SDL Mark Lancaster shared his views on the wisdom of developing and selling enterprise software for translation, his reason for buying Tridion and the impact that acquisition had on SDL’s relationship with CMS suppliers, current and future pricing and business models, and SDL’s luck in doing the right thing at the right time.

• SDL’s future: Technology or services? We’ve long advised SDL to separate its service and technology businesses, but Lancaster defended his current corporate structure. “You need critical mass to fund product development and support. A big customer for our technology is SDL’s services group. Other LSPs that use our technology get a more level playing field with SDL services.” Lancaster said that enterprise technology for translation is still an immature market.”
• How big could the market for language services be? Citing our figure of US$10 billion for the size of the outsourced language services estimate, Lancaster said that “translation is so important and it should be growing faster than it is. We do US$100 million in service revenue. That’s absolutely insignificant.” He thinks the market could be grow to be much bigger than that.

• Why did SDL buy Tridion? “We acquired Tridion because we weren’t getting enough traction with CMS companies. We felt that the the first CMS company that could truly manage global information would be the winner.” In response to a question about whether large corporations have a good sense of managing content across their organizations, Lancaster said “categorically no. Our clients and prospects have difficulty getting senior management to see the value of what they’re doing.”
• How did SDL’s CMS partners react to the Tridion news? Following the Tridion acquisition, Lancaster said that “other CMS companies might not be eager to bridge their software to ours. For example, I haven’t had any of my calls to Interwoven returned recently. However, we did close a deal with Astoria at Avaya. In the end, it’s the customer who decides what CMS and translation automation they want.”

• Is automated translation the solution to everything? Lancaster said that SDL spends a lot of time trying to find how effective automated translation is. Considering efficiency and quality, they have found that certain texts lend themselves to machine translation. MT can be quite complicated, slow, and costly to review.

• Business model: behind the firewall or as a service? Of all the enterprise technology SDL sells, 70% sits in a remote hosting center managed not by the customer but by a third-party hosting company.

• Are SDL technology customers locked in? “Our enterprise customers don’t feel locked in.” He went on to say that “it’s expensive to invest in technology. If you’re an LSP inveting in technology for yourself, that’s a completely flawed business model. You’ll have to employ lots of people. Our filters for Trados take 20 man-years per filter to develop. There’s good technology available in the marketplace — I would encourage LSPs to use it.”

In conclusion, Lancaster said that “we were lucky and did everything at the right time. We went public at the right time. We acquired companies at the right time.”