The Story of Jack Henry & Associates


Here is a modified excerpt from our new book, Intelligent Fanatics: Standing on the Shoulders of Giants:

Small Town Software Giant: Jack Henry & Jerry Hall

Jack Henry & Associates

“Our motto was always, ‘Do the right thing, whatever it takes.’ That was the attitude. Fortunately, if you do that, the other things will work out. Like Jack and Jerry always said, if you do the right things, the financials and measurements will take care of themselves.”

—Mike Wallace, in You Don’t Know Jack . . . or Jerry

“One of the profound lessons I have learned . . . [is] that even when you have an organization brimming with talent, victory is not always under your control . . . There is no guarantee, no ultimate formula for success . . . However, a resolute and resourceful leader understands that there are a multitude of means to increase the probability of success . . . namely, intelligently and relentlessly seeking solutions . . . When you do that, the score takes care of itself.”

—Bill Walsh, in The Score Takes Care of Itself

Costco, Southwest Airlines, Nucor, Les Schwab Tires—nearly any of our intelligent fanatic case studies—all focus(ed) on the process, not the prize. Jack Henry & Associates (JKHY) is another fantastic example of this. The company has intelligently and relentlessly sought solutions for its customers by following the motto “Do the right thing, whatever it takes.”

Jack Henry was the visionary and Jerry Hall implemented the vision. The two men, who grew up on farms, created the foundations of a sustainable technology organization 1,900 miles away from Silicon Valley. Jack Henry & Associates dominated its niche, and it has thrived as it expanded into other niches. JHA’s results are stunning. The founders focused on doing the right thing, and their financial results did take care of themselves.

Jack Henry & Associates would grow from a side project, in 1977, with $115,000 in sales and $9,000 in profits, into an organization with $1.35 billion in sales and $250 million in profits in 2016. The company is now public, with a market capitalization over $7 billion. Obstacles would surface, but the two founders and their team would overcome them. In the process, they have built a reputation that is rarely matched in the information technology sector. Other information technology companies have not followed JHA’s winning operational philosophy and have suffered. Those companies, such as Unisys Corporation, have focused too much on the prize and too little on the process. Unisys’s history and philosophy will be compared to JHA’s.

Few outside the small town of Monett, Missouri, or the banking industry have heard of Jack Henry & Associates. Mark Leonard, founder of Constellation Software – one of the top diversified software companies in Canada and compounders in the last decade (growing shareholder value at a +35% CAGR), looked to Jack Henry & Associates as a perennial favorite conglomerate to study. In Mark’s 2015 President’s Letter to Shareholders, he incorporated their learnings from JHA and encouraged everyone to familiarize themselves with Jack Henry & Associates’s history. The company’s unique story and transition from founder-led organization to nonfounder-led mid-cap company was well executed.

The story of Jack Henry & Associates starts with its two founders. Both Jack Henry and Jerry Hall were born and raised in the southwestern corner of Missouri, only a few miles away from each other. Jack Henry, born on June 30, 1935, was raised on a farm five miles west of the small town of Monett. Jerry Hall, born on March 15, 1943, was raised on a farm ten miles south of Monett.

The two men would not cross paths until much later in their lives. After taking a few basic accounting courses from Springfield College of Commerce, Jack Henry worked a string of jobs, each lasting about five years. These jobs consisted of accounting positions at various firms, a stint taking over the accounting firm Jarvis Tax Service, and then becoming the controller of G&R Machine Works, where he helped the firm go public. After five years at G&R Machine Works, in 1974, he left to work for Gillioz Bank in Monett. By that time, Jerry Hall had been working at Jumping Jack Shoes, in various roles, for sixteen years.

As an operational manager at Gillioz Bank, Jack Henry set up the bank’s first computer, an IBM System/3. In those days, software was scarce for a community bank such as Gillioz, so Jack had to learn to code his own programs for the bank. Prior to the 1970s, banks had no system to connect all of their banking relationships with each customer. In other words, if a customer had multiple relationships with the bank—a car loan, a mortgage, and others—the bank had no centralized system to collect all of that data. Before there was customer relationship management software, Jack created CIF/32 to solve that problem.

Jerry had been appointed data processing manager for Jumping Jack Shoes. In that role, he successfully taught himself how to code. Jack and Jerry would eventually connect with each other. Jumping Jack Shoe Company had been acquired by U.S. Shoe Corp. in 1965, and Jerry Hall had disliked the ensuing corporatization of the company. Jack Henry was soon feeling the same way, when Gillioz Bank was acquired by United Missouri Bank, in 1976. As the only individuals in town who could program computers, the two men would commiserate about their situations over coffee. Jack and Jerry saw no future for themselves with their employers, and their distaste for their jobs was getting unbearable.

Fortunately, Jack Henry had set up a deal with Gillioz Bank. During the development of the bank’s software, Jack convinced the bank’s president to allow him to own the rights to his code, instead of the bank retaining it as proprietary software. Jack and Jerry decided to team up and start their own business on the side, working nights and weekends selling and installing the software for other banks in the area. Once they had enough cash flow coming in, they would quit their jobs and focus on their business full time. That was the start of Jack Henry & Associates, in 1977.

You can read Jack Henry & Jerry Hall’s story in our latest book, Intelligent Fanatics: Standing on the Shoulders of Giants. Become a Member and we’ll send you the eBook-Kindle version for Free.

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