Hogan Eyes PC Software as Rx for Bottom Line

Article excerpt

Hogan Systems, Inc., a big supplier of mainframe software to banks, plans to greatly expand its product line for personal computers, beginning withbranch automation software due out this summer.

Hogan hopes the products will quickly become a major part of its revenue stream, which comes primarily from mainframe software sales and professional services.

"Our mission is very important to Hogan," said Walter R. Tallent, director of the Dallas-based company's technology strategy and head of the branch software project.

"If you look Out two to three years from now, I would expect a good portion of our total license revenue to be coming from branch" automation software, he added.

Meeting Banks' Specifications

Mr. Tallent said that the branch automation software is being developed to the specifications of a committee of six banks that are based in the United States, Europe, and Hong Kong. He declined to name them.

Since Hogan was founded in 1977, its principal business has been the sale of mainframe software that large banks use to track retail loans and deposits. International Business Machines Corp. has had exclusive North American marketing rights to this software since 1986.

More than 100 large banks in the United States and abroad use the software, including BankAmerica Corp. and Citicorp.

Service Business Expanding

In recent years, Hogan has begun to diversify by greatly expanding its professional services business and introducing new mainframe software products, including one for tracking bank earnings.

Five years ago, only about one quarter of Hogan's $33.3 million in total revenues was derived from professional services, while the rest came principally from license fees, maintenance fees, and royalties from mainframe software.

By the 1993 fiscal year, which ended in March, two-thirds of Hogan's revenues of $64.5 million came from professional services, while nearly all of the rest was split between licensing and maintenance fees for mainframe software.

However, the professional services business took a blow in the first half -- ended in September -- of Hogan's 1994 fiscal year.

License Income Increasing

The termination of big consulting projects with IBM and First Financial Management Corp. caused the company's professional services revenues to decline by $6 million in the six months ending Sept. …