Interest in Grid Accrues Financial Benefits for Ohio Savings Bank

by Mainstay Partners

Founded in 1889, Ohio Savings Bank has grown from a savings and loan with a single branch office in Cleveland to one of the nation's largest mortgage lenders. Today, the privately held bank manages nearly $13 billion in assets across 50 branches in Ohio and 20 additional locations in Florida and Phoenix through its AmTrust Bank division.

But by 2004 the bank's growth was stressing its IT infrastructure and draining financial and human resources. So it investigated an exciting alternative: Consolidate the legacy IT systems with an enterprise grid computing solution from Oracle.

The bank reasoned that grid computing would increase performance and stability, give the bank the option of altering the mix and focus of resources, and boost availability. Grid in turn would lower costs, raise service levels, enhance cross-selling and heighten visibility of the bank's mortgage products.

The new system would fulfill another, longer-range objective by laying the groundwork for a services-oriented architecture (SOA) that would eventually consolidate the bank's call center, mortgage application and data warehouse into a unified architecture.

When it came time to act, Ohio Savings invested $813,000 in Oracle 10g grid computing and targeted its call center as the first in line for the solution.

According to an independent study conducted by the consulting firm Mainstay Partners, the decision is paying off. Ohio Savings will reap $1.98 million in benefits over five years from the investment, for a 165 percent return on investment. The bulk of the savings will come from needing fewer staff to manage the system, lowering maintenance costs and breaking the cycle of having to make expensive hardware purchases.

Equally important, the study noted, is what the technological shift signifies for the bank's future. "Our mission is to be recognized for our innovative products and services," says Jo Ann Boylan, executive vice president and chief technology officer of Ohio Savings Bank. "We invested in Oracle 10g grid technology to scale our resources and provide the support and services we have become known for."

Throughout its 116-year history, Ohio Savings has concentrated on three areas of banking: residential, construction lending and traditional retail services. Approximately 80 percent of the bank's nearly $13 billion in assets consists of residential mortgages. Going forward, the bank wants to enhance its national reputation as a mortgage lender and reach and retain customers through personalized, profitable offerings.

But by the early 2000s, the bank realized that its expansion plans were being compromised by its HP RISC-based IT infrastructure, which forced the bank to manage different hardware, operating systems and applications. According to Mainstay, Ohio Saving's IT staff was forced to manually attend to low-value operational tasks such as disk space management and table space reorganization.

The bank was spending hundreds of thousands of dollars annually in maintenance costs, downtime and salaries, officials say. Reinvesting in the platform didn't make financial sense. So the bank moved to an enterprise grid computing solution from Oracle that would proactively address several issues at once: integrate and standardize the various systems, scale inexpensively, simplify database and storage management, deliver higher availability, lower costs, and provide more and better information to customers. "As a bank in the highly competitive mortgage business, we needed high availability in a cost-effective environment that minimizes our risk of outages," Boylan says.

Because Ohio Savings' customers interact heavily with the bank's automated services, the bank wanted a solution that would create a service-based architecture for its call center, mortgage and data warehouse applications.

The company chose Oracle 10g grid technology, which uses Oracle Database 10g, Oracle Application Server 10g, Oracle Real Application Clusters 10g, Oracle Cluster Ready Services, Oracle Enterprise Manager Grid Control, Oracle Data Guard and Oracle Automatic Storage Management to coordinate large numbers of servers and storage so that they operate like one large computer.

With the grid system, Ohio Savings saw the potential to grow and save at the same time. "We invested in Oracle 10g grid technology to scale our resources and provide the support and services we have become known for," Boylan says. The solution Ohio Savings chose was Oracle on HP Intel-based computers and the Red Hat Linux 3.0 operating system. The new configuration will eventually consolidate servers from multiple vendors.

The Mainstay study predicts Ohio Savings will garner $1.98 million in benefits over a five-year period, principally from consolidating the bank's technology infrastructure. Consolidation means the bank will avoid adding to its staff while at the same time increasing availability, lowering maintenance costs and eliminating the need to support idle hardware. The consolidation will also serve as the technological hub for Ohio Savings' data warehouse and mortgage applications.

According to Mainstay, Ohio Savings' $813,000 Oracle investment is on track to repay itself in 17 months. Over five years, Ohio Savings' investment in Oracle will yield a return on investment of 165 percent, with an internal rate of return of 38 percent (see "Five-Year ROI with Grid" for a summary of savings over five years on Oracle compared to the cost of operating the previous system). The bank expects to reap further benefits when it incorporates its mortgage application and data warehouse in 2005, Mainstay says.

Managers also noted improvements in job satisfaction for Ohio Savings' IT staff now that the rote tasks, manual intervention and growing number of recovery operations are gone. "Oracle Enterprise Manager 10g helps reduce the workload of our database administrators and systems administrators," says Ed Kizys, project leader of Ohio Savings Bank. Boylan agrees. "Life is much easier for the DBAs," Boylan says.

Strategic Benefits

In addition to the nearly $2 million in savings, Ohio Savings is realizing six important strategic benefits by choosing grid computing, according to Mainstay Partners.

• Eliminates the variability of multiple vendors
• Standardizes and scales across all business applications
• Accommodates and balances mixed workloads
• Helps direct customers to more personalized, profitable offerings
• Optimizes use of customer data and analysis
• Provides the foundation for services-based architecture

Ohio Savings Bank

Headquarters: Cleveland, OH
www.ohiosavings.com
Industry: Financial Services
Assets: $12.3 billion
Chief Executive: Robert Goldberg
Chief Technology Officer: Jo Ann Boylan