Jack Henry & Associates Inc. has created a division to house the 13 companies it has acquired in the past 18 months.
The Monett, Mo., provider of core banking software and services said Wednesday that the division, ProfitStars, would help it reach large U.S. banks, foreign financial companies, and even companies in industries outside banking. All of those target areas are a significant departure from its longtime strategy of selling core banking software to community banks and credit unions.
One analyst called the move overdue and said that Jack Henry should make even bigger acquisitions to keep up with its larger rivals.
Jack Henry said in August that it was shifting its strategy by offering software and services to customers that do not use its core processing products.
David Foss, who was named the general manager of ProfitStars, said in an interview Thursday that the division would boost cross-sales revenue of noncore products by 10% to 15%.
The acquired companies operated under their own brands before the restructuring, and some sales opportunities were missed, because potential customers failed to recognize that the companies all had the same parent, he said.
Last summer a large banking company that uses Jack Henry's Synergy document-imaging software evaluated its Stratika customer-profitability software, Mr. Foss said. The customer, which he would not name, did not realize that both applications came from the same company; after selecting a competitor's profitability product, the banker told the Jack Henry sale representative, "We don't think you are a big enough company" to support the institution's needs.
"They viewed it as a tiny stand-alone company," Mr. Foss said. "People were confused" by the profusion of product names, and salespeople tended to offer things only from their own subsidiary.
Mr. Foss was Jack Henry's general manager of acquisitions and business integration before he was put in charge of ProfitStars. He said that 40 of the top 50 U.S. banks, including all of the top 10, use at least one product from the division.
Jack Henry had estimated that the division would generate $50 million of revenue this fiscal year, which will end June 30, but its performance is already "ahead of that plan," he said, though he would not say how far ahead.
Historically, Jack Henry has offered noncore software only to its core processing customers: 2,400 small and midsize banks and credit unions. The division will pursue the nation's other 14,000 institutions, foreign banks and brokerages, and companies in the health care, retailing, and manufacturing industries.
Forming the division makes Jack Henry more like companies such as Fidelity National Information Services Inc. of Jacksonville, Fla., and the Metavante Corp. unit of the Milwaukee banking company Marshall & Ilsley Corp. - both of which tend to absorb acquired companies into a single corporate structure - and less like Fiserv Inc. of Brookfield, Wis., the No. 1 core-processing provider, which has long allowed its acquisitions to continue to operate under their own brands.
ProfitStars is now one of the company's three major divisions. It markets itself to community and regional banks as Jack Henry and to credit unions as Symitar.
Thomas J. Walsh, Jack Henry's general manager of marketing, said some of ProfitStars' products, such as its Tangent Analytics software, would be offered to core customers through sales reps from the other two divisions. ProfitStars reps will also offer some other Jack Henry services - such as disaster recovery - to customers that do not use its core banking software.
"Jack Henry is a whole different company than it was five years ago," Mr. Walsh said.
Mr. Foss said the vendor will continue to look for deals, and ProfitStars "creates a home for those acquisitions."
M. Arthur Gillis, the president of the Dallas research and consulting firm Computer Based Solutions Inc., said Jack Henry had long needed to streamline its confusing collection of brands.
Jack Henry's competitors are growing rapidly, he said, including Fidelity, which merged this month with the St. Petersburg, Fla., payment processor Certegy Inc. and is now challenging Fiserv for leadership of the market.
"There's a race going on," and Jack Henry is "going to be left behind," Mr. Gillis said. "They're hitting singles, and that's not good enough in a game where grand slam home runs are what gets you attention."
