ITI Running on an IBM Computer? I Must Be Dreaming!

Cowabunga! I thought I just read an announcement from Fiserv that the ITI product will be modified to run on the IBM iSeries (a.k.a. IBM AS/400) computer. Whew, I knew I should have left the party earlier. Let me blink my eyes a few more times and read this announcement again, more slowly this time. Hum, yep, there it is: ITI will be modified to run on the IBM iSeries. It’s true – I’m not imagining this most amazing announcement!

In case you missed it, let me summarize this bit of news for you. The ITI division will modify the current core system and related ancillary products so they will run on the IBM iSeries computer. My understanding is alpha testing is now under way in the research halls in Lincoln, Nebraska. Beta testing with a small number of select banks is slated to begin late this year or early next year and last several months. General availability of the newly platformed ITI product is targeted for late first quarter or early second quarter 2004. Since conversion availability is usually four to six months out, it would be possible to buy an ITI solution today for implementation on the new platform next year.

Feeling lucky? Give your local ITI sales rep a call and maybe you, too, could be part of the Beta testing program. Be sure to stock up on arrow-proof vests before taking this step. While I have no doubt ITI will make this initiative successful, the company’s deep knowledge is in Unisys, not IBM. Early adopters should expect a few bumps in the road before reaching the autobahn.

GonzoBankers, this announcement is going to have a profound effect on ITI, Unisys, IBM and all of the current and future users of the ITI core system. Let’s examine each consequence:

More banks are run on the ITI product than any other banking system. Information Technology Inc., headquartered in Lincoln, developed the true “bank in a box” product. ITI gained market share by doing the obvious:

• Provide solutions for every banking need
• Make these systems work well together
• Keep it simple; offer no choices (like the old Model T, you can have whatever color you want as long as it is black, ITI would provide whatever product you wanted as long as ITI produced it)
• Keep the entry price affordable
• Maintain a single version of the product
• Listen to the customers and add the functionality they want, within reason

This strategy has worked very well over the years culminating in the dominating market penetration of community banks. Will offering platform alternatives be harmful to their competitiveness? Hardly. It should allow ITI to penetrate those shops that “don’t do Unisys” or perhaps “only do IBM.” The bottom line for ITI is that both current and new customers will appreciate having a choice of platforms.

However, ITI may discover that its partner, Unisys, will not be as willing to sell banking systems on ITI’s behalf. I don’t know the exact statistics, but I do know a significant portion of ITI’s small bank sales are credited to the Unisys sales force. Will Unisys continue to willingly pitch a product that could be run on another manufacturer’s platform? Will Unisys continue to pass on its current level of hardware commission to Fiserv?

Perhaps the more significant impact to Unisys will be providing a financially competitive product to the iSeries computer. ITI is now testing to determine sizing for the new platform. What if the results indicate an IBM iSeries computer will cost only half as much as a similar-sized Unisys box? If so, can Unisys hold the line on its price for an equivalent machine?

Regardless of the computer price differential, IBM will gain new business for its very successful iSeries line of computers. It is hard to imagine any downside for IBM. Let’s see, this announcement means six vendors’ banking core products will now run on the iSeries including Fidelity’s Horizon, Jack Henry’s Silverlake and 20/20 products, Kirchman, Fiserv CBS and now Fiserv ITI. Wow, what choices.

Current ITI users will probably not see any difference. No word from Lincoln at this time on making the new platform available to current users. Assuming the option will be available, considering the new platform would only make sense if:

• You’ve always wanted to run on an iSeries
• Your current Unisys platform is out of gas and an upgrade is imminent
• Your bank is in a locality that is short on Unisys skills and long on iSeries skills

Moving to the new platform may not be widespread for existing ITI users, but it sure will spice up price negotiations with your friendly ITI/Unisys sales representative.

New ITI customers will be the big winners. Once a decision to use the ITI product has been made, new customers will need to consider the following:

• Are locally available technical skill sets better for Unisys or iSeries?
• Ancillary products are better for which platform?
• Integration tools are better for Unisys or iSeries?
• Which platform provides the best price performance?
• Local hardware support services are best for which vendor?
• With which vendor would the bank be more comfortable in a long relationship?

GonzoBankers, it is now in your hands. If this migration goes as planned, picking ITI means you have a choice of platforms. The announcement is good news for current users, new users and the hardware vendors. Naturally, the downside of choice is that there are more decisions to be made. Well, I guess that’s progress.

Congratulations ITI, this is a gutsy move that should address one of the market’s biggest gripes with your solution – hardware pricing. Here’s hoping for a fast and successful addition of the iSeries.
-caf