in search of new business models o why are these models emerging? o what is different? o do they...

In Search of New Business Models

o Why Are These Models Emerging?o What Is Different?o Do They Have Something in Common?o Does Size Really Matter? (And is there the right size that fits all?)o Does Pricing Pressure Create a Quality Abyss?o And much more…

Localization World, 31 May - 2 June, 2005, Bonn, Germany © Logrus International Corp., 2005

Pressure as Stimulus to Progress


Post-2000 World:• Tighter Budgets vs.

Growing Localization Volumes• Customers “Streamlining” Vendor Base• Offshoring Spiraling

and…• You Either Invent or

Go Down the … Food Chain

What Educated Customers Expect

1. Multiple (all) languages AND a complete set of hi-tech services offered as a package (one-stop shopping)

2. Competitive pricing (closer to SLV-level)3. Consistently high quality of deliveries across all languages 4. Single point of contact5. Centralized responsibility for multilingual

localization projects6. Organizational transparency and clear,

well-defined structure 7. Experience and proven track of record for most languages8. Flexibility and scalability9. Reputable and recognizable name or names

behind each proposal


The whole nine yards…

What Creative Vendors Thought

• Traditional Approach (Choose any 2 criteria out of 3: Good Quality, Low Rates, On Schedule) is obsolete…Presumably you might choose any 3

• Size limitations are no longer so strictNature has already staged a “Size Matters” experiment…Internet and Workflow Automation just drop the curtain

• Offshoring should become an integral part of it• Occam’s Axe:

Wipe out redundant communication, managerial & pricing layers, etc.


Brotherhoods of the Language Ring

Allied groups of independent companies located in various countries:

• Unified storefront• Special agreements• Acting as a single entity• Roles based on both native languages and/or

special skills or location; Non-competing• Most include one or more companies located

in offshore areas• Most offer complete solutions and a

full set of services


Why Now?

• Seriously improved communications & workflow automation

• Tighter, leaner, better-defined organization

• Active use of offshoring

• Customers needed an alternative

• Customers have become comfortable with the concept


B6: Localization World, 31 May - 2 June, 2005, Bonn, Germany


Does Size Matter?

B6 - Localization World Bonn 2005

Matthias CaesarLocatech GmbH – LCJ EEIG

Does size matter?

The answer is Yes!

The answer is No!

Size = Position

Size

Glo

bal

#

Fit

Reasons

• Defines our positioning => Market– Global offering– Integration– Deployment of Technology

• Sets our offering– Where?– What?– How?

Solution I

• Small SLV / MLV– Global Presence– Integration– Service Offering– Technology – Flexibility– Cost

• Fit-

-

()

()

CHALLENGE: Shrinking market!

Solution II

• large Global Player– Global Presence– Integration– Service Offering– Technology – Flexibility– Cost

• Fit()

-

()

CHALLENGE: Flexible Cost Structure!

Solution III

• Medium-size Alliance– Global Presence– Integration– Service Offering– Technology – Flexibility– Cost

• Fit()

CHALLENGE: Integration!

The answer is Yes!

The answer is No!

B6: In search of new business models

milengoAdam Blau

Creating Production Efficiencies

• Subcontracting models are removed– Greater resource management and transparency.– Alliance offices communicate directly with client’s worldwide

offices or validating team.

• Scale, centralize and organize internal resources– Member’s specialized skills are optimized to best meet the

client’s relationship requirements. – Centralization of non-linguistic services at low-cost offices.– All work performed in the same company, coordinated by the

alliance global project manager.

Formation of “complex” relationshipsAlliances can adapt and respond to client’s multifaceted communication, linguistic and technological requirements and wishes.

• Unified production workflow.

• Unified technology platforms.

• In-country teams collaboratively working together.

Creating Production Efficiencies

Alliance members are not rotated or easily replaced. As a result:

• Localization workflow protocol designed and improved with each further project.

• Project manager and alliance members develop in-depth insight into the client’s processes.

• Potential improvements are discussed internally as how best to leverage alliance strengths in order to benefit the client relationship.

Creating Learning Efficiencies

• Non-competitive collaboration– Draw on a wealth of knowledge, skills and experience to

raise the overall performance level.• Where one member excels in engineering, the other

compliments in DTP insights. • Best-step practices and new ideas are shared between

alliance members to benefit its clients.

• Training and assistance is shared between members of the alliance

Creating Learning Efficiencies

Pricing: Alliances vs. MLVs

• Common: Rates for Various Languages are NOT Uniform (vs. weighted SLV levels)– “Home” vs. Outsourced

• Different: Models– Alliance, Translation: SLV Base + PM– Alliance, Technical: Offshore Base [+ PM ]

– MLV, Translation: Base + PM

± Special Δ– MLV, Technical: Base (May be Offshore) + PM


Pricing: Pressed Against the Wall

• MLVs: – Negotiate within pre-defined ranges– Reduce rates on SOME languages artificially– Find cheaper vendors or freelancers– Quit

• Alliances: – Negotiate within the range agreed internally– Re-negotiate with particular members– Reduce PM Fee to the limit

(Neither cheap workarounds, nor freelancers are typically used)

– Quit


How Much LOC for Your BUCK?

• MLVs: PM + Overhead >= 30%

• Alliances: PM ~10%

LocalizationWork(MLV)

LocalizationWork

(Alliance)

LocalizationWork

Management & Overhead




Alliances and Economy Airlines (1)

• Tight competition and worsening market conditions -> Economy Airlines

• Concessions:


Longer transfers, remote airports

Offshore locations, remote time zones

Fewer guarantees (late arrivals, connecting flights, limited financial liability, …)

Fewer guarantees (late deliveries, limited financial liability,...)DOESN’T mean lower quality services!

More legs to the destination Not all people speaking good English

Minimized flight services (fewer flight attendants, no free lunch)

Less extensive customer services (fewer account managers, etc.)

Alliances and Economy Airlines (2)

• Good Things:– You typically pay less!– Tighter, streamlined organization– High motivation

• Alliances are just taking off!


Thank You Very Much!



in search of new business models o why are these models emerging? o what is different? o do they...

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