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  • Jack Henry Busts Through $1 Billion Barrier In Fiscal 2012

    October 1, 2012 Timothy Prickett Morgan

    Banking software and payment processing service Jack Henry and Associates has pumped up its sales to above $1 billion for the latest fiscal year just ended, the first time the company has hit that sales level and almost assuring that someone–Oracle, Infor, or even Microsoft–is going to try to try to buy the company.

    But Jack Henry has done just fine on its own, thank you very much. In the fiscal 2012 year ended on June 30, the software and service provider that specializes in sales to small and regional banks, booked $1.03 billion in sales, up 6 percent compared to fiscal 2011. Software license sales for the fiscal year were only up 3 percent, to $54.8 million, and hardware sales mirrored that with 3 percent growth, to $63.1 million. (Jack Henry sells IBM i-based packages that run on Power Systems machines as well as Windows-based solutions that it sells IBM System x and Dell PowerEdge to run.) For the fiscal year, software support and services revenues were up a much higher 7 percent, and together brought in $909.2 million. Net income for the year was up 13 percent, to just under $155 million, which worked out to $1.78 per share.

    For the final quarter of the year, Jack Henry saw new software license sales decline 8 percent, to just under $14 million, with hardware sales up 6 percent, to $15.9 million. Support and services revenues were $236.8 million, rising 8 percent. While new software sales took a hit, profits accelerated, with net income up 18 percent to $43.3 million, which worked out to 50 cents per share.

    The growth that Jack Henry is enjoying seems to be coming from the credit union side of the business, not banks, but banks still drive the majority of its sales. In the fourth quarter, sales of software, hardware, and services to banks was up 4 percent, to $200.9 million, and for the full year, rose by 4 percent to $778.5 million. Credit unions accounted for $65.7 million in revenues in the final quarter of fiscal 2012, up 16 percent, and for the full year were $248.7 million, up 13 percent. Gross margins are a bit higher on the banking side compared to the credit union side, so that growth comes at a bit of a cost. But any time you are growing profits three times as fast as revenues are growing, there is just nothing to complain about.

    The company ended the fiscal year with $157.3 million in cash, no debts, and $296 million in deferred revenues, a services backlog of $435.3 million, and 11,900 customers. This is a pretty solid financial position considering the jittery state of the global economy. And it goes a long way toward explaining why Jack Henry has a market capitalization of $3.26 billion as The Four Hundred goes to press.

    In separate news, Michael Henry, who has been at the company that bears his father’s name since 1979 and has been chairman of the firm since 1994, has retired. Jack Prim, who has been on the board since Jack Henry died in 2007 and who is currently CEO, will take over as chairman of the board.

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    UCG Technologies – Vault400

    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.

    CONTINUE READING ARTICLE

    Please visit ucgtechnologies.com/IBM-POWER9-systems for more information.

    800.211.8798 | info@ucgtechnologies.com

    Article featured in IT Jungle on April 5, 2021

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Volume 21, Number 35 -- October 1, 2012
THIS ISSUE SPONSORED BY:

Maxava
New Generation Software
Abacus Solutions
Tributary Systems
IntelliChief

Table of Contents

  • Some Things To Ponder On The Impending Power7+ Era
  • iBelieve NY: If You Don’t Like Change. . .
  • Arming The IBM i Nation
  • Mad Dog 21/21: Shamoon And Six Trends
  • IBM’s Rometty Takes Over As Chairman Of The Board
  • Jack Henry Busts Through $1 Billion Barrier In Fiscal 2012
  • External Disk Array Sales Slow Down A Bit
  • Trial Date Set in Vision-Maxava Case
  • IBM Fishes For Managed Service Providers; Nice Bait
  • IBM Gives A Deal To Online Software Buyers

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