Localization Vendor Management from the Buyers Perspective
By: Don DePalma and Renato Beninatto (Common Sense Advisory)
04 September 2008
In its research, Common Sense Advisory has found that nearly 90 percent of companies outsource some or all of their translation and localization work. Many use a mixture of language service providers and freelance translators to meet their needs in product localization, website globalization, printed collateral, online help systems, knowledge bases, technical user guides, and training materials.
Every company that we talk with tells us that they struggle with the best model for procuring, organizing, managing, and measuring their language partners.
In the past year, Common Sense Advisory has hosted three buyer-only Vendor Management Colloquiums and helped organize the program for the two LSP-only Vendor Management Seminars. The next events will be hosted in Santiago, Chile (September 25 and 26) and Lisbon, Portugal (October 5).
This article summarizes a few of our take-aways from those events. The full report “Localization Vendor Management - Best Practices for Managing Language Service Providers” was published in February 2008 and is available for Common Sense Advisory members.
Vendor Managers Share Common Concerns
Besides dealing with the operational specifics of translation and localization, buyers of localization share many of the same basic concerns as vendor managers at any company that outsources business services.
- Requirements inside and outside the company drive localization. Demand from consumersand business buyers, competition, national regulations, international specifications, and industry standards make localization a critical component of any business growth strategy. People won’t buy products, services, and websites that are not adapted to local market needs and language (see “Can’t Read, Won’t Buy,” August 2006).
- Cost containment lurks at every threshold. Most of the companies we talk to are publicly-traded, thus exposing their finance statements to the prying eyes of shareholders and analysts. Localization usually happens in a cost center without links back to the high returns of international business (see “Beggars at the Globalization Banquet,” November 2002). Meanwhile, nobody wants to pay retail for their language services, but everybody wants the highest quality.
- Buyers want more efficient purchasing. Procurement departments typically look for one-stop shopping. Professional buyers exert pull toward high-efficiency purchasing methods such as standardized contracts, unified billing, and fewer human resources. Large buyers trim their vendor ranks, seeking a handful of multi-purpose LSPs to fulfill language requirements across a range of corporate functions and geographies.
- Decentralized companies confound enterprise leverage. Borders between business units and country subsidiaries create artificial limits to operational efficiency, financial consistency, and monitoring. Absent the data they need, vendor managers cannot predict demand, ensure the right vendors are project-ready, or negotiate favorable terms with the best vendors. Furthermore, the lack of internal standards for file formats, translation memories, and style make it hard to consolidate the jobs, languages, and volume that would allow for appropriate distribution to vendors. Finally, few companies force their business units to use the services of the centralized teams, further constraining the potential benefits of centralization.
- Localization lives in its engineering corner. Global issues extend to any information that touches international markets. However, few groups have a dialogue with the marketing teams producing materials for other markets. That wipes out chances to consolidate demand and share hard-won expertise. Most organizations miss out by not bringing localization and globalization knowledge into the corporate mainstream.
- The job won’t get any easier. Companies continue to expand through acquisitions, thus forcing localization teams to expand their repertoire of languages, products, and groups they service. They must simultaneously gather into their fold whatever staff and processes they acquire along with the purchased company.
Most companies we observe go through some familiar steps on their way to managing the localization process and the people who do the work, both inside and outside the company. Their focus is first on just getting the job done, however chaotically and expensively. Over time, they move to a more structured approach to qualifying, managing, and optimizing their use of external LSPs.
In the earliest or reactive phase of their work in localization, we find that localization managers either use the suppliers they inherited or hire the first ones who sound like they know what they are doing. They will initially rely on some trusted LSPs to get the work done. As they get more experience, the localization manager will spend more money outside the company to meet the increasing demands of business units for language services. They will assemble a virtual team of LSPs and consultancies to cover desktop publishing, quality assurance, engineering, and translation projects. What many of them tell us is that they’re often duplicating the work of other localization teams inside their companies. Very few have created the role of dedicated localization vendor manager.
Localization Teams Evolve to More Centrally Managed Oversight
As they mature, every company wrestles with the decision about where localization lives – at the corporate headquarters, in a business unit, at the regional level, in each country. The model preferred by most of our Colloquium attendees was to centralize as much of the operation as they could as a shared corporate service. However, most have the good sense to reflect the needs of individual business units. For example, some centralize vendor management, tools, and processes, but leave the project management to local business units.
Given the wide range of company size, product sets, and business models, the shared service organization can take many forms. We’ve interviewed software-as-a-service companies with a localization “team of one” and enterprises with localization groups consisting of hundreds of employees managing multi-national, multi-product roll-outs.
Among the companies that provide translation as a service shared across the enterprise, few require internal groups to use them. Units with translation needs on other campuses tend to overlook the centralized language services in favor of more immediate resources.
Some firms have begun to outsource localization project and vendor oversight to third-party management firms such as AdaQuest and boutiques such as 1-for-All. In these cases, the buyers choose to rely on the claims of the management firms to be objective, active champions and managers of the language service providers and freelancers under contract.
Most localization groups we talk to struggle with the question of balance – how many vendors are enough? Too many vendors are too hard to manage unless you have unlimited staff. If you have too few vendors, there’s a chance that they might not be able to meet your needs.
On one hand, they’re following the lead of other operational functions in their organizations. For example, how many energy suppliers or accountants does your company need? It could be one per facility or business unit. If you have centralized operations, you might have a preferred provider for the whole company, but allow local exceptions. The business focus is providing necessary services. Localization groups want to do the same —to limit or consolidate their number of language service providers.
Few localization teams have enough staff for all the jobs thrown in their direction. Everyone wants to restrict their vendor count in order to get preferred rates, align procurement terms and conditions across their companies, and improve quality and consistency. They theorize that they have a better chance of doing that with a smaller number of LSPs. All want to find the magic number and proper mix of specialized, local vendors with the appropriate expertise.
We find that companies typically alternate between two extremes:
- “Maybe one big LSP can do it all.” Some buyers look to bigger vendors like Lionbridge, SDL, and TransPerfect to supply all their translation, localization, and related engineering needs (see “Ranking of Top 25 Translation Companies,” May 2008). They theorize that this “agency of record,” which works well with advertising and legal counsel, would be just as effective in the globalization sector.
- “Why don’t we let every flower bloom?” Rather than just qualify a single LSP for all jobs, some buyers rely on standardized service agreements, price lists, and a well-defined technology palette to allow any LSP or freelancer to bid on jobs. This assumes that the suppliers agree to and comply with standard terms and conditions. Such systems rely on various software systems – business process management, workflow, translation management, and database management – to maintain and manage the potentially hundreds of vendor relationships that could result from this classic government-style model of qualifying vendors. In this case, the LSP’s goal is to be included in the approved vendor list. Then it starts selling internally.
What to do?
In our interactions with localization buyers, our message is always along the lines that ultimately, buyers need a company that will provide them with language services – and that in the typical formula, language capability always comes first, then comes service. Therefore, in our conversations about vendor management, we often recommend that they focus on selecting the “best value” provider. Unlike selecting the lowest bidder, choosing the best value provider means finding the one that offers the best blend of economy, efficiency, and effectiveness. Once they find what they think is the right one, then it’s time to verify compatibility and work out the details of a long-term relationship.