Huntington Signs Deal with Hogan For Access to Full Range of Software

Seeking to standardize its back-office computing in order to focus better on customer delivery, Huntington Bancshares has signed a wide- ranging software license agreement with Hogan Systems Inc.

Under terms of the multimillion-dollar agreement reached last month, Columbus, Ohio-based Huntington will install a number of Hogan software products, replacing homegrown and third-party accounting systems that form the backbone of the $17.8 billion-asset bank's technology infrastructure.

Huntington officials said they have selected Hogan's consumer loans, deposits, customer information, and profitability systems to install in their Columbus data center during the next 18 months. The software runs on International Business Machines Corp. mainframes.

The deal is unique for a financial institution of Huntington's size, in that it gives the bank rights to Hogan's entire suite of applications software.

"We have contracted for all of Hogan's software, every package they have, but we have not made a decision to install everything," said Rick Sellers, president of Huntington Bank Service Co. He added that some Hogan packages, such as software for branch automation and commercial lending, may be evaluated for use in the future.

Mr. Sellers said Huntington chose to replace its panoply of accounting and information systems with technology from a single vendor because integrating and maintaining software from multiple vendors was becoming very expensive.

"We, like many other banks, have come to the conclusion that you really don't compete with your back-office applications, you compete with your customer systems," Mr. Sellers noted. He said resources once dedicated to the bank's core systems could now be redeployed to improving customer service delivery systems, an area in which the bank has already gained a reputation as an innovator.

"We were constantly struggling with the resources that were dedicated to maintaining the core applications versus a continual and growing need to fund and staff the front-office systems," Mr. Sellers explained. "Now we'll get more bang for the buck with our customer systems."

Paul Zoukis, senior vice president of marketing and sales at Dallas- based Hogan, said his company has seen more U.S. banks considering entry to these types of all-encompassing software agreements.

"By buying everything in one fell swoop," he said, "banks get a very efficient core system capability that is flexible enough to differentiate themselves with their clients."

The Huntington deal is a major shot in the arm for Hogan, coming on the heels of its upbeat earnings report for the first three months of 1995. The company reported income of $4.6 million, or 31 cents per share, exceeding Wall Street analysts' forecasts.

"There have been very few as prestigious competitions in the past 10 years," Mr. Zoukis said. "Given Huntington's standing as a technology leader, we couldn't be more pleased to be working with them."

"Winning over Huntington, which is a bank that prides itself on its technological foresight, should be very beneficial to increasing Hogan's credibility in the marketplace," said Richard X. Bove, an analyst at Raymond James & Associates in St. Petersburg, Fla.

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