Tyler Technologies

No One Gets Fired for Choosing Tyler: Software, Scale and Switching Costs in the Public Sector

Tyler Technologies doesn’t develop the kind of software that makes headlines. Yet few businesses illustrate better how a company can generate extraordinary returns by serving a critical, low-risk, and budget-secure customer: local government. From tax collection and licensing to the day-to-day operations of courts and emergency services, Tyler has become the go-to technology partner for thousands of jurisdictions across the U.S.—a fragmented but massive market in urgent need of modernization.

What sets Tyler apart is not so much its technology, but its execution in a sector where reputation, long-term relationships, and reliability outweigh product innovation. With renewal rates of 98–99%, multi-year contracts, and a sales structure that often bypasses competitive RFPs, the company has built a defensible position supported by high switching costs and deep domain expertise.

But stability doesn't mean stagnation. The shift to cloud, rising interest from private equity, and a new wave of nimble competitors are changing the rules of the game. Is Tyler’s acquisition-driven growth model still sustainable? And can the tradeoff between short-term margin compression and long-term recurring revenue pay off?

This analysis explores Tyler’s origins, current competitive advantages, capital allocation choices, and the structural tailwinds and headwinds shaping its future. I also outline what could go wrong—and what would need to go right—for this model to continue compounding value over the next two decades.