Standards such as TMX are extremely important because they “future-proof” the investments of both customers and vendors.

INSIDER: If someone were writing a history of the localization industry, how would they describe your role and your contributions to-date?

Defining the right process for this industry, then developing and applying the right dose of technology based on open standards. And all of this implemented through the right amount of human effort at the appropriate places.

INSIDER: Why have you been so steadfast in your support of TMX? Is it simply to unseat TRADOS in the TM sector, or do your reasons go deeper than that?

Believe it or not, SDL is not looking to make a business of selling translation technology. Rather, it’s about sharing the return and growing the industry.

Obviously, our reasons go much deeper. Our strategy from the very beginning has always been one of investing for the long-term. We’ve had to invest in improving the industry vs. the SDL game, e.g., we’ve pushed very hard for open standards. Obviously, we derive some benefit, but the benefit is disproportionate to the effort and energy that we are investing in the short-term. To date, we have invested significant R&D resources to ensure that our products adhere to linguistic standards.

However, we don’t do this solely for SDL since we make much of it available to everyone in the industry. There are now tens of thousands of copies of SDLX being used by customers, vendors and freelancers because it has proven to be so cost-effective, and the value of using it is so great. Yet SDL is not making a significant profit on it. So why do we continue to do it? Because by doing so, we’re making the industry a more productive place and growing it, at the same time.

Believe it or not, SDL is not looking to make a business of selling translation technology. Rather, it’s about sharing the return and growing the industry. We’re very happy to share it with other people. Look at how large companies operate. They do things for the long-term, even if they don’t help their own operations directly in the short-term.

In the long-term, if you don’t have standards, the industry suffers, and no one within that industry can operate well.

The translation industry, in particular, is very fragmented. Customers and vendors alike need to have file formats and data storage standards that allow them to easily exchange their information. In addition to standards, you must also be efficient with project management and infrastructure to evolve the industry.

We strongly believe that in the long-term, if you don’t have standards, the industry suffers, and no one within that industry can operate well. Standards such as TMX are extremely important because they “future-proof” the investments of both customers and vendors. Users are free to change tools whenever they want so that they can choose the best tool for the task at hand.

INSIDER: Why have you personally been successful in this business when others have not? Why do people within the industry, such as Mark Homnack, President and CEO of SimulTrans, respect and admire you?

A number of translation companies have been successful. Our strategy, as I just explained, has always been one of investing for the long-term. Much easier said than done, but we have stuck to it, and it is the right strategy. In our view, the success of SDL is not just our short-term finaincials, but how successful we can make our customers and staff.

I believe that the value of a company in the long-term should be measured according to the following criteria:

1. consistent profitability and customer performance;
2. ownership of IPR (intellectual property rights), e.g., in technology;
3. business processes and infrastructure, such as in local offices;
4. and in the quality of management and staff.

INSIDER: What are the top three issues that you’re hearing from customers nowadays?

The three issues are cost, cost and cost.

We essentially teach customers to put all of their localization-related “woes” into a system that does away with a lot of the inefficiencies and subsequent costs.

From a customer standpoint, there’s enormous price pressure. I think customers are frustrated. However, to be honest, I think that a lot is self-imposed, by the way in which they do business, since there is never as much up-front planning as there should be. This, in turn, presents a huge opportunity since we can then show them how to implement cost-efficient workflow, processes and technology. We essentially teach them to put all of their localization-related “woes” into a system that does away with a lot of the inefficiencies and subsequent costs.

However, the question being posed by customers should really be related to an analysis of the process being used. We find that the most successful customers are the ones that allow us to work together with them as true partners to create a solution that makes sense for them. The smart ones know how to leverage our skills as a vendor to solve their problems.

INSIDER: How is the push towards more and more outsourcing affecting SDL and how it runs its operations?

I believe that outsourcing is completely overrated for localization.

We have only moved towards offshore outsourcing over the last three to four years. At the present time, it’s applicable to 20%, maybe less, of the localization industry’s total activity. However, that’s a large number. Technology will continue to reduce the amount of repetitive or duplicated work and further automate it. For example, there will be less and less need for DTP people over time as XML absorbs the workload.

We have chosen to continue to invest in technical infrastructure; whereas, it seems that our largest competitors continue to reduce the broadness of their infrastructure by using agencies. Our perspective, at the end of the day, is that we believe that it’s important to translate in-country. Whether it’s 15 cents or 30 cents. In this way, we have control over our end product since we know exactly what we’re delivering every time.

I believe that outsourcing is completely overrated for localization. You can’t outsource all language translation to China, and the actual translation will always be the most costly piece. Translation can be done very efficiently when the right balance is struck between the process and technological components.

INSIDER: Will internationalization/localization be integrated as part of the software development process, as your largest competitor is claiming? What does this mean for SDL?

If you talk to any medium- to large-sized customer, you will find that they’re not really interested in how the work gets done. Their goal is to outsource what they perceive to be a “problem” and get it done as fast and cost-efficiently as possible. This is fine, as long as the industry learns to adopt and adhere to open standards.

A lot of companies internationalize their software, whether or not they do it in the most efficient way possible. That’s a one-off job and not a major market for SDL. The key thing is to look at the content that people have (most of which is now based in some type of electronic format) as it evolves towards XML. What companies want to do is to get that into as many languages as possible. Therefore, people will always need translation.

The key is to implement the right process and technology.

What we should be doing is to help customers do this as effectively and efficiently as possible. The cost is in the translation, not in the messing about. Approximately USD 50 of every USD 100 of cost is involved in coordination, TM alignment, DTP, etc. However, our customers are only interested in the word count because we have trained them to view the work through that lens, and we continue to quote that way.

So the logical conclusion should be: “Don’t do the yucky stuff, but don’t outsource it either.” The key is to implement the right process and technology. We have several customers (Sun, Philips, DELL, Canon, Case New Holland, Morgan Stanley) that prove that this approach works.

In-sourced, out-tasked, outsourced, not sourced, it doesn’t matter. The language component will always be with us, and it will always be the most expensive component in the process. The key to satisfied customers and profitability is the way in which workflow and technology are applied to and managed throughout the entire process.

INSIDER: While your competitors work hard to find the lowest prices for their customers by reducing their in-house infrastructure, SDL continues to focus on streamlining process and refining technology. How in the world can you afford to do that?

It’s really very simple. People are looking to trim costs wherever and as much as they can. This results in companies being forced to cut corners to reduce price (e.g., skipping the review process, adopting the attitude that “any freelancer will do,” expending less management effort, de-emphasizing quality, etc.). The solution is not to cut corners, but to improve the way you do the work.

One way to improve the way you do the work is available through our KbT System in which we have unified TM, adaptive MT, human translation services and workflow into an integrated whole. What this means for customers is that the translation process is really knowledge-based now. Terminology is maintained and easily updated. Moving the translation component to TM takes out approximately 30% of the translation effort because you can reuse what you’ve translated before. The TM component is then fed into the adaptive MT component, which takes out another 50-60% of the translation process. What you’re left with is the final 10-20% for humans to translate/edit during the pre- and post-editing phases.

All of our customers who have adopted this model have significantly decreased the amount of translation work needed, yet with no sacrifice in quality.

We are now sharing with our customers what we have learned and implemented internally, i.e., that the combination of technology (SDL is the only one integrating TM and MT) + process is a winner because it allows our customers’ systems to learn over time. All of our customers who have adopted this model is that they have significantly decreased the amount of translation work needed with no sacrifice in quality.

We can now save customers considerably more money in the long-term, with the added benefits of (1) protecting their language-related investments, and (2) lightening the load for mid- and upper-level managers. I am constantly amazed at how much aggravation is reduced each time one of our customers adopts our workflow technology/KbT system.

This is not a pipe dream. Most big companies think they know how to do it, so they just want to use body shops. However, they almost never know how to do it, so there’s no improvement in the industry or in the process itself. However, on the bright side, we have truly noticed a change in that many more people are listening now. It takes a lot of time and a disproportionate amount of energy to convince people, though. Evangelization still comes as part of the territory.

INSIDER: How should service providers be quoting their products and services then?

Translation is perceived as somewhat of a commodity, even though not everyone produces the same quality. You can pay a variance of 100% on cost per word, but guess what? In the end, you generally get what you pay for. We spend hundreds of thousands of dollars building up inhouse translation and vendor selection expertise in-country to ensure that we can deliver quality to clients.

It’s not just the quality of the translator, though. If you polled 100 translators, almost all of them would respond that the quality of their translation depends on how much information they have access to. Translators always need more information, and this affects quality. However, if you can place the knowledge into a system that works, the actual cost per word will be less.

People should be looking at how many words there are, how many words are “fuzzy,” rather than exact, matches. And then, add all the other costs. That’s the quote.

INSIDER: Am I right that SDL’s main focus is not software development, but localization services? What is your software development strategy?

Our technology and workflow solutions are not software programs in search of a problem, that’s for sure!

Translation is a bit of a convoluted process. To make a workflow system operate efficiently (and we have no choice but to do this in the service part of our business), you must truly partner with customers to create a team solution. This means literally sitting down, with everyone around the table, to define the problem and explore ways to solve it. And that’s exactly the way SDL develops its products.

Our strategy is to deliver the most complete solution, combining the best in people, processes and technology. If our customers did not need this type of team solution, we wouldn’t be creating it. Our technology and workflow solutions are not software programs in search of a problem, that’s for sure!

INSIDER: What’s your secret for successfully integrating SDL’s acquisitions (six since the beginning of the year 2000)?

Listening, communicating, directing and teamwork are the keys.

First, the acquisition needs to make sense. Through the acquisitions we have made, we have extended our service offerings, increased our geographical reach and enhanced our translation technologies. Each acquisition is different and needs a well thought through and different methodology, with a team to execute. Sometimes the speed of integration needs to be very fast if the existing management is not going to work. In other cases, the existing management is good and needs to be brought on board at their speed. Listening, communicating, directing and teamwork are the keys.

Second, we implement the standard processes, methodologies and technologies across the new acquisition. This helps to integrate everyone into a consistent and efficient way of doing business and ensures that we achieve the fastest possible return on our investment.

Third, we communicate openly and frequently about our plans and the progress we are achieving. People want to know how they are impacted and the impact they are making.

And finally, we work hard at it!

INSIDER: What has been the hardest thing about expanding in China? The easiest?

I would say the hardest has been the effective communication of project information to our Chinese operation, so that we are able to gain maximum leverage from the low cost of resources there. We have learned a lot about how to do this effectively. The easiest part has been the motivating of the team – they are 110% committed to being successful as a key component of the SDL portfolio of service offerings.

INSIDER: And one final question that we ask everyone that we interview: how do you benefit from being a member of LISA? What would you like to change about LISA?

LISA is the place to discuss and resolve industry-wide issues, especially when it comes to standards.

The industry needs a place to meet and where everyone can go to discuss and resolve industry-wide issues. LISA is that place, especially when it comes to standards.

The one thing I would like to see LISA do in the near future is to invest more in standards vis-à-vis the smaller vendors – the people on the outside – who are all trying to do their own thing right now. LISA should value the smaller players, as well as hobnob with the big guys. Every business will benefit. There are many good little companies out there, and these small localization vendors are important to LISA’s future and the future of the industry.

Editor’s Note: For more insights into Mark Lancaster and how he views the future of the localization industry, please read “The Big 3 Speak Out.”

Mark Lancaster founded SDL (Software and Document Localization) in 1992 after identifying the need for a high-level service provider for the localization of software and documentation. He graduated with an HND in Electrical and Electronic Engineering, entered the engineering profession and then progressed his career as a Project Manager at Lotus Development Corporation and as the International Development Director at Ashton-Tate. As Chairman and CEO of SDL, Lancaster is responsible for the strategic development of the business. He is a co-founder of LISA. Lancaster can be reached through his Personal Assistant Nikki Pollard.