Re-thinking pricing and business models for cloud translation


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Presentation released at the ATC annual conference in London on September 23, 2011.

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Re-thinking pricing and business models for cloud translation

  1. 1. Re-thinking pricing and business models for cloud translation<br />Abstract<br />Innovation is not simply the introduction of something new, it is a change effected by implementing an invention. Change revolves around innovation, and innovation-originated changes provide better results than any "invisible hand".<br />It is ironic that the localization industry, specialized in adaptation and customization, has been insistent on its existing process model and is not adapting itself.<br />Do the latest technological advances really free translators or just tether them to their desks more than before? Why should one consider switching to cloud computing? We will search an answer to these questions by discussing cloud computing and collaborative translation technology to make process simpler, lean, and parallel and face the new translation industry mantra of "cheaper, faster, and better" to meet the growth in volume, velocity, and volatility.<br />The number of customers interested in translation is rising, but the economic slowdown constrain their willingness and capacity of expenditure. In addition, these customers mostly see translation as a commodity, and no one wants to spend much for a commodity that is believed, as such, to be available in large quantities without qualitative differentiation.<br />To win the challenges of global business, a systematic re-thinking of the translation process is necessary. To keep pace with the changing situation, the translation process must become "agile", and "cloud translation" could be a way.<br />Today, speed and agility are the drivers. Costs become truly important only when these two requirements are met. A close combination of highly skilled individuals and technology with a new process model to create and support communities on demand to maximize knowledge reuse and increase speed could be an answer to arrange the translation production lines that the continuously flowing content streams require.<br />Cloud translation could reduce intermediation and open the way to disintermediation. Is this good or bad? Neither! Innovative LSP's should just capitalize on the opportunity.<br />Wording<br />About six years ago, I went to the gap to buy a pair of jeans. I tend to wear my jeans until they’re falling apart, so it had been quite a while since my last purchase. A nice young salesperson walked up to me and asked if she could help.<br />“I want a pair of jeans—32–28,” I said.<br />“Do you want them slim fit, easy fit, relaxed fit, baggy, or extra baggy?” she replied. “Do you want them stonewashed, acid-washed, or distressed? Do you want them button-fly or zipper-fly? Do you want them faded or regular?”<br />I was stunned. A moment or two later I sputtered out something like, “I just want regular jeans. You know, the kind that used to be the only kind.” It turned out she didn’t know, but after consulting one of her older colleagues, she was able to figure out what “regular” jeans used to be, and she pointed me in the right direction.<br />The trouble was that with all these options available to me now, I was no longer sure that “regular” jeans were what I wanted.<br />Barry Schwartz, The Paradox of Choice, Why More Is Less<br />Cloud computing is a vague and obscure term conveniently used to convey a poetic vision of the Internet and of something we already know and do. Is it just a buzz, then? Not exactly, because the underlying technologies are mature, but it may sound just like this, and talking about cloud computing may thus be like talking about nothing.<br />Wernher von Braun was the German-American rocket scientist that led the development of the booster rocket that helped land the first men on the Moon. When asked what was the purpose of the moon race, he used to say: «What is the purpose of a new born baby?»<br />Innovation is not simply the introduction of something new, it is a change effected by implementing an invention. Change revolves around innovation, and innovation-originated changes provide better results than any “invisible hand”.<br />Typically, the language services industry has a conservative approach to crises, and sees any change as a major change, with companies relentlessly seeking to cut costs. In an industry almost entirely based on outsourcing and freelancing, reducing staff is not a impractical solution to cut costs, so language services companies commonly resort to lowering pays and occasionally to technology. In fact, a recent Common Sense Advisory report showed that the translation industry is generally a low-tech industry where “do more with less” is an imperative that very few can follow.<br />It is ironic that the localization industry, specialized in adaptation and customization, has been insistent on its existing process model and is not adapting itself.<br />On the other hand, an innovative approach to crises relies on product innovation, which cannot but be very limited in a century-old activity. It could happen only with the so-called value-added services, and this partly explains why many still look at translation as a cost, and the consequent competition on prices.<br />Competing on prices also implies that compensations are no longer enough to retain the best resources, while, when too low, they could only attract the worst.<br />Vendors should compete on the scope of services and responsibilities, but this raises the range of services and the required skill set while exposing vendors to the client’s organization.<br />Therefore, only process innovation can be effective, and yet, again, technology is used to streamline processes because the new translation industry mantra is “cheaper, faster, and better,” but doing more with less costs more, and technology is not enough. Technology can help increase volume and speed, but processes are made by and pivot on people. Therefore, the people in the translation industry must first redesign processes, but very few people in the translation industry are willing to repudiate their education.<br />If the last product innovation in the GILT industry dates back to two to three decades, the last input or organizational innovations are lost in the mist of time. Many market innovations have taken place, although all minor and pertaining to the business sphere. A few major innovations came, ça va sans dire, from information and communication technology.<br />Is the Internet changing the way we think? Is Google making us stupid?<br />According to Cambridge professor Ha-Joon Chang, the washing machine has changed the world more than the Internet. Nevertheless, when the washing machine was invented, there were people rallying that it was evil, others said that it would free women, while others claimed that its price would not pay out the price of the dozen books one just could buy.<br />Technological changes definitely influence work habits, and sometimes even radically change them.<br />What is happening today with information technology happened with printing presses that according to Erasmus would «fill the world with pamphlets and books that are foolish, ignorant, malignant, libelous, mad, impious and subversive.»<br />Let’s take the software market. The market of apps is growing rapidly, and so is the demand for localized apps. To meet this demand speed and readiness are prerequisites, more than knowledge and ability. Speed and readiness can be offered through community services enabling developers to start their localization projects in a matter of minutes, with a few clicks, with nothing to download or install.<br />At the moment, these services are possible via cloud computing only, with shared servers providing resources, software, and data on demand in a typical location-independent service-oriented architecture. It is an Internet-based IT service model, where virtualized resources are dynamically scaled and provided.<br />In fact, the term cloud is used as a metaphor for the Internet, based on the cloud drawing used to represent the Internet in computer network diagrams. The computing is in the cloud, i.e. the processing (and the associated data) is not in a specified, known, or static place. This is in contrast to a model in which the processing takes place in one or more specific servers that are known.<br />The spreading of cloud computing is a consequence of the ease of access to the Internet. More and more frequently it takes the form of web-based applications that users can access and use through a web browser as if they were installed locally on their own computer.<br />Generally, cloud computing customers simply consume resources as a service and pay only for the resources they use, with everything they need being out in a cloud on the Internet, where hundreds of machines are working together.<br />The typical cloud computing architecture is a three-layer reversed triangle.<br />The first layer is SaaS (Software as a Service): the software is delivered over the Internet (virtualized) by a provider licensing it to customers on demand, through a subscription; functionalities are used to augment or replace real world processes.<br />The second layer is PaaS (Platform as a Service): a runtime system and application platform available over the Internet with the sole purpose of hosting application software.<br />The third layer is IaaS (Infrastructure as a Service): traditional computing resources, such as servers, storage, and low-level network and hardware resources offered on demand over the Internet.<br />So why should one consider switching to cloud computing? The advantages of this model are:<br />Accessibility from anywhere, through an Internet connection;<br />No local server installation required;<br />Pay-per-use or subscription-based payment methods;<br />Rapid scalability;<br />Reliability;<br />System maintenance included in service.<br />Cloud computing helps to bypass wasted time, money, and product limitations on traditional business applications, achieving a more efficient, centrally controlled business, and allowing access to all applications from anywhere the Internet is available, without worries concerning servers, office space, power, etc.<br />In fact, capital expenditure is reduced by not having to purchase servers or full copies of software, while SaaS can be deployed more quickly as no local installation is required freeing up resources to focus on core business activities.<br />The model also presents a few drawbacks, from security and data integrity issues to the increased revenue cost of paying for the use of the services, from the dependence on Internet connection availability to the lower flexibility and the higher customization costs.<br />Anyway, cloud computing is a major innovation also in the translation industry, with a deep impact on organization, process, and market, opening the door to real collaborative translation.<br />Collaborative translation is not crowdsourcing that is just one model of many to leverage massive online collaboration for translation.<br />A major implementation consists in parallelized process instead of the typical serial approach found in most translation workflow systems. This approach resembles the assembly line, and it is why, in a Common Sense Advisory report of December 2007, Renato Beninatto and Don De Palma described collaborative translation as the end of taylorism in translation.<br />The new translation industry mantra is “cheaper, faster, and better”, coming from the impressive increase in technical and business content of today.<br />In a period of economic slowdown, companies apply strategies to reach new markets. Companies of all sizes and from all industries all over the world are being advised to find more international customers as fast as they can, and to increase their exports even faster as the economy becomes increasingly globalized and companies sell products and services in multiple markets. These strategies involve adding languages, and this partly explains why the content requiring translation is growing every year.<br />The content requiring translation is growing because of the unprecedented ease of content creation of the so-called Web 2.0. Nevertheless, most of this content is ephemeral and is not intended for commercial translation, but it also makes the number of customers grow.<br />Therefore, not only do companies apply strategies to release their products more quickly while adding more languages, they also strive for localization readiness, more agile development processes, and to reduce the amount of content or leverage it.<br />‎Even though the number of customers interested in translation is rising, in a period of economic slowdown their willingness and capacity of expenditure is limited. In addition, these customers mostly see translation as a commodity, and no one wants to spend much for a commodity that is believed, as such, to be available in large quantities without qualitative differentiation.<br />Therefore, to win the challenges of global business, a systematic re-thinking of the translation process is necessary.<br />The traditional translation process is a chain, as strong as its weakest link, and the longer the chain, the more weak links will be found in it. The supply chain in the professional translation industry still goes from the global enterprise content creator to the internal localization department to the MLV, to the SLV’s, to freelance translators who are the weak link in the supply chain. This means that the translation industry is still at a vendor management stage and makes LSP’s generally underdeveloped for a mature market.<br />Vendor management is the largest cost budget item that could be huge for companies with hundreds or thousands of vendors. It requires dedicated technology and staff and involves delicate tasks like quality assessment and several vendor managers to rotate to keep healthy relationships with vendors.<br />To keep pace with the changing situation, the translation process must become “agile”, and “cloud translation” could be a way.<br />A collaboration platform allows the client to minimize project management, and take on the role of facilitator, helping many-to-many communications, reducing e-mail transactions, capturing knowledge for immediate leverage, and providing a clear assignee at each project stage.<br />Cloud computing is the foundation for cloud translation, which exploits SaaS platforms for large scale pooling of translation professionals, terminologists, and domain experts, as well as for sharing linguistic data. These platforms could also serve as online marketplaces for translators where customers and translators can be connected directly or with a minimal intervention by a middle man, thus opening the way to disintermediation.<br />In a collaborative environment, not limited to crowdsourcing and social translation, name recognition and reputation are the equivalent of gold. Outbound marketing will still be necessary to reach prospective clients, but to build or improve reputation in the industry, and disseminate their name, translation companies could and maybe should use social media. The best use of social media is to share information, and spread views and opinions to be known and grow in authoritativeness, even with customers.<br />Speak at conferences, seminars, and webinars. Run your own blog. Contribute to industry newsletters, regularly issue whitepapers on the company’s or industry’s main focus.<br />Translation technology has laid dormant for a decade or more because the largest translation buyers invested only in traditional translation technology. In the last few years they have been looking for further cost reductions through process optimization, and invested in workflow and content management software.<br />This led these very large translation buyers to fragment their translation projects. Therefore translation jobs are getting smaller and instantaneous, while clients are expecting vendors workflows to be tightly integrated into theirs.<br />And here come cloud computing and collaborative platforms whose essential flavor is scaling and parallelism. Projects are split into tiny chunks that are dispatched to the members of a community specifically set up for each project, who will process it concurrently. The work is kept unabridged since chunks are reassembled in real time. Scaling and parallelism can help reduce dramatically lead and turnaround time and overhead or make it possible to recruit specialists who might otherwise not be willing to commit to the full job.<br />In a typical collaborative environment, team members can track the work that is left to do, rather than just the work that is achieved to date. This will improve transparency of the remaining work and highlight revision costs, inconsistent authoring, etc., while marking the areas where the whole process can be improved.<br />Translation is made on the web, all the time, by the best specialists available, regardless of location or ownership of desktop translation tools.<br />In a collaborative translation project, the project manager is actually a facilitator whose task is to create a community with translators, recruit a subject matter expert to answer questions about the topic, collect and provide all the tools to run the project, and assure support to translators where they need help. A few consultants will also be hired to handle the shared translation memories and the term base, develop the style guides, and tune the machine translation engine.<br />In a collaborative translation project, there is no need for reviewers and editors that could be disruptive for harmony and confidence in the project team, with the project facilitator and the consultant doing their best to have translators strictly follow the style guide and glossary.<br />Cloud translation allows for data centralization and resource decentralization, and the relevant technologies are widely available today, even for free.<br />Yet, the translation industry is still tied to the quality axiom. A corollary to the quality axiom says that fewer translators produce a more consistent output, as if a reader could distinguish some ten thousand words in a million. Moreover, it still happens to hear translators express concern about the use of translation memories as per quality, intellectual property, impoverishment of the language, and so on.<br />Another axiom derived from the quality axiom is the asset axiom, where glossaries and translation memories are assets, and, as such, are supposed to carry some value. Conversely, glossaries and translation memories do not necessarily carry an intrinsic value, since in this case value comes from their exploitation, and exploitation, in turn, depends on the ability of highly skilled translators.<br />Crowdsourced translation is a typical implementation of cloud translation. It relies on online communities, distributing the workload across dozens, or perhaps hundreds of contributors for greater volumes, higher speed, broader consensus on meaning, and possibly lower cost.<br />This rent-a-crowd approach generally results in lighter workloads for individual translators.<br />Anyway, translation crowdsourcing is not free and does not necessarily rely on volunteers, typically amateurs. Actually, it costs money to manage work, whether workers are volunteer or paid, and build a collaborative translation capability.<br />Professional translators should not undervalue crowdsourcing, and be careful not to emphasize the difference with amateurs involved in social translation projects. When warning that a crowdsourced job was not done professionally, they might be told that even Noah’s Ark was built and run by amateurs and the RMS Titanic by professionals...<br />A model is possible to blend efficiency with highly skilled professionals by recruiting specially selected communities of paid translators. Yet, time and money are needed to set up a specialized back-end infrastructure to bolster the productivity of the community, and it could take months to recruit and pool a qualified staff.<br />Therefore, free is not the point. Time is.<br />Hence, not only are highly skilled individuals no longer enough, technology is no longer enough either. A close combination of the two with a new process model could be an answer. Continuously flowing content streams demand translation production lines. A possible solution could be to create and support communities on demand to maximize knowledge reuse and increase speed.<br />In fact, today, speed and agility are the drivers. Costs become truly important only when these two requirements are met. Speed is for volume, and agility is for content type, while quality is a prerequisite and is taken for granted, even though different thresholds are commonly envisaged.<br />Therefore, language service providers must learn to actually differentiate their service offerings to accommodate the trends in content and arrive at different levels of quality to meet their customers’ needs in terms of speed, cost, content type and quality.<br />Anyway, buyers won’t ever start going directly to SLV’s as this would require efficient processes and a collaboration technology infrastructure, and MLV’s could redesign their production workflows to tie translators rather than to pursue efficiency.<br />On the other hand, LSP’ are the only ones who see translation as a service. Buyers see it definitely only as a product. This product hardly presents any meaningful qualitative differences, and that is why LSP’s all too often struggle to make a convincing case to justify translation costs: buyers are willing to pay for the perceived value. Products presenting no meaningful qualitative differences are usually labeled as commodities, and the path to losing real and strong value-add is named commoditization.<br />This reaffirms the chance for cloud translation to reduce intermediation and open the way to disintermediation. Good or bad? Neither! Innovative LSP’s should capitalize on the opportunity to connect clients and translators directly.<br />In general, LSP’s share the same pool of resources, and testing freelancers is expensive and not reliable. The solution to reduce overhead is then shortening the production chain. Collaborative platforms combining workflow and computer-aided translation capabilities into one application are the future. Humans can translate texts of any kind, rank the translation for accuracy and provide final edits, all via a browser from anywhere in the world. Machine translation will capture the translated texts and then suggest a possible translation when the words or phrases appear again, thus reducing the overall time and effort required for translation. No overhead for administrative activities, no duplication of work.<br />Anyway, alongside with platform management, collaborative models will still require resources for team management, quality management and intelligent work assignment, definitely not the same as intended in the industry as vendor and project management.<br />For its intrinsic scalability, cloud translation could also help redefine the business model of an entire industry, which is now visibly obsolete, allowing LSP’s to find themselves a size that fits.<br />In the years immediately ahead, the survival of the translation industry will be played around linguistic data (corpora, translation memories, glossaries) and on the ability to deal with it. Today the focus is on compatibility and interoperability of formats and platforms: when they are fully achieved, tools will be unimportant, one will equal another.<br />Right now, online work environments offer both simplicity and completeness, bringing work tools, business administration, collaboration, and other resources together into one easy-to-learn, easy-to-use web interface. To take full advantage of them, LSP’s must build specific capabilities, and possibly applications within the platform.<br />At the same time, LSP’s should not forget King Gillette’s lesson on marketing. It took two decades for the disposable-blade safety razor to take off, and Gillette tried every marketing gimmick he could think of. Eventually, he decided to sell cheaply to partners who would give away the razors, which were useless by themselves, to create demand for disposable blades and make its real profit from the high margin on the blades. What is your razor and what are your blades?<br />On the heels of the dot-com bust in 2000, innovators realized that the future of the Web was social. Sites such as Napster (1999) for music sharing, Blogger (1999) for hosting blogs, and AOL’s instant messenger (1997) began paving the way for the interactive Internet. Web 2.0, however, debuted in our lexicon only in 2004 at the O’Reilly Media conference.<br />Today, the interactive Web is a reality, and social media is more than social networking sites like Facebook. It includes a whole network of sites and services where users interact with one another, accounting for 10% of all Internet time.<br />Social media is all about interaction, and this has radically changed even the approach to information that can no longer only be provided as downloadable, static wording.<br />This approach is unstoppably leading to parceling, and to the final affirmation of microtasking. Here lies the reason for crowdsourcing. Collaborative platforms allow all members to have an overview of a project, even when they are knowledgeable in and getting involved with one or a few portions of it.<br />The emergence of new applications for MT is raising awareness that language services can generate revenue, and many buyers are experimenting with MT, but the plethora of variables involved in channeling content through the MT pipeline and customizing it has a negative impact. On the other hand, service providers are using MT to greater productivity, but wonder about the best cost model.<br />Despite a certain interest in inventing new “value-based” cost metrics, there is a strong tendency to stay with the word as the industry unit. Mainly because workers still need to be paid in a transparent way.<br />New business and pricing models should be devised based on efficiency in translation delivery, since efficiency is now more important for many customers than perfect quality or cost.<br />If post-editing does become a marketable service, we shall need metrics that accurately predict the post-editing effort for a given document. And it will be necessary to design workflows that factor in post-editing right from the start, rather than fitting it in as an after thought as many do today.<br />The main issue is asymmetry of information. Providers have a strong financial incentive to pass all services off as “good”, especially basic services. This makes it difficult to select a vendor to buy from for good at a fair price. The result is that buyers will only pay as fair price for the cheapest, to reduce the risk of overpaying, and high-quality products tend to be pushed out of the market, because there is no good way to establish that they really are worth more.<br />Therefore, the more efficient you become, the less effective you get, i.e. when you try to go on the cheap, you will stop selling, or the less you invest in your non-tangible services, the fewer sales you will get.<br />The music industry is a perfect example of how an entire industry can change without changing the intrinsic nature of the basic product. All changes have been revolving around the method of delivery, especially over the last thirty years. In 1980, vinyl was still the king; ten years later cassettes and CD’s were equal in market share; in 2000, CD’s outpaced by far all other media; in 2010, downloading equaled the sum of all other media, but the product is the same as ever: music.<br />In 1993, fluid milk processors in California agreed to allocate 3-cents of each gallon sold to fund efforts to promote the consumption of milk through marketing, advertising, promotion and public relations.<br />Got Milk? is one of the most famous commodity brand campaigns in the United States, and now a powerful property. Items with the “Got Milk?” logo printed on them became popular. It has been licensed on a range of consumer goods including Barbie dolls, Hot Wheels, baby and teen apparel, kitchen items (baby bibs, aprons, and dish towels), outdoor ads along high-traffic commuter routes, television spots, billboards, bus stops, and decals on grocery store floors.<br />Spam canned luncheon meat has not achieved the same results, as the term spam has been associated to an undesired excessive amount. And yet Spam captured a large slice of the British market within lower economic classes and became a byword among British children of the 1960s for low-grade fodder due to its commonality, monotonous taste and cheap price.<br />