Firm makes fine-tooth comb for phone bills
S3 Matching Technologies' software helps large corporations identify errors and save money
2/18/2004
By Sachi Izumi, Austin American Statesman
A couple of former Marines say they can rescue customers from millions of dollars in phone billing errors.
S3 Matching Technologies' software helps large corporations identify errors in their multimillion-dollar phone bills by identifying flaws in the billing system.
Many companies blindly pay their phone bills because the vast number of calls makes it almost impossible to verify each one, said S3 CEO Jack Holt. He estimates that up to 5 percent of charges in large corporate phone bills are incorrect, costing companies as much as $400,000 each month.
"The complex billing system creates small errors that are overlooked because they are very small," Holt said. "Nobody cracked a code how to find them until Mark (Davies, S3's chief scientist) came along, and there you have it."
So far, S3 says it has just a handful of customers, but five of them are among the Fortune magazine list of the 100 largest companies. S3, which is privately held and financed, declined to name its customers. S3 prices its software based on how much money it saves clients. The payments can run into hundreds of thousands of dollars, said spokesman Jim Moore.
Large companies with toll-free phone lines receive phone bills with as many as 100 elements including intercarrier charges, surcharges and taxes because each call passes through several carriers and other databases, said Tim Pletcher, S3's chief operating officer. S3's TeraMatch product combines each carrier's billing system into a common format.
The software monitors a company's phone usage and compares it with a database of billing data from the customer's telecom provider.
S3 says its technology allows companies to match the bills to the actual usage with more than 95 percent accuracy in a matter of seconds.
"Everyone knows in the industry, the clients and the telecom, that the bills are wrong," Holt said. "Until now, no one has been able to definitively prove it. We can prove it." The software can cut the time needed to correct billing errors by several months, the company says.
S3 is in a crowded field. Analyst Eric Goodness with the computer research firm Gartner Inc. said there are 46 other products competing in the same market.
"It's a fairly new market because most enterprises don't realize what the products can do for them," Goodness said, noting other telecom expense management companies with similar products have grown by almost 100 percent a year.
Through TeraMatch, S3 said, large corporations and governmental institutions can save $4 million to $5 million in a year.
S3 formed in December with the merger of two Austin-based companies: DueTel, which provided telecommunication network analysis; and Process Direction, which made business-process software.
Everything started when Holt, who ran DueTel, and Pletcher, who ran Process Direction, became neighbors. They had served in the same Marine battalion in the early 1990s but didn't know each other then, Moore said.
They combined Pletcher's knowledge of data warehousing with Holt's background in telecom corporate financing. They later collaborated with Davies, a computer scientist from the Massachusetts Institute of Technology who invented TeraMatch.
S3 is looking beyond telecommunications. Davies said his software can audit anything that has two-sided transactions, activities as diverse as electricity usage, electronic voting and trading on the New York Stock Exchange.
"There are any numbers of different things where this could go in and be like a Good Housekeeping seal of approval for these companies with huge volume of transactions," Holt said.
sizumi@statesman.com ; 445-2954