S1 Corp. hopes that Enterprise, once the Atlanta online banking software vendor's most prominent unit, will benefit from efforts to promote a smaller unit that sells software to community banks.
Enterprise, which makes customizable, multichannel software for midsize and large banks, has long been S1's flagship. But when Johann Dreyer became the parent company's chief executive in November, he said some customers were unaware S1 even had two other units, and he quickly undertook a reorganization plan to promote all the units equally.
Neil Underwood, the general manager of Enterprise, said that the reorganization plan is helping his unit, because it has enabled the others, especially Postilion, which provides software and payment services to smaller financial companies, to make referrals to potential customers that otherwise might not have considered Enterprise software.
Enterprise and Postilion "are different companies now," Mr. Underwood said. "They're run by different folks, and they've clearly defined the markets that they serve."
As part of the reorganization, Enterprise's sales force has been expanded to 50, after being cut to 10 in late 2005. S1 also shifted its pricing for Enterprise products from a subscription model to an up-front licensing fee, in part because large banks preferred licensing.
Mr. Underwood said that at conferences, Enterprise and Postilion representatives stand side by side, referring customers to each other where appropriate. Such decisions are not always obvious — there is no particular asset size where a bank stops being a Postilion customer and starts being an Enterprise one — but the obvious cooperation could help customers decide whether S1 can meet their needs, he said.
Enterprise's focus right now is on cash management and online business banking, Mr. Underwood said. Each year it looks at which products need improvement, and it starts improving those products. Last year S1 invested in its Enterprise teller product, and soon it will conduct R&D for its call center and sales products.
Though the Enterprise line is still sold on the benefits of buying multiple products that can communicate across channels, "the products themselves will stand on their own," Mr. Underwood said.
Postilion also is making its own deals. On Thursday, it announced one with Metavante Corp., the payments subsidiary of Marshall & Ilsley Corp. of Milwaukee, to provide online bill payment capabilities through Postilion's online banking software.
The two companies will market the software jointly. The Metavante service will allow bank customers to fund online bill payments with credit and debit cards, something that is still uncommon for bank sites. It will also allow same-day payments.
Gwenn Bezard, a research director at Aite Group LLC of Boston, said it is important for Enterprise to cooperate with Postilion, because they can benefit from each other's expertise.
S1's previous cross-channel strategy of hoping to persuade big banking companies to use several of the interconnected Enterprise modules "lends itself more to the small-bank environment than the big-bank environment," Mr. Bezard said. Big companies "pick and choose the best component for each environment" from different vendors, while small ones are more accustomed to sticking with one vendor.
"The current approach is more reasonable," he said. "Banks are not spending to the level that they were spending 10 years ago or five years ago on online banking applications. … The market is mature."
Dan Schatt, a senior analyst for the Boston market research firm Celent LLC, said it is important for Enterprise and Postilion to work together to target banks with around $1 billion of assets, whose needs are hard to predict.
"You've got some very innovative banks that are under $1 billion in assets, so you can't necessarily" assume they would want only Postilion products, he said. "You have banks that are moving up in size and shifting strategies."
S1's attention to building up individual elements of the Enterprise suite may not be enough for many large banking companies that are accustomed to going to vendors that specialize in just one channel, Mr. Schatt said.
With Enterprise, "what they're talking about at the end of the day is a best-of-suite approach, and everyone else is doing best-of-breed," he said.
S1 said Friday that a Dutch auction tender offer ended Thursday with agreements for it to repurchase 15,955 shares, or less than 1% of its outstanding stock, at $5.75 each. Once the transaction is completed it would have about 61.6 million shares outstanding.
