[November 23, 2008] DCI readies for bigger bytes: Data Center Inc. honors its humble beginnings as it prepares to further expand Tweet Nov 23, 2008 (The Hutchinson News - McClatchy-Tribune Information Services via COMTEX) -- From its beginning as a four-person nonprofit operation that ran off a 40kb computer in a storage room at The Hutchinson News, Hutchinson's Data Center Inc. has grown to a 285-employee for-profit business with nearly a dozen regional centers around the country. Like the kernel of an idea that first launched it, the company continues to change and expand as it marks its 45th anniversary -- and its first $1 billion bank as a customer -- this month. The way it was founded and structured, however, owned by the customers it serves, remains basically the way it operates today, said Mark Harris, Data Center's marketing director. Hutchinson banker Nation Meyer recognized their potential quickly when computers were introduced into the nation's banking system in early 1960. At the time, individual banks handled all their own check processing and manually balanced general account ledgers nightly. "There was no question that computers were faster and more accurate than human beings," Meyer said. Yet it was only the largest banks -- less than 2 percent of some 15,000 in the United States at the time -- that could afford this new technology, Meyer said. Meyer, president of First National Bank of Hutchinson, and Hutchinson National Bank President Art Collins were already working together on several projects, including transporting checks at night for processing. So when he got the idea from an Indiana banker after a 1961 banking convention of forming a cooperative of banks to handle processing, Meyer immediately approached Collins with the idea. Eleven banks were included in a study to see if the idea was feasible, but only four ended up committing to the effort. J.A. Mermis of Security State Bank in Great Bend and Walter L. Roth of Peoples State Bank in Ellinwood joined Meyer and Collins. The cooperative hired Don Lindt as president in 1962. He was set up with an office, but initially had no computer. Lindt wrote the computer program that would be used for processing, and finally, in October 1964, a leased IBM 1440 arrived on The News' loading dock. The computer used paper punch cards for input and disk packs that stored 3 megabytes of information each. The paper deposits and checks received each day were processed at night, using a computer coding system developed for checks, with the balanced ledger sent back to the bank each morning, Meyer said. "It didn't make any money those first few years," Meyer recalled of the operation. "We had to pay into it at a higher rate per item than if we were a big bank. But it's very competitive now." Collins and Lindt, incidentally, were also involved in the process of creating the computer coding system that went on checks, called the Magnetic Ink Character Recognition program, with a DCI representative serving on the national nine-member board that formally developed the system critical to computerized processing. By 1966, DCI was handling deposits for six banks, "overnight clearings for 100 correspondents and processing a wide variety of commercial applications for several of the bank's other customers," according to the company's 2004 annual report. In 1968, the company hired its ninth employee, Melvin Mac Kay, to sort checks. "The told me to work from 6 p.m. until I was done," Mac Kay recalls. Serving today as senior vice president of application development, Mac Kay is the longest tenured employee at DCI at 40 years. By the early 1970s, Data Center Inc. outgrew its space at The News and moved into a state-of-the-art building designed specifically for housing computers. Gary Hopper replaced Lindt as president in 1975, and added more processing sites. In 1987 the company became a for-profit corporation, though still owned by its 42 cooperative members, who mostly represented banks. When Hopper retired in 1995, A.J. Krail was named president and CEO. Krail moved the company into the former Emprise Bank building and then made the critical move of converting from mainframe processing to a client-server base, introducing new product lines through an acquisition. Krail died suddenly in November 2003, but not before helping develop early editions of what is today the company's primary product, the iCore software processing system. The conversion from a mainframe system that started eight years ago was completed just this month, with its last mainframe customer going online, noted CEO John Jones, who succeeded Krail in 2003. The company still processes checks for banks, but the number dwindles every day as they're replaced by electronic transactions, including debit, credit and ATM cards. Like its founding, however, DCI is pioneering the new electronic processing and management systems, Jones said. "We've crossed the threshold," Jones said of its first $1 billion customer. "It gives us the springboard to bigger markets, and also more credibility with the bank customers we have." To see more of The Hutchinson News or to subscribe to the newspaper, go to http://www.hutchnews.com. Copyright (c) 2008, The Hutchinson News, Kan. Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. [ Back To TMCnet.com's Homepage ]