A strategy based on individual translators and Single Language Vendors (SLVs) are most appropriate for organizations with minimal translation needs, limited language requirements or who have the wherewithal to create a large global localization vendor management group – essentially an internal MLV. Testing individual translators or SLVs is really about testing how well the individual or group of individual can take words and translate them into the language concerned. A traditional translation test of a few hundred to a few thousand words is appropriate here – as long as you have someone available to check the output!

Moving up to a localization strategy based on MLVs or using a complete outsourcing provider changes the game though. The common error most organizations make when testing these vendors is assuming that the quality of translation is most important thing you can be testing. Beyond testing actual translation quality it is important to assess how well the partner can translate simultaneously to 5, 10, 25 or 50 languages, with the most attention paid to how well their processes will stand up to the rigors of your schedule. Due diligence at this level goes far beyond whether the prospective partner can find someone to translate a few hundred words!

For MLVs and localization outsourcing providers, testing is most beneficial in a “real-world” style piloting a live project with a small number o pre-qualified vendors following due diligence. This live pilot would typically come near the end of the vendor selection process, after the short-list of viable candidates – the one (ideally – although in some cases the right approach is to pilot with a small number) who look like ideal partners based on the rest of the due-diligence. A pilot should be a real-life project for both organizations and should be representative of how your organization works on a day to day basis as well as how you want to partner over the long haul. Specifically, Pilot approach must address these questions:

• Does this vendor have documented repeatable processes for delivering content in a consistent, high quality format?
• Can this vendor scale to meet the overall needs with their current processes?
• Can this vendor make “value-add” recommendations in the context of the PLP to help optimize the overall localization spend?
• If there is a technology aspect, can the vendor properly assess the best technology and implement it seamlessly into an organization?

At the end of the project, each vendor should present a retrospective review, including concerns, lessons learned and potential gains from best practices. These “post-mortem” reviews are where the key differentiators between vendors will come to the surface.  A company will have the data necessary to answer the four questions above, as well as many others allowing a controlled and educated go/no go decision to be made.

The Pilot approach is the only way to truly gauge the strength of a vendor and their ability to meet your needs.  Typically it takes longer to complete, but it allows the vendor to demonstrate more of their specific capabilities and allows both parties to determine if they are a good fit.

This year there were 37 countries represented on the G500 up from 35 in 2008 and 33 in 2007. Hungary, Israel and Venezuela are all newcomers. The EU and US dominate of course (163 and 140 respectively) but Japan, China, Switzerland, Canada and South Korea are all in the top ten. As Zia Daniell Wigder of Forrester put it in her news item

While there are still twice as many Fortune 500 companies based in the US as in the next country on the list (Japan), the number of US companies declined from 162 in 2007 to 140 in 2009. The number of Fortune 500 companies in Britain, Canada and the Netherlands also fell. By contrast, all other countries in the top 15 saw their numbers grow or remain flat. Out of the top 15, Russia, China and Spain showed the highest percentage growth in the number of companies listed.

This shows that although there is still a strong bias towards the EU and US, there is opportunities for companies wherever they are. This all looks good for localization – as more countries baptize global companies their populations will be more willing to accept brands created elsewhere – which means more localization requirements. Even in the depth of a recession many of the businesses here continue to grow – which again is good news both for the global economy and for us.

Companies in advanced economies were shocked to see suppliers in Asia and elsewhere simply disappear as orders from abroad contracted. In China some 67,000 factories went bankrupt, according to that country’s authorities, in the first half of 2008—even before the U.S. financial crisis sent the global economy into a tailspin.

Outsourcing and subcontracting are rife in localization at a number of levels.

Typical practice for global scale MLV’s is to subcontract to SLV’s on a language-by-language or region-by-region basis. The problem for the company procuring the localization services is that they are disconnected from those SLVs and have no way to predict the stability of the companies that are actually going to be performing the work. Procurement departments and selection committees will often spend a great deal of time  reviewing financial stability of a potential localization partner – work which is rendered useless if the actual production is performed by a completely different organization.

I would recommend anyone tackling a vendor consolidation to start begin asking questions that will identify stability issues not just at the MLV / master contractor level but at each point in the production supply chain. Here are some key questions:

• request third-party validation of each sub-contractors financial health and its sales or operational history,
• ask to see references from other or past partners,
• ask to see ongoing processes for tracking sub-contractor risks (a buyer, for example, should want to see a map of the partner’s supply chain including contingency), and
• develop backup options for each important sub-contractor.

Having confidence in a trading partner means having confidence that the partner knows what to do in the event of a breakdown in their subcontractor supply chain. Where subcontractors are part of the equation, as Josh says,

These practices will give both sides greater confidence that a crisis won’t wipe out their trading partners and leave them scrambling to find new ones.

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.

Is it generally better for the business to drive localization strategy or do you find the business.

Good question… so I will come at this from my perspective, from my experiences. My background is in web, specifically in building interactive marketing strategies, but I think the lessons I have learned have application outside interactive marketing. Premiere Global Services is a global provider of on-demand applied communications technologies. Our global headquarters is in Atlanta and we have a presence in 24 countries.

But before we start, let’s be real about some things. The decision of whether localize first or create a global sales strategy is made somewhere above our pay grade and most of us are not in a position to fundamentally effect the company we work for. Our job is to take that corporate strategy and create a strategy for global markets that best supports the company’s goals. That means each of us need to understand what those goals are so we can best advise the “higher pay grades”.

We don’t get to make decisions on corporate strategy, but we do get to support that strategy.

So given that, let’s take a step back and look at the options. If you have feet on the street outside your domestic market, you have no choice but to enable those guys. If your target is to globalize because you feel that you need to compete ‘out there’, be very cautious in the way you (localization managers) build your localization strategy. It has to be extremely fluid – localization is a very expensive proposition so if you don’t have channels in-country, you have to ask if localizing right now is the right thing to do.

Given that this forum is for localization best-practices let’s assume our “higher pay grades” have a corporate strategy that leads to a localization strategy. The first rule is “don’t half-step”. So many managers with responsibility for localization figure they can go into this slowly, waiting for the global strategy to show results before implementing a local-language strategy – but you have to make the strategic decision to support language alongside the corporate decision to do business somewhere. At the end of the day, when that key sale is made you have to be ready to support it.

“Boots on the ground”

For us at Premiere Global the situation is that over the last 20 years we have grown dramatically through acquisition, both of domestic US companies and also in EMEA and Asia-Pac. So it reached a critical mass for us, and we realized that we needed to synchronize about how we present our brand to the marketplace. Which all sounds great…

… but what we found by the time we reached that conclusion was that the boots that were already on the ground – the business development, sales and marketing teams in each region and country – had been doing whatever they had to do to create the materials they need…. and now we had a mess on our hands. Four or five different websites all managed by in-country individuals, four or five versions of each product manuals and sales collateral with no consistency of style and varying levels of accuracy.

For a global company this isn’t acceptable and so my advice is that once boots on the ground and a presence outside the US you must support that team as well as you support your domestic teams. That doesn’t necessarily mean translating everything but it does mean being ‘real’ about the commitment to local markets and trade-offs you will undoubtedly experience if you half-step market-preparation.

Lessons learned

So ultimately we decided that a key part of global expansion is in understanding exactly how we will support our people in-country. That strategy means knowing how we will support them getting the materials they need to be able to market, to sell and to support. This helps the company be smart when making choices about where to invest time and effort.

Editors note: Michael has kindly agreed to answer any questions and repond to comments when they are posted.

I was lucky enough to sit on the panel alongside Scott DeFusco of Deltek and Michael Buckham-White of Premiere Global yesterday. I have met Scott a number of times in the past but not Michael.

Michael is a 15-year veteran of human communications profession.  He held positions with a number of telecommunications companies, including AT&T, and was instrumental in launching the current UPS brand to the internet.  He is currently the Vice President of Interactive Marketing and CIA (Customer Insight & Analytics) for Premiere Global Services. Michael did an excellent job of chairing a Q&A on whether business (revenue)should drive globalization strategy or whether strategy should come first in order to drive revenue. The right path for most companies, of course, is a balance – but striking the correct balance makes the difference between success and failure.

Scott DeFusco, Vice President of Product Management forVirginia based Deltek, is responsible for driving the product strategy and innovation for Deltek’s Vision and GCS product lines. Scott has been instrumental in driving Deltek’s global strategy from product design through global go-to-market strategy. His Q&A was centered around the significance of educating business executives before executing a strategic sourcing solution for localization. Over the past eighteen months Scott has completely revamped Deltek’s approach to global markets – no mean feat for a fast growing software company – and to do that he had to build an education strategy for each major executive SVP and above. He also needed to craft a procurement and comprehensive vendor assessment strategy to select a localization partner.

Thanks to both Scott and Michael – and to everyone else that attended and participated.

What sets successful global organizations apart from those companies who struggle to gain an international foothold?

Quite simply, the successful organizations manage their product portfolio strategically by understanding where each product fits in the context of both local and global brand. Global companies know that active management of brand on both global and local levels simultaneously allow them to know what products fit into which markets. There are three key factors to your brand successfully in any global market:

• Understanding how your brand is currently positioned in current markets
• Understanding how your competition is currently positioned in those same markets
• Understanding the specific, local needs of consumers in those markets

While each of these factors plays a major role in determining success, each is dependent on proper execution of the others to be pivotal. The three are intertwined and perfect execution of any one will be for nothing if the others are not executed well. Poor execution here will lead to potentially expensive and irreversible damage to your company’s brand across global markets.

Understand how your brand is positioned

Understanding you current position in global markets, versus how you are seen in your home market is the vital first step. This is harder than it sounds for small to medium sized companies because they think and act like a domestic company because their ‘brain-trust’ is largely held in a small number of domestic head offices and therefore thinks like a domestic organization.

For organizations looking to move in to a new market, thorough examination of performance in similar markets will be important.  If you plan on growing organically, you will need to investigate the brand recognition in the new market, using that feedback to determine your strategy.  Some companies expand in to new markets through M&A, using the existing foothold as to mitigate entry costs. You have to be cautious here, and make sure that you understand how the current market views the company you are looking to merge with.  Is it similar to your goals in the new market, or is the image different from you entry plan.  For example, a mid-level provider from the United States purchasing a low-cost provider in a foreign market needs to understand how this company is viewed.  If the acquired company is seen as the “low-cost alternative” then it will be difficult to maintain, let alone grow business if prices are raised.

This step is not intended to derail an organization from moving in to a global market, but it is important that your company truly understand how you will fit in to the new market. This allows realistic expectations for initial gains and long-term maturity to be established.

Understand how your competitors are positioned

It is equally important that a company understands who their competition is in the new market, and how those organizations are viewed.  You will find, if proper research is done, that the successful global organizations have similar brand image and recognition in each market they occupy.  Conversely, those organizations struggling to gain a foothold in the international marketplace are often viewed in completely different ways, depending on where you are when you ask.  This gives your company insight on how to strategize against your competition, both in the short-term and long term. 

Two examples of successful understanding of both their position, as well as the position of their competitors would by Hyundai (organic growth) and Tata Motors (M&A). Hyundai’s entrance to the US market was done with both short and long-term goals established well before the first car entered the market. 

Hyundai’s first offerings were seen as “low-cost, fuel-efficient commuter cars” for families in need of a second vehicle, but who could not afford to manage two typical car payments.  While the entry point was low, Hyundai continued to set realistic sales and service goals.  Over time, they introduced SUVs and premium vehicle lines into the US market.  The intention was never to control the market, but to take a piece of the market from their competitors who were fighting for the lion’s share. The culmination of these efforts in the long-term was the introduction of Hyundai’s first V8 automobile, the Genesis.  Competing in the premium/luxury category, it won Car & Driver’s 2009 North American Car of the Year.  No small accomplishment when you are competing against established luxury brands like Cadillac, BMW, Mercedes and Lexus.

For Tata Motors, the growth in the global auto markets has come through acquisition.  The Indian giant released the first mass-produced car in its home market earlier this year, the sub-compact Nano. Estimated to sell 25,000,000 over the next decade, this can be considered a domestic coup.  However, the Nano would be hard-pressed to find success in other markets, especially in the USwhere the safety regulations require several major components absent from the Nano production line. 

In response, Tata Motors purchased to well-established luxury vehicle lines in Jaguar and Land Rover. Sold by Ford Motor Company, these two vehicle lines carried to key strengths that Tata was looking for in an acquisition. First, they have strong quality backgrounds and second, they have passionate, dedicated customer bases.  In essence, these two brands were “move-in ready” for Tata. Further success was found for Tata with the successful launch of the Jaguar XF sedan, which re-established the brand’s performance credentials. Oddly enough, the XF was developed by Ford Motor Company, but the release almost immediately after the acquisition was completed.

Understand the specific needs of the local market

Both of these examples lead me to the third factor in global brand management, which is understanding the consumer needs in the markets you are trying to enter.  Far too often, organizations look to strong domestic products as a cost-saving way to enter a market.  The logic seems sound, with a strong brand recognition and image being directly linked to product performance, but it is not that simple.

Each market has a different level of need for the same products. A fundamental flaw in most organizations is the belief that a “strong brand image” equals “iconic status.” Very few items in the market today have a status that makes them desirable and a reality for each global market. Once that is understood, your company is on the right track to finding the right product for each market.

The right products for a new market may be in your company’s current arsenal. That said many organization find better success by creating products specifically for the local market, rather than re-badging current product lines. Cellular telephone companies are a good example of this.  

So, what now?

In closing, it is important to understand how your brand is seen around the globe, as well as in your own backyard. This understanding takes time and money, but the up-front costs will undoubtedly improve your organization’s chances for long-term growth and stability in the global marketplace.  

This due diligence can seemingly fly in the face of “timely entry” as international organizations grasp the “cost per day” of missing out on a burgeoning market.  However, successful companies realize that the initial delay mitigates to risks of unmanageable expenses and expectations down the line because understanding the market’s image of your brand helps you maximize the growth.

As the market continues to be volatile, many companies are looking to cut expenses and hold on to their cash – conversely, leaders are also aware that an economic downturn is the perfect time to capitalize on competitors troubles and leap ahead. Expanding into new global markets is one example of where planned expansion can reap big competitive rewards.

What do successful global-companies know that you don’t?

The most successful global companies understand three things better than their competitors

1.      Their industry

2.      The markets that represent opportunity for that industry

3.      The level to which their product-offerings must flex to meet the needs of individual markets

Understanding which products for what needs and where in the world that applies is critical in developing a strategy for global-scale operations. Knowing when to invest in preparation and how to create competitive advantage from that is the thing successful global-scale organizations know that others don’t.

In today’s current markets, companies risk potential losses from entering a market too late, too early and of course, not at all. Being unready to take the opportunity – being unprepared for globalization – is a critical sin, but it is the situation most companies find themselves in. Whether you are a localization manager fighting to prove your team is not overhead or a run a line-of-business that believes there is opportunity in new markets – finding budget to prepare in advance of the global push is tricky.

The question is, “How do energize the company to prepare for global-markets ahead of the need for timely entry?”

Is your localization strategy suitable for global-scale localization?

A company’s content, and the translation of that content, is often seen as a “cost of doing business outside the home market.”  In reality, that global content is a collection of assets to be leveraged.  Like a piece of hardware, a physical installation or a number on a balance sheet, there is inherent and tangible value that can be placed on the content – as long as it is leveraged appropriately.  Before this becomes an op-ed piece on global content management, let me put it into the context of localization and your localization strategy.

What those successful organizations know is that an effective global strategy requires a flexible, global-scale localization strategy. Translation is not a core-business for most organizations. Localization is typically seen either as something to be taken handled by line-of-business managers, on an as-needed basis by in-country managers or through localization departments – none of which are particularly flexible methods of working.

So the original question was “How do energize the company to prepare for global-markets ahead of the need for timely entry?”

Assuming your organization already operates in more than one market you have the basic skeleton. Next you must show that when new markets are suggested you are able to quantify what your management need to know; how long will it take, how much will it cost, what is the risk, how difficult will it be?

Unfortunately most localization departments are forced by circumstance to focus on the tactics of dealing with today rather than the strategy of supporting global-business. Shifting your organization from the one to the other is hard but it is necessary if you are to demonstrate how your organization is prepared to meet the competitive challenges of 2010 and beyond.

What Can You Do to Mirror the Successful Global Organizations

There are three things that truly successful localization departments that separates them from the rest of the pack:

• You can’t do anything unless an executive is sponsoring you
• Localization has a narrow scope, but a large impact to the organization
• The right solution for their needs has to be flexible to meet changing needs

First, you cannot generate lasting change without executive support. Especially now, with corporations tightening the grip on spending, areas like localization need to be seen as essential, rather than just a means-to-an-end.  To do this, you have to “provoke” your executive champion to take action and support you.

Saying, “localization is important” will generate nothing from your executive, but helping them understand, “we have consistently lost 15% profit margin for the past 2 years in these 3 markets because we reacted to need for local-language materials instead of being prepared” should get their attention. If you are working closely with a partner vendor they should be able to support the creation of this kind of messaging and the presentation to back it up. If you are treating localization as a commodity it will be more challenging but still not impossible – if in doubt seek help from an external consultant with experience in this area.

Your next job is to help your executive understand that although localization has a very narrow scope, it has a large business impact – this translates to opportunity! 

Every part of the organization is touched by those handling the localization. It is one of the few operational processes where the impact is felt across the entire company from sales and marketing to product development and customer support. This breadth is important, because part of provoking your executive champion is to showing how vast the impact of localization can be to the organization.

Last, you need to know that there is no “cookie cutter” fix. Every company will have a specific solution for localization that is right for them. Every localization strategy has to be fluid to account for new markets, products and business need. No matter how similar in size and scope to others within their industry the problems – and therefore the solution vary. The key is to develop a global-scale localization strategy that can account for those changes when they come.

So, in summary

• Know what you want your global-scale localization strategy to be
• Find and groom a suitable executive
• Help them understand the opportunity for the company to use local-market preparation to competitive advantage.