A Goliath among the Davids

I t possesses a broad footprint established through 19 years of scalable processing solutions for the retail marketplace. It continues to significantly invest in new products focusing on flexible implementation as well as high ROI for customers.

Its solutions are utilized by 350 banks worldwide, three international stock exchanges, three of the top U.S. brokerage firms, three of the top 10 retail pharmacy chains, two of the top five grocery chains, two of the top 10 petroleum and convenience stores, four of the world's top airlines, two the world's leading resort chains and one of the world's top theme parks.

It is S2 Systems.

Established in 1983 as a provider of high-performance switching software in the payment-processing arena under the name Shared Financial, the company evolved and in 1994 was part of a multiple acquisition by Stratus Computer. The other half of the acquisition was SSI, and a new software entity was formed, Stratus 2. In 1999, S2 spun off and stood on its own two feet, albeit as an independent company owned by a New York investment group, Basic Capital.

Since that time, S2 has come into its own by leveraging experience and expertise in design, manufacture and development of high-availability transaction-processing solutions.

"We are unique. We've developed current-generation product from past experience," says Stephen Clark, President/CEO of S2 Systems. "All our products have been designed by a company with experience in deploying a significant number of multi-proprietary solutions."

While there are numerous solution providers that make similar claims, Clark believes S2 Systems has a leg up on the competition.

"There are competitors, traditional competitors, running proprietary platforms," says Clark. "All of those are considerably expensive to maintain and modify. Ours is designed to enable people to rapidly and quickly adapt and interface with Web-based devices as well as POS devices. Since we offer more cost-effective solutions that are quick to deploy, the total return is significant."

In fact, Clark claims S2 Systems has the only open-platform solution that boasts heredity as well as scalability and flexibility. The cornerstone of that solution is the OpeN/2 Engine. S2 has a wide range of applications that complement the OpeN/2, targeting core authorizations, card processing, check management and other related transactional capabilities.

The OpeN/2 engine provides robust and scalable online transaction processing capabilities integral to real-time e-business. The core transaction engine is built for high volume throughput and peak performance with applications for EFT, card activity and check management.

S2 Systems' OpeN/2 solution suite is premised upon component-based open architecture, allowing interoperability with a wide range of contact points, including ATMs, POS devices, PDAs, wireless and other emerging technologies. Additionally, interfaces are available for common enterprise applications supporting industry-standard relational database drivers such as SQL and Oracle on platforms such as NT/Windows 2000 or UNIX.

S2 Systems offers these processing services mainly to banks and processors. "Our traditional customer profile is Tier 1, although our OpeN/2 is very flexible and can scale down to smaller organizations," says Clark. "We have customers that range across all aspects, but the majority are larger-scale organizations."

S2 Systems also provides solutions to the retail, travel and hospitality business sectors, especially with the shift toward increased use of electronic payments.

"While we have very good check-clearing systems in this country, there are high portions of businesses that are demonstrating a clear desire to go toward electronic checks," says Clark. "We are delighted (about) this trend. As you look at the growth in transaction volume, most of the studies show a very distinct level of growth in electronic transactions. Our customers are looking for higher levels of capabilities. They're looking for solutions that can scale up with the same reliability and flexibility to enable their business to adapt."

S2 Systems has recognized this shift and has begun to deploy its products into institutions that previously weren't viable customers. "One thing the dot.com movement did well was drive the level of capabilities of platforms much higher," says Clark. "Companies putting e-commerce on their sites have done a lot to bring about a higher level of reliability. With the ability to configure multiple servers, we have capabilities to deliver more traditional services online."

Though its services are clearly focused on electronic commerce, S2 Systems does not overlook the brick-and-click aspect of retail. "At the point-of-sale, our system can deal with any transaction," says Clark. "The traditional POS environment will continue to evolve with electronic payments, and our system is inherently designed to handle all those transactions. We continue to add incremental value to our core engine."

S2 Systems also adds value to its suite of solutions through customer support. Since S2 is a global provider, it offers support and service in all time zones. United States, Europe, Asia, even Africa have access to a 365-24/7 live-voice call center.

"Our clients' systems are mission critical, and we are in a position to address that and maintain a high standard of support," says Clark. "That is one aspect of our longevity. Many of our customers have been with us for years, some even dating back to our Shared Financial days."

Training is also a big part of S2 Systems' customer support. S2 works closely with customer IT departments, offering a broad range of training services, from courses in operation and support to implementation and integration. Depending on the customer environment, S2 Systems can implement its solution suite in as little as two weeks with larger deployment time needed for more extensive environments. It all depends on the need of its customers.

"Most customers clearly are much more interested in rapid migration with their existing systems, co-residing with our platform and phasing in applications," says Clark. "Over time they begin to see benefits and flexibility and add more functionality."

Does S2 Systems utilize the ISO channel in providing its services? For the most part, no. "Given the traditional footprint of our country in larger-tier markets, we use a direct-sales channel," says Clark. "We do have a local sales rep strategy in some smaller markets or markets that require local representation, such as in Latin America."

Besides a strong in-house sales force, S2 Systems even incorporates an in-house deployment staff. "We do have our own capabilities of deployment," says Clark. "It may vary with larger scale implementations that can be done with customers' system integrators. But we do guard our products closely."

An area that S2 Systems is very open to, though, is acquisitions. "One of our core strategies - to move forward and leverage our position on a broader basis - does require acquiring complementary organizations," says Clark. "A lot of our customers are looking for fewer suppliers to provide more. That's important."

What is also important to S2 Systems is that those potential acquirees also have a complimentary attitude toward its capabilities as well as complementary products and services that will bring broader end-to-end solutions to its customers.

Clark sees the future of the industry being directly affected by the consolidation of suppliers. Fewer companies will be offering multiple-transaction services. For S2 Systems, that's a good thing. Since its OpeN/2 products are able to handle transactions generated in any format in any platform, be it POS, mobile or kiosk, the challenge for S2 to successfully expand in this environment is not that dramatic. What does challenge S2 is simply time.

"The challenge for us is to continue to add in a timely fashion critical applications for more functionality and broader selection of back-end applications as well as more refined fraud-management tools for our customers," says Clark. "

Fraud management is a special issue for S2 Systems. "Online fraud and risk management is traditionally handled by back-end apps. We believe a back-end view of handling this is archaic," says Clark "The security and fraud management systems need to be an integral part of the system. We bring fraud products to the market that are integrated in real time rather than switched to back end. We are guided by our customers (because) they want much more interactive, real-time capabilities. If enough customers ask for it, that is the way the industry will go."

S2 Systems is banking on that direction. "S2 is really taking a leading position with our OpeN/2 products," says Clark. "We are getting high levels of traction, and we are seeing higher levels of movement from even the more conservative customers. For example, we are working closely with both Intel and Microsoft. ... Many of our customers have their own views on who they want to use, but clearly we are bipartisan."

A bipartisan solutions provider that wants to be the only one on the convention floor at the end of the day.