow through that e filing system. Everybody else keeps doing it the way they always do. It doesn't hit scale, it doesn't hit and the benefits don't really come to the client until they mandate that the only way you can file both initiated and subsequent filings are through the e filing system.
Obviously, if it's mandated, then you're getting 100 percent of the e filing cases going through the e filing system. So that typically comes late in the cycle after a CMS implementation. The reason I take you through that is it'll help you understand when I say our future growth drivers are still going to be people moving to e filing. So this is our we do about 33%, a little north of 33% of the population is under contract with Tyler, either in full production or in some form of getting to production. Of those contracts that we hold on the CMS space, only about 40% of them are at a place where we believe they're maximizing their e filing.
They've gone mandatory for all case types. So we've got a lot of room to grow in e filing alone. And obviously, when you add Cook Counties, that adds to our market share, which means we have more opportunity on the e filing side. So promising future for us as far as we can see with e filing. The other thing about e filing that I want you to understand that we're very optimistic about is the innovation that happens within the e filing system itself and what we've seen our clients do with us.
And just bear with me while I play this out for you. So this is a typical e filing arrangement where an attorney wants to initiate a case or submit another filing through a something called an electronic filing service provider. That is just a portal that then connects to what we call an EFM or e filing manager. And then that e filing manager works back through to the case management system of choice. And that's a base one.
By the way, we're serving over 550,000 attorneys or registered users today. So this is the standard arrangement. When we started getting into this business in 2010, 2011, that was what we got into. Since that time, just in the 5 short years that we've been doing that, other things have bolted on to this ecosystem. So for instance, you see the this thing called government filer.
The original e filing machines were civil filings. Well, now we have the capability for the prosecutor, the DAs of the world to initiate criminal filings, then all the subsequent filings that come after that will work through that arrangement and e filing. So that's a tremendous value for our clients. This thing down here called Odyssey Guide and File. We're seeing a trend in the industry for self represented litigants to they want to file without the cost or the assistance of an attorney.
So Tyler, C and J, has built a machine that an application that helps self represented litigant. It's a questionnaire. It's a set of questions asking the filer what they're trying to do. It asks a lot of questions that then make sure that the forms, the proper forms for making an acceptable filing are populated and created, so that they don't the courts don't have to have a roomful of attorneys or pro bono attorneys trying to help the self represented litigants come in and figure out what paper to get and what information they need. It's all online.
So we provide this as well in the ecosystem. The other thing that I'd call your attention to is this engine called research. If you notice, everything is going through what? Everything is going through that EFM. Lot of data going through that EFM.
We've got clients now, big clients, statewide clients that are approaching us going, you got to help us figure out how to leverage that data that's going through that EFM and leverage it for uniform search for their constituents, alerts that they want to see when things are going through the system, analytics that they want to pull from the information going through that system. And they're willing to pay for that kind of capability. And we're right in there with them trying to figure out the best way to do this. We can monetize research, and we will. So again, and I don't know what else is going to come out.
There's other things that I could talk about that I won't that we are working in this ecosystem alone. So a lot of growth left, not only in mandatory e filing, but the innovation that is coming with Tyler and our clients through this, okay? So pretty excited about that. All right. Enough about e filing.
I don't have time to talk to you about international. We are interested in international. We are investing in international. We do have our first contract, as you know, in Australia. It's going fine.
It's going to be a slow build in our international markets. But I will tell you, it's working just like we had hoped. As the product is on track, I think our first case type is going to go live towards the end of this year. We've already got 5 serious prospects that are watching this and dealing with our sales rep. I would say we've got one of our best sales guys who work in the international market exclusively.
And there's 5. They're different courts. They're also interested in some of the ICJ applications, prosecutor, jury, some of those things. So we're seeing a lot of interest generated just by our presence in this continent, for sure. So future.
All right. So we've talked about C and J. Those are some of the growth drivers that we see coming. Pretty bullish on that. New World is doing great.
You put them together, and you got this thing called Tyler Alliance. Now I haven't talked much about I work with C&J, I work with New World, but I also work with these 2 smaller companies that we bought in 20 14. Softcode is a company when a judge renders an order, that order is given to the sheriff or the constables to carry out, to deliver the paper, so to speak, that's the term, the civil papers. But then they also have to stay on top of that to make sure if it's payments or garnishments or things like that, they have to make sure that they have to provide status on how it's going down to the sheriff's office. So soft code automates all of that.
Brazos is a citation automation company. It's primarily for traffic, but they also do city citations too, and they work back through the courts to collect. So 2 very Tyler Alliance type applications. These two applications, I mean, they've had a really good run here over the last couple of quarters. What we're starting to see happen is we have multiple sales force, our public safety sales force, which is not only New World, it's also LGD Public Safety, who sells to small cities.
They're both selling. The public safety people are selling, Brazos and SoftCode and the courts people are selling. So we're just seeing good cross selling start to happen. As a matter of fact, Cook County, I don't know if you noticed that, selling start to happen. As a matter of fact, Cook County, I don't know if you noticed that or not, but $2,000,000 of the Cook County Court deal was Brazos.
So we're starting to see good synergy there. The integrations between the applications, they're coming. I mean, they're there. We have some. They're They get sewed in to the there's 4 application groups here.
There's New World Application Group, there's C and J Application Group and then these 2 applications, four groups. So we're carving off bits and pieces to begin to work on the total alliance, and we have a road map for the alliance type integrations as well. So we're well on our way to doing that. I thought you'd be interested that the cross selling is happening and then the integrations are coming. So prior to buying New World, C and J did pretty good.
We were pretty successful at selling courts, jail and prosecutor in an integrated justice solution. We were very proud of that. But now, in this simple graphic, you can see with the addition of New World and a well performing New World, our ability to accomplish the mission that Bruce was talking about earlier today of impacting state and local government for the good, not only efficiency, but just making it just. Our ability to do that has grown exponentially. Serve a larger market now.
From a shareholder serve a larger market now. From a shareholder standpoint, we're also seeing quite a bit of opportunity, similar to Andy. He's Andy does circles. I'm doing bar charts today. I guess we need to get our circles, I'm doing bar charts today.
I guess we need to get our act together, Andy. But this is an interesting it's oversimplified, I'll admit. But this is a chart that talks about the agency present that we have. So it assumes that all agencies from a dollar standpoint are equal, and I know they're not. But this is our market share as it relates to the number of agencies or offices in the states.
We've got a lot of room to grow. And I will tell you, I do have numbers on this, the numbers for license are measured in the billions and the recurring revenue streams for the represented in the green are measured in the 100 of 1,000,000. So a lot of room for us and that should excite investors, I would think. So that's what I got. I think the takeaways are New World is doing great, couldn't be happier with them.
C and J has got a lot of growth left and are actually turning into an innovation machine. And then, Tata Alliance, I think, is spot on, both from a mission standpoint as well as revenue growth. Okay? Who am I turn it over to, you Brian? I'm back again.
How do I do on time, by the way? Early. 3 minutes early, all right. Good deal.
Okay. So next up on the agenda is more of a free form Q and A roundtable. We're going to bring a couple more members of the team up here, I think 3 others that will join us. And we'll just open up for questions from the audience here as well as on the webcast. So we have a little bit of need to open that up.
And so in just about 2 or 3 minutes, we'll start up again with a roundtable. Okay. So in addition to those of us that you've already heard from the session, we've got 3 more members of our management team here with us. Dane Womble is President of the Local Government Division Greg Sebastian, President of Public Safety, President of New World and Chris Hepburn, who runs the ERP and Schools Division. We have microphones at both ends so that you can be heard on the webcast.
So if you would like to have a question, just raise your hand, we'll bring you a microphone and it can either be directed at specific person or we'll figure out who's the best to answer. Go ahead, Scott.
Great. Thanks. Scott Berg with Needham and Company. I guess the question is probably directed towards Bruce, and maybe this is your 4th daughter, Connected Communities, the term here, unless someone else wants to answer it. But how much is that philosophy or product vision dependent upon customers moving their products to the cloud versus having an on premise perpetual license?
I know you guys have talked about the data exchange sharing initiative, but whether it's lifetime in the data or other challenges that are there. I didn't know if that's actually part of the vision to try to get more customers on the cloud longer term.
It's a great question. I'm going to I'll take a stab at it and bring Jeff to the mic into it. I don't think the data exchange is definitely a cloud based initiative, something we built with Microsoft. It's an Azure based solution. But that's something that's very lightweight.
It's not actually their core application back into that. The others are actually within their on prem system. Everything else we showed you there is not dependent on them moving to the cloud. So for example, if they have a service bus that's common with our service bus, with another application, that will that's not cloud dependent for us to have a much tighter integration than what we have there. Does that make sense?
I'll speak to that and then maybe Jeff. I mean the first on the data rights, our customers own the data. That's not I mean that's very clear. We're also talking about publicly available data. So what's here is what they already have, what's available, what again, that's their on prem system feeding lightweight way into a shared cloud.
That's what we're talking about there. It's not actually moving their whole app into the cloud, if that's what you mean.
So I would add to that. Clearly, some of the benefits that they would get only accrue if they move to the cloud. And the thing that you pointed out is a perfect case of that where to really realize this sort of multi cross jurisdictional thing, you really have to have everything together in the cloud. And so when we look at constituent portal, for example, some of the experiences that we're trying to build that cross the jurisdictional boundaries. And a good example is sort of the builder developer persona.
You've got builders who are building out residences, let's say, in the Dallas area, and they have projects going on in Plano and McKinney and Frisco and the Colony, all these kinds of things. Today, they have to go to these different websites if they want to interact with those different organizations. We want to build an experience for them where they log in once. And regardless of where that project is, they get a dashboard that shows them everything that's going on. That's really only achievable if that application is hosted in the cloud.
So I think once we start explaining those benefits to people and they realize it, we will see a transition of at least those citizen facing things more into a cloud model. The back end systems that they connect to, they could be
important distinction there. I'm trying to find it draw a fine line here. So the citizen portion, which he's talking about just the actual portal, that would be cloud based. The actual back end system is still can be could be cloud based, but it also could be on prem. That would be fine in that model.
I think I'd add to that because I think your question actually was, are you doing this for this purpose or are you doing this partly to incentivize people to move to the cloud? And I think Tyler, I don't know if we're unique, but maybe runs against the tide a little bit there. We don't incentivize our clients to move to the cloud really. We do not necessarily see a better business model, which I appreciate the investment community has rewarded the the investment community has rewarded the cloud revenues over traditional maintenance revenues. But if you look at Tyler's maintenance revenues, at least 98% retention, very high margin, low people cost, low CapEx, it's a great model.
And we have a great cloud strategy. We have a nice growing business in the cloud with our clients, but we don't have a bias toward it. It's higher CapEx. It's maybe marginally less sticky, and it's much more people intensive. So we just want the clients either way.
We want those win rates that you saw both the group presidents go to capture the customer and want to keep them forever, and we're happy to do it in either model.
Tim Plasal, Northland. Question probably for anybody up there. But if you take a look at your vision there, it's getting a lot of the fiefdoms to work together and to share data. And are there particular applications where everybody wants access to that data that if you have that application, I'm guessing ERP, but maybe you could help me with that and more. So like examples I would think of is like manufacturing, everybody wants access to the ERP system.
ERP system. Little fiefdoms would want access to that you could execute on that common vision, if you will?
I guess I just want to try to make sure I understand. I mean think about what we showed you with the complexity of local government, right, and what Jeff described that all of us, I mean this includes anybody that wants to write to this space, if you want to design an application that you're going to make available for all the small cities and counties that are out there, well, you got to navigate that then to provide solutions to that base of customers, that would be? Yes. Then to provide solutions to that base of customers. That would be highly, highly unique from what is currently available today.
So everybody would like to be able to provide these services to citizens. They'd like to do it in a deep way that resolves to the back end transaction systems like payroll, like all the things that we've talked about, these essential city and county services. It's how to do that in a way that navigates the complexity to where I can manage all of that. So what we're providing now is a model to do that that's never existed.
But is there particular data that is very valuable across the various silos, I. E, tax data, I would think something in criminal records, that sort of a thing.
If you were in the opening session and you saw the demo I did of what we call Atlas, which is kind of a mapping layer over the top of that data, all of that data if you look at all the data that's maintained in Tyler applications or even third party applications that our customers have, a lot of it is location based, right? They want to know what's going at this particular place right here. We actually control a lot of that data in our systems, and that's the kind of data they do want to share. What's going on at that particular piece of property? What assets are installed on the ground?
What's the value of it? How much utility usage do they use? All those kinds of things. And we're able to pull all that together with this data them. I think we're a little bit ahead of our customers, to be honest with you here, because they haven't really been able to realize these kinds of things, and it's up to us to educate them about them and show them how they can do it.
And the message does resonate with them. I mean, we've done some of these presentations before, and they're starting to wrap their head around it. They get it. So I think we're going to see more and more willingness, but both within and between governments to do this kind of thing.
Not to belabor the point, but so example like what Brett described where he talked about the feeding everything that feeds through the electronic filing manager. If you think about it, if you're an attorney, kind of be a valuable set of information and know how to judge rule or what kinds of access is being handled by other what kind of access is being done by other attorneys that I might be up against in the case. Highly, highly valuable, but I want to be careful. A lot of that is not data that own. All we're doing is helping our clients begin to get value for that data.
Like with the core data, we don't own that data, but we can help them resell data to title companies and all kinds of others in a way they've never been able to before. And that's an important distinction. I mean we're providing a we're on the behalf of city and county government. We're helping them do things they've never been able to do through this technology. It will realize revenues for them.
Maybe we participate in that depending on the arrangement, but often we don't have
the rights to that underlying data. Okay. Then one quick follow on then. Jeff, if Brian and John bring a company to you and say, this is exactly what we want, we're going to buy this, We won't go into your nightmare, but what is your dream architecture? When you've laid out there, we've seen from a lot of application companies, but everybody uses a little bit different twist on things.
Is it all built on Microsoft Azure or something like that? What would be something that would say, yes, we can do that easily? I would say it's simple, and it uses widely used Internet technologies because that's what all of our new stuff does, right? And I tell my dev's this
all the time, if you can't Google it, we're not using it.
It's John Weidemoyer for Jonathan Hutt, William Blair. Your personalized portal seems very interesting. It makes me wonder if to properly sell it going forward, the concept over the longer term, do you anticipate the need to have higher level decision makers involved in the purchasing process so that the more entities within the jurisdiction would have an umbrella entity that could oversee the purchasing and persuade the lower level folks who are making the decisions to go that route? And I'm also curious about inter jurisdictional, if how that might play out because obviously you're talking about 2 different umbrellas, but just curious if you anticipate drawing more people at higher level into this the purchasing process.
Go ahead. We've discussed this a lot. Bruce,
I think 2 things. First is really what John started with today. We're not taking our eye off the ball. We defifedum. They're going to they care about their particular agency and we have to win that as a best of breed application, and we track carefully what they care about.
At the same time, this particular story does very well for folks that work at a county level, see like a county CIO or a county manager or a more senior level decision maker because this is a problem that is extraordinarily hard for them to solve. So we have found that as we're able to tell that story, they want to explore it. And will that influence buying decisions? We would certainly hope to that. Lynn, did you want to add to that?
No. Tom was just going to say
that's exactly right. We've had that discussion. And in fact, we've talked about it on a marketing level. We've talked about devoting marketing resources to sort of the higher level county executives, and that's something that we intend to pursue.
Usually, the decision on what you buy, who you do mayor's office. What we want to do is raise the awareness there so that they task those making those decisions with, Hey, we want this comprehensive solution. We want these levels. And then finance directors and judges and tax collectors will execute on that, and Tyler will be the more qualified solution.
I think something else to add to that is to drive almost a new audience at the citizen level. So we start providing this geofencing and providing all of this data. Now I can look at data across multiple jurisdictions, across multiple county lines, and then we provide this really robust portal. And now the citizen is going to their council people and their commissioners saying, why aren't you using Tyler? So it's actually a new audience that we're trying to sell to,
Hi. Two questions. First one is, can you just remind us, do you bid on every RFP that comes up in the market? Or are there certain deals that you might not pursue and why not? And second question is just, you talked about your win rates based on a number of contracts.
But I was just wondering, in terms of dollar win rates or the dollar value, are you capturing similar, I guess, 60%, 70% dollar value as well? Or are there other differences in your average contract value that kind of skews your dollar capture in one way or another?
I'll let you're looking at me when you asked that, I think it's my number, I'll let Greg speak to that. But those the numbers I was showing you were transactions. They were not dollar factor. So but we do track both.
It would depend on the division. So Justice, for example, the dollars would be a higher percentage than the number of decisions. And somewhere else, it might be different. Overall, it probably would not vary an awful lot. Those averages would be similar.
We bid most opportunities, which actually would drive our win rates down. Some companies are more selective because win rates aren't high enough to justify going after all those deals. But generally, unless something is well outside of our target market, we're involved. Greg, do you want to add anything?
No. I mean, that's how Public Safety operates as well. We'll generally bid most RFPs. Of course, we look at the functional requirements, whether or not we've got who the competitors are, whether or not we have relationships in So there's limited resources to do an RFP. So we tend to be more strategic, but we generally bid most of them.
I'll add to that just as an example. Within our appraisal and tax vertical, we'll bid everything in the Tier 1, Tier 2, Tier 3 space and we're bidding a lot of business in the Tier 4 space as well. We haven't lost many deals in the upper tiers over the last couple of years. So our win rates in those tiers are much higher than our blended win rates. We tend to lose more frequently in the smaller tiers because that application is very much like the SAP.
It is the SAP of the property tax world. A big application like that is difficult to deploy in a smaller jurisdiction unless you've built a preconfiguration model, which takes an investment and educated the implementation teams to deploy that effectively. So with some product lines, we do have a disproportionate value of the market with other product lines. As John said, our win percentages are commensurate with the value of the marketplace.
I'll add one other thing on that. We've mentioned on the last couple of conference calls and I think Andy had it in his presentation. To us. We believe we're the beneficiary of more than the more of those to us. We believe we're the beneficiary of more than the more of those than our competitors are.
There's certainly some deals that are sole source to someone else. But often, one of the criteria that allows them to do that is having another Tyler product and be able to piggyback off of that. And with the breadth of our existing customer base, we have a lot more opportunity for that. And so we are seeing a growing number there, which is certainly helpful for us.
So obviously, this is an investment year and the clarity that you provided is very helpful. But what are the internal metrics that you guys look at to evaluate the return you're going to get on that investment? It sounds like you expect better win rates. But are there some certain features that you can directly monetize? Or is there other ways to get a return on this investment?
I'll jump in and add a couple of thoughts. There are some applications in the realms that Bruce and Jeff have talked about that we may choose to give away. For example, the constituent portal itself, the framework, we may give that to jurisdictions that have multiple Tyler products. Now the elements within the constituent portal like the electronic bill presentment that Jeff showed in the opening session today is something that we will monetize. So not every investment we're making in this strategy we're looking to monetize because we believe over the long term it's going to influence the win rates positively.
But there are a number of things that we're investing in that will grow our addressable market.
Most of the internal development and the projects, for example, that we talked about in the public safety area are aimed at increasing win rates and broadening the market. So more wins both in the existing segment of the market, the public safety that's roughly a quarter of the total market where we're highly competitive today and broadening that market significantly, most cases moving up, but in some cases
I would add to that on the New World Public Safety side is just in conjunction with the win rates is just being competitive. There was a time not too long ago when we couldn't even respond to a significant portion of the RFP compliant.
And
compliant, and that gets us into the higher win rates.
That's right. So the Javelin project that Brett presented, that's our CAD innovation project. That's going to take our RFP compliance in the CAD area to over 90% by the end of the year. So we started last year, as Lynn said, high 60s, low 70s. Some of our competitors were significantly higher than that.
So that's the first thing that we addressed is getting our RFP clients to a competitive rate so that we could at least have a spot at the dance and compete for the business.
Two questions on the strategy of bundling the products into Tyler Alliance and Nexus.
To what extent should we expect to
see that drive cross sell opportunities? Or should we think more about it as kind of driving a product differentiation? I think it's a little Brazos
into a CMS Brazos into a CMS opportunity, I mean that's the largest sale in the history of Brazos was now to Cook County. So every service is going to be using our e citation solution in that city. I think you'll see more of that where we're able to go into these markets. But I think some of it will be add on sales that will come after. So once you've already got the platform, some
of that will grow from there.
That's right. It just depends on how the agencies buy their technology. I don't personally see a big group of agencies getting together and creating 1 ginormous bid for a group of our products. That's just not going to happen. What will happen is we'll compete head up.
It will be a feature of the product that it can, out of the box, integrate with other products in the region. And then as we just like we're a New World as we're in a support organization, we want to be able to embrace those opportunities within a region and help direct our clients to just brick by brick begin to identify those business scenarios between agencies and then we'll help them begin to create those not only application interfaces, but then the business scenarios around it that provide value. So that's how I see it playing out much more than great big consolidated art piece.
And I'll just add. I think that the value curve for our customers isn't going to be linear as they add more Tyler products. I think it's exponential. The more products we get in there, the more that they can take advantage of some of these strategic initiatives we have. And I think the value curve is not linear at all.
Just one last thought on that though.
I mean, we deliberately did not go towards an approach that was 1 giant monolithic architecture. We've seen those. We've seen them in certain counties. Those tend to be they can be enormous failures. Our approach is very different than that.
We box for it to integrate into other solutions in the region and that will expect out of the Boxford to integrate into other solutions in the region. And that will be, we think, a differentiated advantage.
And just a follow-up on the R and D expense. Can you talk about how extending the Microsoft commitment impacted your R and D expense for the full year? And just based on the presentation today, it sounded like some of the features have been built out, but others haven't. How long should we expect the period of ramping R and D expense to continue?
Microsoft R and D really took place the change in our relationship with Microsoft or the amendment to that was part of the sort of natural evolution of relationship. And that really took place in 2016. So we were spending about $2,000,000 to $2,200,000 a quarter on the Microsoft Dynamics R and D and that's been cut back by about 80%. Now a lot of that those resources and that expense has been reallocated to other development initiatives within Tyler as we've talked about. But that's kind of an ongoing commitment that we'll have for some time with them.
The R and D initiatives we've talked about here, this level of R and D that we've elevated this year, we talked about spending about another $6,000,000 or so on the R and D line, and there's a couple of $1,000,000 that's up in the cost of sales line as well. We expect a number of these projects are kind of 2 year projects. So we expect that we'll we won't elevate a lot above that next year, but this is kind of our base and that we'll see leverage in that as we look out over the next few years that R and D should, we would expect grow slower than revenues, we'll sort of grow into this new base of R and D. But certainly over the long run, we expect to see significant leverage from the R and D line as we're able to leverage a lot of these development efforts across multiple products and multiple relationships.
Two questions. First, what portion of your customers are on the latest version of your software? And second, in terms of payments, once you get on a single payments engine, can someone sort of talk about how that increased monetization works? I mean, do you guys contract with the payment processor and then take a cut as it goes through? Or how would that work?
What was the What was the first question?
Version is 100% on the
current version.
I'll take the first part of that. On the Munis product specifically, we release an annual version every year, and that version has a life cycle for 3 years. So you can pretty much count on a third of our clients being on a product that's very current, onethree that's in its 2nd year and onethree that's retiring. And then that keeps rolling over. And that gives us real nice consistency year over year.
We can pretty much plan where our clients are going to be. It's worked out very, very well.
Port beyond the 3 versions ago?
What we do is we support 1099 and W-two mandated changes. So by not rolling those into a retired product, really forces the client to the current the next current release.
And as we've described with our evergreen process, there's no additional cost to the client to move. So they always have access to the latest version of the software as part of their maintenance and support.
To answer your question about the payments. So different payment processors, different gateways have different revenue models. But typically, we do earn kind of a kickback or commission, if you of everything that we run through that. And a lot of those are volume based. So the more that we run through, the more revenue that we get.
We are trying to reduce the actual number of payment gateways that we support by transitioning to the single payment engine, both to reduce
Scott Wilson from Piper Jaffray. This question is for Andy. I couldn't help but notice that from Brett's slides, Tyler has kind of relationships with 7 of the 10 largest counties in the U. S. But I think in your ERP competition slides, you kind of position your Tyler's ERP from Tier 2 down.
So I'm just curious if you could talk about what your strategy might be for moving up to the Tier one opportunity? Do you have interest in moving that direction? How often do those opportunities come up for bid? And then just how big is the Tier 1 opportunity in ERP from a license maintenance perspective?
So that space from a license perspective is probably $100,000,000 or so just the Tier 1 space exclusively. There is a number there are a number of jurisdictions in the Tier 2 space that also have a Tier 1 bias. We might see, I don't know, we think 2 or 3 deals on an annual basis that are in that range. What our thoughts are so we sell a product in the ERP space. It has a low service profile.
We've got an organization built around that model that's very effective. It's worked well for a long time. To move into the Tier 1 space, the model is a little bit differently. It's more service intensive. Currently, if we do development, it's released as part of our annual release cycle.
That development would need to be more on demand for those larger engagements. It would need to be ongoing through the life of the project. So a much larger service footprint. And so we have talked about ways to maybe pull that client out of the normal release cycle, do heavy development during the project life cycle and then at the end of that bring them back into the product fold. But we're still, I would say, in the planning phases of determining whether that's something we want to pursue.
We want to make sure that, that doesn't upset the core business. But there certainly is market there. Over the long term, we do want to participate in that. So whether that model works or another one that we develop, I don't know yet. But I would expect us over the course of the next 4 to 5 years to begin to penetrate that market a little
bit better than we have historically. Anything you'd add to that? I might be the anti Tier 1 person here, but it's very labor intensive. So if you think about your license ratio to service ratio, it ends up being multiples of services, low margin, lengthy time to get those clients live. So that Tier 2, Tier 3 marketplace is just perfect.
Nice license to service ratio, we get them up live, they go on to the maintenance roles, and we start to add on sales to them. So they're both exciting. It's great to have that Tier 1 name, if you will. But when I think about is that a model, that high maintenance, low margin model, I'm not so sure. Roger Ruth in the back, he's sitting behind you.
He was our really our expert to get those Tier 1 clients who had a bias toward Tier 2, Tier 3 to really Roger used to go after, those Tier 1 clients who didn't want to be Tier 1. They didn't want the Oracle SAP model. They've done that in the past. They paid 1,000,000 for services that they just repeated on their next release. And I always thought Roger did a real nice job saying, hey, that's a flawed model.
You don't it you're a Tier 1 size, but you really want to be a Tier 2 model. You want to buy the application. You want to get on a consistent release like we just talked about where every few years you're automatically taking the next release, it's not service intensive, you're getting that through your maintenance installers. I think that's really the model I'd like to see is those large clients adopting our model, not us adopting their model.
You might actually say that to give a bad answer that it depends. And I think that's what Chris is getting at, which is the Tier 1 market historically has been much more project oriented than product oriented. And to the extent that continues, being very heavy service to license ratio, a lot of custom work, maybe never even gets back to general release, very problematic, a lot of failed implementations. We're not that interested in that. We'd much rather do 5, 6, 8 Tier 2 and 3 deals rather than the huge Tier 1 deal.
To the extent it can become more product oriented, which there is a good possibility of that. It hasn't worked. There have been failed implementations. And to the extent the market can say, Hey, we don't want that. We're not that different.
We want a product that's proven and works and move forward, we'd be more interested in the Tier 1 opportunity. California is a good example that these guys executed on. They followed a fault a failed development project and were able to say to very large counties, right? Like L. A.
Right. This is our model. This is how we are going to do it and it works and we need you subscribe to this. And they got in line and did it.
Well, that's like a Cook County exactly.
We do really well when we become behind a large SI that's done one of these projects Chris is describing. We're able to come into that kind of environment, and they don't want that anymore. They don't want to touch that stove anymore. They'd like a different experience.
Alyssa Johnson from Pacific Crest. One of the things that I noted in your keynote that kind of stood out was that as kind of people kind of go to this common system architecture of your products that will like significantly drive down the cost of integration. With software services being a pretty high mix of your revenue, can you talk about how that kind of revenue stream will how you see that transforming over the next few years?
I think I can give broad strokes on that, but I mean roughly,
I
mean software services, the services revenue that we have is not the most profitable revenue that we have. So our preference is to go up to recurring streams or license revenue. And often these budgets are somewhat bound. If we're able to not have spend $1,000,000 on integration costs, whether you spend that on other products or in other kinds of ways with us, I mean, we would much prefer that kind of a model.
The reason it looks like we have high professional services is because generally we deliver all the professional services. So if you looked at us against a lot of the software companies you might follow, they may deploy their software through integrators. So their professional service line isn't really what ours is. We don't do it for business reasons. It's lower margin work.
It doesn't help our overall margin picture. But we do it because we control the project and the quality. We execute on time within scope, and that's how we keep winning new business. So that line is higher because of the comprehensive group of services we deliver along with the software, not because we're service intensive. Our service ratio to licenses would be lower than most companies.
We've got time for
a couple more questions, and then we'll be around here
Ken Wong from Citigroup. John, you spoke of a pivot this year. Should we be expecting much disruption in terms of your business from either a sales operation, R and D perspective or even externally from your customers in terms of just trying to get those guys on board with this kind of slight pivot that you speak of in the business?
I'm sorry, getting who on board?
Getting your customers to kind of understand this vision longer term. So I'm just trying to figure out kind of internally, externally, if any disruptions
Bruce said at one point, as long as it's a 10 year process. But very long horizon. I don't think it's very disruptive. We really got, I thought, very good feedback even after the session this morning. Now I said those that enthusiastically embraced the messaging came forward and talked to all of us, and those that are skeptics maybe walked out the back door.
But it was very well received. What we would love to see in the first, say, 18 months is that this message is embraced even without all the deliverables on the street, right? So people what's interesting is our win rates are strong and people say, Boy, they win a lot of business, they're doing well, almost like we're taking orders. It's just not the case. Every deal, even with certain advantages, are very hard fought and usually come down to an agonizing decision for the client.
And fortunately, we win our share of them. But in those situations where they're looking at 2 public safety systems or 2 financial systems and they're down to the final couple, what we'd really like to see in the next, like I said, 18 months or so before so much of this actually gets delivered is that they say, Hey, I get all that upside for free. I get it all included. Nobody else can give me the connected community. Nobody else can give me the benefits of Alliance and Nexus and these sorts of things.
And we're seeing marketplace. So I don't see it being of reception in the marketplace. So I don't see it being disruptive. I hope what we do see is that people see the benefits, they see the vision. And in those close decisions, it makes a difference.
And then we are potentially looking at a slimmer federal government. How have you seen it historically? How has that impacted the buying behavior down at the cities and counties?
We don't do much for the federal government. So we wouldn't expect it to have much of
an impact on us. The systems we sell really address local needs for the most part. They're funded locally, property taxes, fines, fees, revenues, there have been not a lot of administration and changes in those sorts of policies.
And as we've said several times, everything we do is an essential enterprise application. So there's really nothing discretionary. When there's been any disruption over the long, long term that we've seen, it's a matter of timing. If somebody needs a new court system, if somebody needs a new payroll system, they simply need it. And they might be able to defer the decision a year or 2 because of timing, but ultimately, they have to replace that system.
And that's all we do. We don't do anything that's discretionary.
Okay. With that, I believe we're kind of at the at our stop time. We appreciate all of you making an effort to come here. We hope you found it useful and informative. Hope you enjoy the rest of your time here in San Antonio.
Certainly, we've got thousands of customers there to the extent you want to interact or visit with them, you're welcome to do so. And some of us will be around for a little while after this, if you'd like to visit informally after that. And we look forward to seeing you in Boston next year. Thank you.