Technology Adoption and Competitive Advantage in the Translation Industry

1. Technology Adoption and Competitive Advantage in the Translation Industry

2. Contents • What is Project/Open? • Project-ERP • What is Open-Source? • Competition in the Translation Industry • Sources • Arenas • Technology Adoption • Example: Translation Memories • New Technologies • Project/Open Modules

3. What is Project/Open?

4. Invoicing Work-flow Sales Projects ProjectForum Clients FileStorage Users Costs PurchaseOrders TradosIntegra-tion FreelanceDatabase What is Project/Open? • “Project-ERP” • Integration Solution forTranslation Agencies • 100% pure Internet • It’s mostly free software! • We earn our money with additional modules, installation and support

5. What is Open-Source? • Everybody can use and copy open-source programs • “Science model”: Everybodycontributes and shares • Mouth-to-mouth marketing • Development costs are much lower • Sales costs are much lower • Revenues from installation & support are sufficient

6. Competition in the Translation Industry

7. Translation Value Chain The “Classical” MLV Model QualityMan. Clients Staffing QC • The “classical” MLV (Multi Language Vendor) uses a lot of freelancer (“Editing” and “Trans.”) to provide the service for his customers. • Only a few language resources (“QC”) are working in-house as staff. Sales PM Editing Trans. MLV

8. MLV SLV Translation Value Chain Subcontracting to SLVs QualityMan. Clients Staffing QC • Larger or more sophisticated (localization) projects require specialized resources, so the MLV needs to subcontract to specialized SLVs • However, these SLVs are not allowed to communicate with the client directly, resulting in a huge overhead. • The “valued” contributed by MLV is limited to sales, QC and PM Sales PM Editing Trans. MLV

9. MLV SLV SLV Translation Value Chain Bypassing the MLV QualityMan. Clients Staffing QC • As a result, MLVs get frequently bypassed or “disintermediated” • Customers start to work with sophisticated SLVs directly and save up to 40% Sales PM Editing Trans. MLV

10. MLV SLV SLV Translation Value Chain MLV Defensive strategies QualityMan. Clients Staffing QC • MLVs try to defend by “integrating upwards” towards the customer to create lock-in and by beefing up their sales force • Lionbridge’s losses have reduced since 2002… Sales PM Editing Trans. MLV

11. MLV SLV SLV Arenas Translation Value Chain Fighting Arenas QualityMan. Clients Staffing QC • This feels like the Californiagold rush. Just make sure to sell tools and denims… • We are selling Translation Workflow… :-) Sales PM Editing Trans. MLV

12. Arenas and Strategies LargeMLV SmallMLV SLV Freel. Arena • Extend/ Defend • Learn CustomerIntegration • Defend • Improve • Learn Sales • Defend • Improve • Improve • Learn ProjectManagement • Defend • Improve • Specializeon the language Staffing • Defend • Improve • Learn QualityManagement • Improve/ Defend • Learn “Production”Organization • Improve/ Defend • Learn Service

13. How to fight? Competitive „Weapons“ • Best management practices in each area/department • IT tools OperationalEfficiency Strategic • Specialization • Languages • subject area • industry sector, • . . . • Size • . . .

14. Example: TM-Adoption

15. TM-Adoption Companies that replied to the LISA 2002 TM Survey Benefit • Very useful (saves 20%-50% of the work) Driving Force • Intense Competition, particularly after the advent of the Internet Why did adoption take so long? • Translators are normally not very tech-savvy. • TMs became easy to use only with the appearance of Windows/ Mac OS 100% Competitive Advantage for Early Majority 80% 60% 40% 20% 0% 2005 1990 1995 2000 Figures from LISA 2002 TM Survey Interpolations

16. 100% 80% 60% 40% 20% 0% 1990 1990 1995 1995 2000 2000 2005 2005 Types of Adopters • Innovators (“Techies”) • Appreciate technology for its own sake • Early Adopters („Visionaries“) • Will accept an 80% solution • Early Majority („Pragmatists“) • Want a complete solution • Want to see it working • Late Majority (“Conservatives”) • Focus on who else is doing it • Emphasize maturity of the technology • Laggards (“Skeptics”) EarlyMajority LateMajority EarlyAdopters Laggards Innovators Source: Everett Rogers, “Diffusion of Innovations”, 1962

17. Technology Portfolio Fax in TranslationCompanies Email inTranslationCompanies Translation Memories 100% 80% 60% 40% 20% 0% 1980 1985 1990 1995 2000 2005 2010 Qualitative curves for Fax and Email adoption

18. New Technologies

19. Translation IT Trends Solution • Extranets for file download/ upload (FTP-Servers, Web-Access, …) • Project Collaboration • Distributed TM • Quality Management/ Database • Integrated Freelance/ Provider Databases (across offices, integrated with Quality DB) • Freelance Self Service Problem • Clumsy handling of files • Communication in large project teams • Hassle to manage TMs • What is quality??? • Price pressure, complex freelance market • Long PM telephone calls with freelancers

20. Project-ERP DistributedTM? Technology Portfolio Fax in TranslationCompanies Email inTranslationCompanies Translation Memories 100% 80% 60% 40% 20% 0% 1980 1985 1990 1995 2000 2005 2010 Qualitative curves for Fax and Email

21. Jochen Hummel (Trados) "But here’s the key: it is only bymakingimprovements along theentire supply chain that theindustry can be transformed andenjoy the benefits of its next waveof growth.” Jochen Hummel, CTO Trados „For the nextwave of innovation, however, the key ingredient is what we atTRADOS are calling “collaborative workflow.” By combining technology support for localization projectmanagers with a platform that provides task and processautomation along the entire supply chain, collaboration betweencorporations, language service providers, and translators willreach a degree of transparency and efficiency that was heretoforeimpossible." Source: Client Side News 08.03

22. MLV SLV SLV Translation Value Chain QualityMan. Clients Staffing QC Sales PM Editing Trans. MLV

23. 10 8 Invoicing 1 ProjectForum Sales 9 Projects Work-flow 2 Clients FileStorage Users 7 Costs FL-PurchaseOrders TradosIntegra-tion FreelanceDatabase 6 5 3 4 Optimization Potential • Integrated Workflows • Multilingual CMS • Custom Apps. CustomerIntegration • The analysis of the optimization potential has lead us to the modules of Project/Open • The introduction of IT-tools is frequently meant to improve best-practices as well. • Sales force automation • CRM • Data Warehouse Sales • Internet Project Collaboration • Intranets/ Extranets ProjectManagement • Integrated freelance databases Staffing • Quality database, integrated with freelance database QualityManagement • Translation Workflow • Semiautomatic PM • Balanced Scorecard “Production”Organization • Service Mgmt. • CRM • Scorecards Service

24. Conclusion • Know in what arenas you are playing • Focus on a single area at a time • Choose your weapons • Don’t chose the wrong ones! Project/Open Frank Bergmann frank.bergmann@project-open.com www.project-open.com