GTY Technology Holdings Inc. wants to help government agencies run better, and it’s investing hundreds of millions to do just that with several online operations, including Chicago-based payment services provider CityBase.

GTY Technology Holdings Inc. wants to help government agencies run better, and it’s investing hundreds of millions to do just that with several online operations.

In the state-and-local market for government e-procurement, B2B e-commerce and related digital or electronic services, GTY Technology has invested several hundred million to acquire six companies: CityBase Inc., eCivis Inc., Questica, Sherpa Government Solutions, OpenCounter Enterprises Inc. and Bonfire Interactive Inc. It closed this week on the $160 million purchase of CityBase.

CityBase is a Chicago-based provider of government payments services and eCivis, based in Pasadena, Calif., is a developer of government grants management software. Questa, headquartered in Burlington, Ontario, provide payment services. OpenCounter, based in San Francisco, develops software applications for managing government regulations and permits.

Sherpa is based in Denver and is a developer of government budgeting and transparency applications, while Bonfire, a developer of e-procurement software, is headquartered in Waterloo, Ontario.

Together all of these companies have been acquired or merged into Las Vegas-based GTY Technology, which through its IPO wants to bring a suite of cloud-based and Software-as-a-Service procurement, e-commerce and related services to state and local governments—a potential $40 billion market that GTY says is highly fragmented.

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The North American market for providing cloud software and digital technology applications to state and local government is big, says GTY Technology.

Each year, such state and local agencies combined spend more than $117 billion on technology, including $3.4 billion on utilities management software, the company says.

The state and local government market in North America, which includes 3,000 counties, 36,000 municipalities, 18,000 law enforcement agencies and 13,000 public school systems, also is a big and untapped market for e-procurement services, says Bonfire CEO Corry Flatt.

More than $2.1 trillion flows through state and local government procurement programs annually and last year state and local procurement agencies collectively made more than 35,000 individual purchases for some type of technology, says GTY Technology.

Most (70%) of state and local governments run on mostly outdated legacy systems, but thus far only about 5% of state and local governments are running cloud applications, says GTY Technology.

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“While government procurement can sound dry and dull to the uninitiated, we think just the opposite,” Flatt says.  “We believe that the application of cloud software to government procurement is one of the most pressing challenges of our time.”

The holding company says it has a current customer base of 2,000, a cross sales opportunity to sell more services to that base of $170 million and potentially as many as 6,800 new customer prospects.

“We are presenting this market a suite of companies that are flying in formation,” Flatt says. “This is a huge opportunity to provide a fragmented market with cloud and SAS services.

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