Sales and Profits Up at Jack Henry in Fiscal Q4

August 27, 2007 Timothy Prickett Morgan

Jack Henry & Associates, a hardware and software supplier to banks, credit unions, and other financial organizations that has a sizable presence in the i5/OS and OS/400 ecosystem, last week reported its financial results for its year end and fourth quarter of fiscal 2007. As has been the case for a number of years, Jack Henry continues to be a bright spot.

For the fiscal fourth quarter ended June 30, Jack Henry reported sales of $181.3 million, up 12 percent, with net income of $78.2 million, up 15 percent. Software license sales fell by 5 percent in the quarter, to $24.3 million, but support and services sales rose by 17 percent to $133.2 million, more than making up the decline. Growth for various electronic funds transfer services, ATM and debit card processing, bill pay, remote capture, and Check 21 transaction processing, rose by 33 percent to $7.2 million. Hardware sales, including the distribution of System i hardware, rose by 3 percent to $23.7 million.

For the full 2007 fiscal year, software license sales at Jack Henry fell by 9 percent to $76.4 million, but service and support sales rose by 18 percent to $503.3 million. For the year, electronic funds transfer services grew by 38 percent to $28.9 million, and hardware sales rose by 7 percent to $88.3 million. Total sales for fiscal 2007 came to $668.1 million, up 13 percent, with net income of $104.7 million, up 16 percent. Jack Henry ended the fiscal year with $89.6 million in cash, up 17 percent, too.

In the IT sector, with the exception of companies that have monopolies, that is about as good as it gets in terms of growth and percent of revenue that drops to the bottom line.

Jack Prim, the company’s chief executive officer, said that software license sales in the quarter were below expectations, and that the growth that the company did get came through sales to existing customers, not through acquisitions.

In an effort to quell Wall Street’s jitters–and Wall Street is nervous about anything to do with financial institutions these days–Jack Henry’s president, Tony Wormington, tried to assure investors that the company was still in a good position. “We continue to experience strong demand in both of our banking and credit union segments for our products and services,” said Wormington in a statement accompanying the financial results. “This strong demand is both inside our core base of financial institutions through our Jack Henry Banking and Symitar brands and through the products marketed under our ProfitStars brand to non-core customers.”

Only a month ago, Jack Henry has acquired Gladiator Technology Services, a provider of security services specifically tailored to banks and other financial institutions, which shows that the company is looking for other things to sell to those organizations besides traditional hardware and software. Gladiator Technology sells various services, including network intrusion prevention, firewalls, server intrusion prevention and event logging, risk assessments, compliance and regulatory solutions, and email filtering and encryption.

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Texas Bank Licenses Core Banking System from Jack Henry

Jack Henry’s Revenues Increase Thanks to Support and Services

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Tags: Tags: mtfh_rc, Volume 16, Number 33 -- August 27, 2007

Do the Math When Looking at IBM i Hosting for Cost Savings

COVID-19 has accelerated certain business trends that were already gaining strength prior to the start of the pandemic. E-commerce, telehealth, and video conferencing are some of the most obvious examples. One example that may not be as obvious to the general public but has a profound impact on business is the shift in strategy of IBM i infrastructure from traditional, on-premises environments to some form of remote configuration. These remote configurations and all of their variations are broadly referred to in the community as IBM i hosting.

“Hosting” in this context can mean different things to different people, and in general, hosting refers to one of two scenarios. In the first scenario, hosting can refer to a client owned machine that is housed in a co-location facility (commonly called a co-lo for short) where the data center provides traditional system administrator services, relieving the client of administrative and operational responsibilities. In the second scenario, hosting can refer to an MSP owned machine in which partition resources are provided to the client in an on-demand capacity. This scenario allows the client to completely outsource all aspects of Power Systems hardware and the IBM i operating system and database.

The scenario that is best for each business depends on a number of factors and is largely up for debate. In most cases, pursuing hosting purely as a cost saving strategy is a dead end. Furthermore, when you consider all of the costs associated with maintaining and IBM i environment, it is typically not a cost-effective option for the small to midsize market. The most cost-effective approach for these organizations is often a combination of a client owned and maintained system (either on-prem or in a co-lo) with cloud backup and disaster-recovery-as-a-service. Only in some cases of larger enterprise companies can a hosting strategy start to become a potentially cost-effective option.

However, cost savings is just one part of the story. As IBM i expertise becomes scarce and IT resources run tight, the only option for some firms may be to pursue hosting in some capacity. Whatever the driving force for pursing hosting may be, the key point is that it is not just simply an option for running your workload in a different location. There are many details to consider and it is to the best interest of the client to work with an experienced MSP in weighing the benefits and drawbacks of each option. As COVID-19 rolls on, time will tell if IBM i hosting strategies will follow the other strong business trends of the pandemic.

When we say do the math in the title above, it literally means that you need to do the math for your particular scenario. It is not about us doing the math for you, making a case for either staying on premises or for moving to the cloud. There is not one answer, but just different levels of cost to be reckoned which yield different answers. Most IBM i shops have fairly static workloads, at least measured against the larger mix of stuff on the public clouds of the world. How do you measure the value of controlling your own IT fate? That will only be fully recognized at the moment when it is sorely missed the most.

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