Harry Herington feels a twinge of sadness in loosening his control of Olathe-based NIC Inc., but it would be selfish to pass up the $2.3 billion merger opportunity with Tyler Technologies Inc., he told the Kansas City Business Journal.
As NIC co-founder and CEO, Herington helped craft the company’s vision and success. The company provides a way for residents to conduct business with governments online, such as renewing vehicle tags or filing a business permit in a secure system. NIC’s clients include 31 state enterprise partners and 7,100 federal, state and local government agencies. It views itself as the R&D shop for government.
Early days
Herington became involved with the company when it was known as KIC and went live in 1992 after winning a request for proposal with Kansas. At the time, Herington was associate general counsel for the League of Kansas Municipalities and was considered one of KIC’s first information partners.
The company solved a frustration voiced by business leaders, who couldn’t easily and quickly access the latest data to stay compliant with new legislation, rules and regulations. They wanted electronic access instead of relying on quarterly mailings. But as Herington worked with KIC, he saw a bigger opportunity to take advantage of the internet to better serve businesses and residents and create 24/7 access to government. He pitched the idea to KIC’s founder. KIC became NIC and went public in 1999.
“This was actually tremendous risk,” Herington said of joining NIC as a co-founder.
The former police officer was saddled with debt from law school, but he wanted to combine two passions: technology and serving citizens.
“I looked at my wife … and I said, ‘We’re never going to make any money at this, but this is so much fun, and with this (company) I can actually see where we can make a difference,'” he said. “She’s like, ‘I believe in you, and if this is the right thing, then let’s go do it.’ … It’s been the best experience of my life. It really has.”
NIC has grown from six employees to roughly 1,000 and operates more than 30 offices. Last year, NIC reported $460.5 million in revenue — up 30% from 2019.
Letting go
When Texas-based Tyler Technologies started courting NIC in September, the Olathe company wasn’t looking for a buyer.
But Tyler persisted, and the two companies eventually reached a number that satisfied NIC’s board. NIC shareholders are expected to vote on the merger during the second quarter, Herington said. If the deal goes through, NIC would become a wholly owned subsidiary.
Unlike NIC employees, Herington negotiated the merger and had months to shift his mindset about the future. But still, it’s an adjustment. Having been a part of the company for so long, it’s “strange” to think about not being the ultimate decision-maker, and it’s bittersweet, he said.
“I would be lying to you if I didn’t say there’s a sadness that comes with it because it is my baby. It’s something I’m very proud of,” Herington said. “It’s not going away — it’s only getting better, and I know that. Giving up control for the right reason — that is leadership, and you’ve got to know when to do that. In this case, it would be selfish of me to just hang on to it. It would limit the company, it would limit the employees, and I recognize that. I’m proud of where we’re going.”
Fostering innovation
He’s also proud of the company’s culture, which has driven NIC’s success. His No. 1 role, he said, is “guardian of company culture.”
Culture is crucial — it builds the foundation for trust, integrity, passion and drive. To build trust among employees, he has traveled to NIC offices throughout the U.S. to host “Ask the CEO” sessions, where everything is up for grabs, from his personal life to business strategy. He also invites employees to add him as a friend on Facebook, where he’s an open book.
“Life’s too short to be someplace where you don’t trust the leadership,” he said.
To foster innovation, NIC removed the hierarchy. Individual offices have autonomy to create solutions best suited for their state. NIC then can promote those solutions to other customers. A prime example was a developer in NIC’s Arkansas office who saw the state’s need for a “personal assistant for government.”
The office developed Gov2Go, a mobile app that learns about a person’s civic responsibilities, tracks those interactions and notifies the individual about items such as a coming renewal or payment. It also offers one-click payments. After deploying Gov2Go in Arkansas, the developer pitched the solution to NIC’s corporate office — and the team listened, investing millions of dollars to make Gov2Go available to all 50 states.
During the pandemic, employees continued to innovate and launched more than 130 Covid-related applications. NIC also stepped outside its normal business role to partner with two other companies to solve Covid-19 testing availability by launching TourHealth, a one-stop shop for Covid-19 testing. Last year, TourHealth sites tested more than 500,000 people.
“Especially when all this fear was coming down, the employees trusted the company, they trusted the vision, and they said, yes, we can make a difference. That’s what culture does,” he said.
Why NIC decided to sell
Although several factors influenced NIC’s decision to sell, a top priority was return on investment to shareholders. When NIC pushed Tyler’s offer to $2.3 billion, it became a number that was big for any market, not just Kansas City, Herington said.
It also provides a win for employees, who now have more growth and career advancement opportunities. It’s not often one negotiates a deal that’s sweet for stockholders and employees, he added.
Tyler also primarily serves local governments, whereas NIC targets state governments. The two companies’ tech solutions focus on different aspects, which creates the ability to expand customer relationships and offerings.
“If you think about it, that’s a perfect marriage,” he said.
If the merger wins approval, NIC will retain its Olathe headquarters and other offices. Although his future role hasn’t been determined, Herington said he doesn’t plan to leave.
“What’s important about this deal is Tyler did not look at NIC and say, ‘All right, how can we bring them in and find cost-saving synergies?’ That was not the focus,” Herington said. “The focus is, how can we come in and assimilate the two companies to do even more? If you look at the agreement, nothing changes with this company, other than we now have more in our arsenal and Tyler has more in their arsenal, and we’re going to become one family.”