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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.
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.
“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.
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IBM staged the hardware (that is, loaded the ITI application on it); ITI took care of the rest of the implementation.
Inking the deal to purchase the iSeries in August 2004, the Bank of Utah was one of ITIs first platform users.
According to Wegman, eight banks moved to the iSeries in 2004, with 18 making the move last year and 16 currently in the queue for 2006. “iSeries performance is incredible and the value is outstanding,” he said.
Once the bank agreed to buy the iSeries, the migration project took off quickly. With help from ITI, implementation started in September 2004, and the system went into live production in the second week of that November.
Once the banking application was loaded on the new box (which IBM took care of), “We generally schedule two preconversion trips where we come out and port the database over and do testing,” Wegman said. Generally, testing takes three to six weeks.
“From four to eight weeks later, well be positioned to do a live switchover,” Wegman said. “We do training just before that.”
The aggressive schedule was needed because the mainframe was just about on its last legs. “We were running out of space rapidly,” Parkinson said. “We needed to have it in before Thanksgiving. We didnt want interruptions to the customers while they were doing their holiday shopping.”
With the system now in production for more than a year, the bank has realized many benefits, Parkinson said. First and most important is that the bank can now offer customers the applications they have come to expect from all banks.
The time spent on updates and backups has been greatly reduced, Baxter said, much to his relief. Nightly updates take less than an hour. Tape backups run only 10 to 20 minutes. Quarterly reports, previously a major ordeal, take just 40 minutes. Even better news: After more than a year, the box is running at only 3 percent capacity, making for a better experience for the bank personnel who serve customers.
“The applications are launching much more quickly. The users can do inquiries more easily. Better performance for our front-line people hopefully translates to better service for the customer,” said Baxter.
Lauren Gibbons Paul is a freelance writer based in Waban, Mass. Contact her at lauren.paul@comcast.net.
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