SDL is kicking off a series of webinars on Tuesday (the 7th July) that tackle a set of best-practices around improving the total cost of ownership of localization – the first being increasing the Return on Investment for localization budget. The others tackle localization testing, machine translation, multimedia, validation and review processes, localization in Agile environments and culminating in Business Process Outsourcing on the 18th of August. Most of these webinars and many others put on by SDL, and other vendors are aimed at improving the Total Cost of Ownership when it comes to localization – but what really is the Total Cost of Ownership when it comes to localization, how do you go about quanitifying it, and how do you then understand what you can do once you know the number.

How to define the total cost of ownership for localization?

I define Total Cost of Ownership, or TCO, as the complete cost of translation based on the current strategy weighted by ratio’s quantifying overall quality and time-to-market targets. This can be expressed in a formula as shown below.

TCO=(c×qr×tr)

Total cost (c) multiplied by quality ratio (qr) multiplied by time-to-market ratio (tr). Once you know the total ownership you can begin to understand the efficiency (E) of your translation environment, and make decisions on how to make improvements. To caluclate this simply divide TCO by the total number of translated words (w):

E=TCO÷w           or           E=(c×qr×tr)÷w

We know how to calculate TCO and the efficiency of the environment, however with localization, to quote that old saw, the “devil is in the detail”; each of the component variables needs to be carefully and consistently calculated. This is not an easy task of we are to get an accurate answer for either TCO or E.

Calculating Total Cost (c)

c (cost) is the total cost of the strategy including internal, external (vendor), technology and overhead. This can be tricky since most organizations don’t track these items under an umbrella category (or even track them at all). Sometimes it can be easier to use cv (external spend to vendors) but this will provide misleading assumptions.

Calculating the quality ratio (qr)

qr (a single number representing quality for the time period being measured) you need to have a formal measurement of quality. There are a number of ways to measure quality however I favor a simple count of agreed “bugs” with severity weighting, measured against agreed quarterly target bands. This is shown in the chart where we can easily see that qr for the third quarter would be measured at 5 points since quality was rated “poor”. The heavy lifting here is in agreeing how to quantify, agree and weight each individual “bug” taking a pragmatic view of the preferential nature of translation without losing track of accuracy. There are a number of standards available that can be used or modified including SAE J2450 and a proprietary standards such as the one available from LISA but the amount of effort and the need for pragmatism here shouldn’t be underestimated.

Calculating the time ratio (tr)

tr (a single number representing time-to-market – the time taken from deciding to translate until the content is authorized for delivery) you simply need to choose when to start the count for any given translation job, when to end it and whether to count weekends! Weighting is very important since being one day late on a three month project is very different from being one day late on a security patch that has a 24 hour deadline. Calculating the number of words w (words) is a count of the net number of words translated including 100% matches and machine translation output. If you are using automated environments such as a Translation Management System or have a well-structured vendor strategy this should be fairly easy – otherwise quantifying the total number of words will take a great deal of effort.

Why go to all this effort?

Typically time, cost and quality are the three Key Performance Indicators that are measured in localization, however to be useful outside of simple benchmarking those KPI’s can be used to model and measure strategic and tactical changes to the environment. Our research and experience show that measured steps to reduce TCO and increase overall efficiency have a significant benefit over and above a simple-minded focus on driving costs down.