Electronic Data Systems Corp. has agreed to buy a small but fast-growing supplier of personal computer software for bank branches.
By signing a letter of intent to acquire Ampersand Corp., of York, Pa., for an undisclosed sum, Plano, Tex.-based EDS -- a unit of General Motors Corp. -- hopes to boost its PC capabilities in the banking industry.
"Its strategically a very important purchase for us," said Tim Ryan, a vice president in EDS' large financial institutions? unit.
About an eighth of EDS' revenues of $8.2 billion last year came from computer services to banks, including running banks' mainframe computers and check sorting machines, operating their ATMs, managing their credit card systems, and doing consulting and systems integration work.
A Shift to PCs
EDS' traditional strength has been in mainframe technology. But as PC usage soars and mainframe usage flattens, EDS officials want to do more work with the desktop machines.
In banking, that means selling and installing PCs and software for branch automation, one of the hottest areas in bank technology.
According to the American Banker/Ernst & Young 1993 technology survey, about a third of all tellers, and more than half of all customer service representatives have PCs on their desks. In three years, nearly all tellers and customer service representatives are expected to have PCs.
Ampersand sells PC software that helps tellers balance their cash drawers, and so-called platform software that helps customer service representatives open accounts and sell bank services.
The company has more than 100 clients running Ampersand software in 14,000 branches.
Other leading suppliers of teller and platform software of PCs include Olivetti North America Inc., Argo Data Resource Corp., International Business Machines Corp., Systeme Corp., and Unisys Corp.
Ampersand's biggest customer is Keycorp, Albany. N.Y., which runs the vendor's teller and platform software in nearly 900 branches.
A Windows Opportunity
Other big customers include Boatmen's Bancshares Inc., St. Louis. and U.S. Bancorp of Portland. Ore.
Ampersand is also one of the first branch automation vendors to develop software for soft Corp.'s Windows operating system.
Ampersand's president, Dale Smith, said that last year his company had revenues of about $2.5 million and pretax profits of about 20% of revenues. He added that Ampersand's revenues have grown about 35% in each of the past three years.
Mr. Smith and Mr. Ryan said that no management changes or layoffs at Ampersand are planned.
Instead. Mr. Smith will become an EDS product manager, and will run the Ampersand business out of its current offices, with the same 24 employees who now work at the vendor.
Money for Expansion
EDS will provide capital to allow Ampersand to expand, and EDS staffers will help sell, support, and install Ampersand software.
Ampersand customers welcomed the sale, as long as Ampersand's management stays in place.
"We've really had a good relationship" with Ampersand, said Robert Tucker, Keycorp's generation manager of technical operations. "We don't expect it to do anything but get better because of the additional resources available" to Ampersand.