IBM System Pays Bank Big Dividends

Case Study: The Bank of Utah moves its apps to the IBM iSeries for an affordable network performance improvement that means better customer service.

Early in 2004, IT managers at the bank of Utah bumped up against a hard reality: Their 5-year-old mainframe had simply run out of gas.

Memory utilization and CPU usage on the Unisys NX5601 typically ran at more than 80 percent. Nightly updates of the online banking application took approximately 8 to 10 hours to complete, running into the next business day. Tape backups took an hour. Quarterly reports on the different types of accounts took 14 hours.

"We had run out of horsepower. The box was overtasked," said Matt Baxter, vice president of IT for the Bank of Utah, in Ogden. Baxter and his team faced a simple choice: pony up the dollars for another mainframe or see if another type of hardware might serve their needs at a lower cost.

Like many smaller banks, the Bank of Utah needed to wring every drop of value out of its IT investments. With 13 branch offices, roughly $600 million in assets and only 14 full-time IT staffers, the bank could not afford to throw money at its server capacity problem.

But it still wanted to offer the same services as larger competitors, such as online delivery of check images and real-time Internet banking.

Not having a robust platform on which to run and store work was inhibiting the banks growth potential—via mergers and acquisitions and organic growth—as well.

The bank could not get to the next level of online banking functionality without upgrading its hardware—in as cost-effective a manner possible.

So, Baxter said, he was receptive when his representative at the banking software provider and systems integrator Information Technology (a subsidiary of Fiserv) suggested that Baxter might want to check out the IBM iSeries as his next platform rather than go with another mainframe for cost reasons.

Baxter said he trusted ITI, the banks longtime software provider, to give good advice. ITI, of Lincoln, Neb., had decided to port its banking application suite, called Premier, to the IBM iSeries early in 2004.

"Theres a certain market segment that will only look at IBM," said Dave Wegman, ITIs senior vice president.

/zimages/4/28571.gifClick here to read more about how IBM aims to make the iSeries more attractive to SMBs.

ITI was not yet finished with the process of rewriting its code to run on either the Unisys or IBM boxes when the Bank of Utahs mainframe hit the wall. Still, Baxter decided to limp along on the old mainframe until the middle of that year, when ITI would be able to give quotes on both platforms.

When the numbers came in, Baxter and Scott Parkinson, senior vice president of retail banking, were stunned, both men recall. The quote for the IBM iSeries was $500,000 cheaper than moving to a new Unisys mainframe. (Unisys has since announced price reductions on its mainframes.)

In fact, the quote for the iSeries, including system software and installation, was $200,000, as opposed to $700,000 for a new Unisys mainframe, according to Baxter.

With an upgrade of the ITI Premier software running an additional $50,000 and a new check-imaging system for $400,000, the bank would have an affordable way to offer "big bank" services to its 50,000 customers, according to Parkinson.

Baxter said his IT team estimated the iSeries would help the bank save $500,000 in operational costs over five years.

Many SMBs (small and midsize businesses) are attracted to the iSeries because it includes the server, the storage, the operating system, the networking and security capabilities on a single box, according to Ian Jarman, IBM iSeries product manager.

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"Its an exceptionally well-trusted system in terms of availability, securability and the ability to run multiple workloads reliably on the same system," Jarman said. To date, more than 16,000 banks worldwide have chosen the iSeries, said IBM officials, in Armonk, N.Y.

Next Page: Better performance means better customer service.