What Do LSPs Look for in Software They Buy?
By: Don DePalma (Common Sense Advisory)
10 December 2007
Ask any language service provider what distinguishes its offering from that of competitors and you'll hear the same refrain — quality, timeliness, and value.
Underlying those anodyne differentiators are hordes of human assets, extensive processes, and, increasingly, the technology they use to manage their internal workflows, interchanges with customers, their vendors, and the translation tools that do the work. Some build their own "translation management systems" while others buy commercial off-the-shelf (COTS) software.
Last month we surveyed GALA members who are language service providers about the technology they use to run their businesses. We asked about their spending plans, which software they use, why they do or do not use COTS software, and the importance of standards in their plans. Thirty-six LSPs completed the survey.
We have asked these same questions of LSPs before, most recently with a panel of 266 language service providers in late 2005. We did not survey exactly the same people in 2007 as we did in 2005, but there was some overlap in the two groups. To provide some context for this year's data, we will reference some of the 2005 results for comparison. For a complete discussion of the 2005 survey, read "Language Services 2006: Supply Side Outlook" (January 2006). That report reviewed the state of the market and predicted many of the industry, geographic, and business development activities that played out over the last two years and some that have yet to happen. Stay tuned.
The 2007 Survey: Show Me the Money!
Our research methodology at Common Sense Advisory begins with the money and only then proceeds to content, services, and technology. Thus, our first question queries LSPs about their spending plans for the coming year. Roughly two-thirds of the sample said they planned to spend more in 2008 (67.6%) versus about a fifth who said their spending would remain about the same (21.6%). That's great news for globalization software vendors such as Idiom, LTC, Project Open, SDL, and others.
By comparison, 48 percent of our 2005 respondents told us they planned to spend more money in 2006; 43 percent were planning to spend the same amount as in 2005. Although the samples are different, we would say that our 2007 results validate our anecdotal, interview, and consulting data over the last year that shows increased interest among LSPs in translation and process technology.
To what can we attribute this heightened attention? We can think of a few reasons:
- Scale. There's the increasing volume of globalization work — more words, more languages, more products, and more companies wanting to go global. All of that translates into the need to automate and work more efficiently.
- Competition. The internet has allowed tiny new suppliers and freelancers to compete internationally, many underpricing their way into new business. Automation is just one way that more established companies can compete more effectively against lowballers.
- Choice. Compared to 2005, there is more choice in some globalization software sectors, the software vendors who survived are healthier, language services sales have grown, and there is some clear, strong competition for the 2005 incumbent Trados. Remember 2005? That's when SDL bought Trados, firms like Idiom were barely holding their own, and the only other choices in translation memory or translation management were suffering or being sold off. Two years have made a lot of difference in the vendor landscape.;
LSPs Prefer Buying Translation Automation Software over Building It
Given the flood of solutions that have entered the market since mid-2005, we wondered how the buying patterns have changed since then. We asked, "Generally speaking, do you buy or build (that is, internally develop or pay to have someone develop for you) language technology? Check all that apply."
- Buyers outnumber builders. This year, 44.7 percent of our sample said they buy commercial off-the-shelf products versus 46.7 percent two years ago. An almost equal number prefer buying but find that they need to build some components — 42.1 percent said that "we mostly buy but build some software" versus 30.5% in 2005.
- Do-it-yourselfers have picked up the pace. This year's smaller sample showed a greater tendency to build than buy (18.4% vs. 10.5%). LSPs with mixed build-buy strategies — "we mostly build but buy some software" — increased slightly from 12 percent in 2005 to 13.2 this year.
- Open source has become a factor. We didn't ask about open source solutions two years ago but did this time in response to some write-in answers to the earlier survey. One-sixth of the sample (15.8%) is working with open source, which is testament to solutions that are popping up as more developers and academics discover the sector.
We also asked those who build what's wrong with COTS: "If you build or mostly build, why don't you use commercial products? Check all the reasons that apply." The top three reasons were that LSPs determined that commercial products don't have all the features they need, their processes are unique, and integration is a problem (see Figure 1). This trio of disincentives paralleled the top three reasons from 2005.
One answer did catch our eye — "concerns about buying from a competitor" increased substantially since 2005 (27.8% versus 14.3%). This issue derives from the feeling among some translation agencies that SDL, following its acquisition of neutral Trados, would favor its services business over that of rival LSPs using SDL or Trados software. Over the last year, we have heard from LSPs like Crossgap and thebigword who have productized their internal systems in order to sell them on the open market. We generally recommend that they avoid this business model, but we do appreciate why a company might want to do that — and we'll address this in a future article.
Figure 1 : Why LSPs Do Not Use Commercial Software
Source: Common Sense Advisory, Inc.
LSPs Speak Their Mind on Why They Don't Buy
Some providers shared their thoughts on why commercial translation tools didn't make the cut at their companies. Their comments fell into three buckets, all tied to the more comprehensive solutions built for translation management:
- Tenure. Some LSPs have been developing a commercial system for years, largely due to the absence of a good solution when they started. Now, they have a lot invested in the solution they built.
"When we started the development in 1999 there were no commercial products available with the specification we and our lead customers were looking for." Bengt Sjögren from Interverbum
- Customer needs and costs. Their clients have the inconvenient habit of using a variety of technologies, thus requiring more flexibility than some translation management systems can deliver.
"Our main customers use different environments and sets of tools for localization workflow. This requires us to continuously adjust to their requirements. We've found that no commercial solution is flexible enough or opened for user-defined (at least common user) functional modifications. Besides that, we have to deal with the high cost of licenses and subsequent upgrades." Krzysztof Leporowski from Studio Gambit
- Internal complexity. Internal LSP needs are complex themselves. The bottom line for many is that no single solution does it all.
"There is no 'single solution' out there for the customers. They vary in their needs. We find that Idiom provides a good link for the localization workflow to content management systems. For less advanced users (or smaller groups), Author-IT has an interesting approach for content management and localization work flow. For those needing integrated content management and localization workflow, there is a good & affordable solution with DocZone. In general, though, we are always working to find the "right solution" for our customers ." John Watkins from ENLASO
Some LSPs don't see that slam-dunk solution that would make their decision easy:
"When there is no clear choice in terms of which tool is best suited for your needs, committing to one product is a concern." Teddy Bengtsson from IFL
Standards — Always Important, But Not Where They Should Be
Finally, at every GALA meeting there is discussion of standards. Our panel was not different. Fully 86.4 percent said that standards like TBX, TMX, and XLIFF were important or very important. Just 13.5% said they weren't important, and no one said they were useless. In 2005, 67.3% said they were important or very important, 28.6% said they weren't, and 4.1% said they were useless. Again, different samples, but the zeitgeist seems clear. There were some naysayers, echoing our own analysis of the shortcomings of standards in delivering the interoperability that the market should demand.
"As some standards are not good enough, they are not as important to us as they should be. For example, TMX doesn't really provide compatibility between the different translation memory formats." Bertrand Gillert from LocaSoft
Marching Orders for Software Suppliers
These responses should guide software vendors looking to increase their sales to language service providers do two things: 1) talk to their prospects to figure out what they need and figure out how current software falls short; and 2) spend some money marketing and supporting their products in this market sector. We discuss this second issue in "How TMS Developers Pitch Their Wares to LSPs", also in this newsletter. World-class software without focused marketing, sales, and support will not grow the market or convince LSPs to stop building their own solutions.
Don DePalma is the founder and chief research officer of the research and consulting firm Common Sense Advisory, and author of the premier book on business globalization "Business Without Borders: A Strategic Guide to Global Marketing."