Prototype Research from

Bringing Home the Localization Bacon

Why Localization Should Remain a Priority in a Down Economy
By Donald A. DePalma

June 2002

Bringing Home the Localization Bacon

Table of Contents
Introduction .......................................................................................................................................................3 Interviewees Remain Optimistic about Global and Web Investments...................................................4 Companies Seek a Global Presence; the Web Enables It ............................................................. 4 Global Companies Need to Build Brand Wherever They Go..................................................... 5 Global Market Leaders Cut Cost and Time Using the Global Web ........................................... 6 Everyone Wants to Cut Costs from their Localization Efforts ................................................... 6 Conclusions from Interviews .......................................................................................................... 7 Localization Decisions Cannot Be Made in Isolation.................................................................................8 The Web Remains at the Heart of Many Globalization Discussions ......................................... 9 Domestic Web Prowess Often Fails to Find Its Way Abroad ................................................... 10 Diagnosing Common Globalization Personality Types ..........................................................................10 Planetary Newbies: Companies Still in the Starting Blocks...................................................... 11 Globally Savvy Firms: Companies Cut the Domestic Umbilical Cord.................................... 12 Seven Most Effective Arguments for Globalization Budgets .................................................................14 Reason 7: Increase Revenue and Share from Global Markets................................................... 14 Reason 7: Increase Revenue and Share from Global Markets................................................... 15 Reason 6: Beat Competitors to These New Markets .................................................................. 16 Reason 5: Heighten Brand Awareness ......................................................................................... 17 Reason 4: Shorten Time to Market................................................................................................ 18 Reason 3: Improve Collaborative Efforts and Knowledge Management................................ 18 Reason 2: Lower the Cost of Doing Business .............................................................................. 19 Reason 1: The Customer Is at the Center of Everything............................................................ 21 As You Make Your Budget Case .................................................................................................................21 Around the World with Common Sense .............................................................................................23 About Common Sense Advisory...........................................................................................................26 Future Research ........................................................................................................................................26 Copyright Information ............................................................................................................................26

June 2002

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Bringing Home the Localization Bacon

Introduction
Corporate boards and shareholders have rediscovered ROI and theyre pushing executives to systematically assess, justify, and prioritize their spending plans. High on the list of suspect projects is the localization of products, marketing, and Web sites for non-English-speaking markets. Why? These activities are often performed outside the mainstream of corporate systems, have small staffs, and tiny budgets and as a result have failed to develop widespread support. However, while localization comprises a tiny part of most companies total budgets and a small amount of corporate mindshare, it typically enables a firm to derive a large percentage of its revenue from markets beyond the borders of its headquarters country. In this report Common Sense Advisory sits down with executives to discuss their localization plans and how they justify their activities and expenditures. Then it details the personality types of companies considering the global plunge, with the goal of providing some insight into typical management behaviors that can accelerate or put the brakes on localization projects. Finally, it analyzes and prioritizes the most-compelling arguments that executives responsible for localization budgets or implementation present to their budget review boards. Please note that: The analysis in this report is based on an extensive set of interviews with corporate executives and localization practitioners. They were conducted over the last year for the book, Business Without Borders: A Strategic Guide to Global Marketing (New York: John Wiley & Sons, 2002) and for articles and presentations. Some sections of this report appear in the book. These discussions focused on global business activities and the process of localizing products, services, and Web sites to allow them to be used in international markets. This paper is a prototype for future reports. Future research from Common Sense Advisory will include quantitative information (for example, how much companies are spending; where theyre seeing most value) and graphic representations of that data in the interview part of the report. The analysis section of future reports will include graphics, a discussion of methodology for the topic under consideration, and frank assessments of vendor performance and solutions.

In a follow-up report to be published in November 2002, Common Sense Advisory will present the results of a study of companies or business units based in the United States that have systematically localized their products
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Bringing Home the Localization Bacon and services for international markets. Based on detailed interviews with 50 companies, this upcoming buyer-centric report will provide a detailed accounting of the state of localization in large firms, outline the best practices, and describe how leading brands measure and justify their investment in localization. If youre interested in subscribing to this research or participating in it, see the contact information on the last page of this report.

Interviewees Remain Optimistic about Global and Web Investments

Our interviews focused on the value of going global, both in the so-called brick-and-mortar physical world and on the Internet. What we found were a collection of traditional reasons for going global plus a strongly evolving sense of how the Internet will facilitate revenue from new markets, better customers service, and lower overall costs. Despite the view of many market pundits that the Web has become yesterdays news, it remains a central element to the globalization plans of most large companies.

Companies Seek a Global Presence; the Web Enables It

Interviewees consistently echoed the theme that they didnt have a choice about investing in international markets; they told us that if they expected to grow and provide a return to shareholders, they needed to expand their presence beyond their home markets. Besides this desire to grow the business, most were concerned with lessening the time and resources it takes to get products and services into their global distribution network. This is motherhood and apple pie for us we really have no choice except to invest in and excel in international markets because we are a global company. The only way that were going to grow revenue per employee, a critical metric for us and our stock price, is by moving into new markets. (Electronics Manufacturer)

International markets give us that opportunity to grow. The benefits of globalization can be huge and are proportional to the effort expended. Localization is a strategic imperative for not an option if we are to maintain competitive advantage and grow revenues, margins, and shareholder value. (Computing Systems Developer)

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Bringing Home the Localization Bacon International is a growth engine for us. The Web is a big part of that engine that helps us deal with the big picture in any market more sales, more profit, keeping customers happy. (Retailer)

To grow we need to accelerate the processes that it takes to get us into new markets so that we can get a first mover advantage or at least become the smartest mover. After all, were in the business of selling ice cubes. The value of an unoccupied airline seat or unslept-in hotel bed can never be recovered. Its our business to sell that melting asset into as many markets as it makes fiscal sense for us to support. (Travel Agency)

Global Companies Need to Build Brand Wherever They Go

Respondents emphasized that their brands make up a big part of their value proposition. As they push into markets, they must figure out how to provide the right quality of experience and support for core values that they provide their home-market audiences but in a way that makes sense to local buyers. We sell an experience on the Web and in our showrooms as much as we market a high-performance vehicle. We need to get the community around the world to interact so that prospects and owners see our brand as different from our mass-market competitors that lack passion and personality. (Vehicle Manufacturer)

As part of our brand we have honed a set of policies for the safe treatment of our products. We need to offer local language product information that underscores these values. (Chemical Supplier)

The more faith an international client has in our Web site, the more faith that client will have in our company as a whole. Its about branding and building goodwill based on strong customer satisfaction. We know that some of that satisfaction comes from being able to access content in their native language. (Airline)

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June 2002

Bringing Home the Localization Bacon

Global Market Leaders Cut Cost and Time Using the Global Web
Our interviewees view their investment in Internet infrastructure as a way to cut costs and improve processes for customers, employees, and partners. They universally see their Internet-based systems as critical elements of a strategy that will reduce transaction costs, eliminate unnecessary processes, standardize communications, and reduce the cost of servicing customer needs and employee programs around the world. We use an employee Intranet to educate all of our sales staff on consistent sales messages. We provide them tools to match the right product to the customer. Various utilities shorten our sales cycle by letting customer-facing staff answer questions directly. We have freed up customer service representatives by moving to a customer self-service model. This lets us assign our CSRs to more value-add activities that increase the value of a sale. It also lowers our cost by having the customer go to an FAQ for typical problems and resolve their problems. (Computer Systems Manufacturer)

We have used our global Web systems to reduce risk by keeping worldwide staff better informed. We have also used these systems to reduce cost by aggregating our demand for various consumables and services. We use the systems to deliver information to our staff around the world. Finally, we got back the entire cost of our global Web roll-out from what we saved on recruiting costs by using the Web as our exclusive head-hunter. (Financial Services Company)

We have found that customer self-service in our world markets costs a quarter per incident versus $14 if a human is involved or more if its international. That has decreased our headcount needs, and has led to substantial cost take-out in process, organization, and technology infrastructure. (Airline)

Everyone Wants to Cut Costs from their Localization Efforts

For executives that have taken a strategic approach globalization projects, they have found that their work comes under the same scrutiny as any other operational function in their firms. That means that they are under constant pressure to be more efficient year over year. This productivity takes many forms, ranging from centralization of core functions to beating up their vendors for every penny.
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Bringing Home the Localization Bacon Weve moved to centrally managing our core operations, infrastructure, and maintaining standards and guidelines for our brand. Were investing in making localization tasks such as authoring, translating, or proofing content to be interchangeable between internal staff or localmarket agents. Were working hard to improve productivity and eliminate inefficiencies in production, approval, translation and localization processes through standardized and effective workflow and tools. We hope to reduce the time and cost invested in launching and maintaining sites in new markets and speed up our entrance into new language markets through a properly internationalized technical infrastructure. (Medical Device Manufacturer)

Weve streamlined our content authoring and translation processes to move toward greater content reuse. Wed like to develop training materials in one language that can be translated and distributed across regions rather than start from scratch for every region. Besides saving us money, it also gets us into new markets more quickly. Weve started monitoring the decision to translate or localize content and the frequency and changes in criteria used. The earlier that we can subject our learnings to monthly trend analysis, the better for our overall globalization effort. (Semiconductor Manufacturer)

We are developing a single international platform that we can adapt for each country and its individual dealers. This will improve our development efficiency, help us get to new markets more quickly and cost-effectively, and thus increase our flexibility to respond to customer requirements. (Automotive Manufacturer)

Conclusions from Interviews

From our interviews with executives responsible for selling their companies on the importance of globalization and getting or retaining budget, we conclude that: Global implementation has slowed but not stopped. The potential for gaining more business and market hedging outside the United States continues to drive globalization efforts. However, the continuing economic malaise has put a greater burden on globalization advocates and localization practitioners to better demonstrate the value of their
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Bringing Home the Localization Bacon efforts and to cut costs to the bone. Internet technologies have become a core element of globalization. Whether its the customer-facing Web, an internal system for employees, or a broad supply chain, the Internet shoulders the burden of crossborder activity. Companies extensively use net-based systems for branding, customer service, and inter-enterprise communications. Efficiency and cost remain critical concerns. The days of Web wine and global roses have long since passed. Faced with the demand to make their investments pay off, our interviewees talked about enhancing their ability to conduct international business and how they need to improve the underlying infrastructure and localized communications to support these efforts.

Localization Decisions Cannot Be Made in Isolation

The responsibility for global markets is a big subject and crosses many functional units inside a company. The questions of how a firm chooses to enter an international market, whether it decides to go in online or with a physical presence, create a subsidiary or use a distributor, offer its whole product line or just part, do a full or partial localization of products and user manuals, and a host of other questions typically come up in discussions about globalization. No executive makes these decisions in isolation as he takes into account economic news, market conditions, and competitive pressures. He must also take into internal issues such as internal competition for scarce budgetary resources, corporate politics, and shareholder pressure. Some companies understand the dynamics of market entry and the need to build a case for it, but many dont. The management at firms that dont get it falls on either end of a spectrum that is either woefully uncommitted to global markets or convinced that 1.3 billion consumers in China will save the companys bacon. The balance of this report will speak to all contingents, giving executives who feel the need to globalize their operations or marketing some ammunition to fight their budget and resource battles. Psychological warfare. Some of this ammo comprises psychological profiles that will help these global market advocates understand and counter the arguments of xenophobic executives and Boards of Directors. At the risk of being a little too Freudian, this section outlines some commonly found behaviors that you will have to counter. Your challenge
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June 2002

Bringing Home the Localization Bacon is to figure out where your boss fits before you dive into the fray. Global market ratiocination. The second chunk of the analysis provides a set of rationales for global market entry and support, prioritized according to the corner office agendas most frequently encountered by Common Sense Advisorys analysts. A strong business case. In all cases, the underlying them will be the business case. Successful globalization project managers have taken to heart the notion that globalization is first and foremost a business issue, so they treat international market support as they would any other business issue that comes before their Boards or crosses their desks.

The Web Remains at the Heart of Many Globalization Discussions

When these market leaders decide to support a new geography, their intent is to improve service, hedge revenue bets, decrease time to market, and lower costs. In the process they hope to gain more revenue and outmaneuver their rivals. They use an array of channels subsidiaries, distributors, partnerships, and the Internet to reach customers in demographically attractive markets around the world. Many use the Web to publicize their presence in a market, thus employing it as a relatively low-cost way to communicate and conduct transactions. The domestic Web complements physical channels. To serve their customers better and to complement their traditional face-to-face businesses. They offer a wide range of capabilities at their sites, from the basics of product information and extending to self-service and commerce. Almost every successful customer-facing Web site in the States supports marketing efforts, while about half of them let customers self-serve with FAQs and answer utilities. Internally, companies use the same Internet technologies to improve employee productivity and enhance communication with partners in their supply chains. Globalization activities benefit from rigorously defined online investments. The same possibilities and needs present themselves on the global Internet, but most companies havent yet evolved their planning past the win big in new markets part of the equation. What companies are doing online and why theyre doing it is very clear in their domestic markets. Unfortunately, the same executives who can point to success on the Web havent generalized their experiences enough to understand that they should push for the same achievements internationally.
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Bringing Home the Localization Bacon

Domestic Web Prowess Often Fails to Find Its Way Abroad

Many companies have already deployed their second- and third-generation Internet sites, adding large dollops of informative content, focused interactivity, personalization, and one-click navigation, all intended to win customers and keep them coming back again and again. Few firms, though, have successfully deployed even a first-generation international site that does much more than welcome a consumer or business buyer in their own language before throwing them back into the language, currency, and cultural milieu of the U.S. home market. That lack of global experience and implementation explains the hesitation at many firms. Companies have succeeded online in their domestic markets, but they have failed to align their global aspirations with whats driving the allchannels-integrated success of their headquarters business online. More experienced companies that have successfully deployed second-generation online applications at home laid out not only the expected return on their investment that is, competitiveness, new markets, more share but also the means to get there satisfied customers who buy more stuff more frequently. What can we learn from these companies? Success in a given market means doing whatever it takes to convince your prospects whether theyre business buyers or consumers that you mean business. In many cases it will mean adapting successful strategies from your home market for example, personalization for consumers or partner relationship management techniques for business buyers to market conditions. In all cases, it requires localization to market needs, desires, and expectations.

Diagnosing Common Globalization Personality Types

Identifying how your companys budgetary decision makers think is the first step in crafting a convincing argument for more budget or for keeping what you already have. Unfortunately, theres no list of every company with a physical presence in multiple international markets, a raft of successful international Web sites, the business plan they used to enter new markets, and the technical road map on how to get there. Every firm brings its own global experience to the table, along with am understanding of the challenges that made the company push ahead or stop dead.

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Some, like automakers, bring decades of brick-and-mortar experience in international markets to the Web. Others, like online travel reservation companies, bring online selling knowledge but no on-the-ground expertise. Consider two extremes planetary newbies and the globally experienced with various permutations. As you read, diagnose your companys personality type. Understanding how people think and what motivates them will help you in crafting your business plan for globalization.

Planetary Newbies: Companies Still in the Starting Blocks

Maybe you work for a global organization that has had little experience with the Web, your management has not been globally enlightened, or its too riskaverse to do much more than acknowledge that its not tackling the growth potential of international markets. Three archetypes stand out. Some firms harbor delusions of global presence. Such firms understand that theres a global market, but see no need to do anything different to meet its needs. They are satisfied with the current level of business coming from abroad, expect their customers to speak English or pay in dollars, and feel no competitive pressure to change business practices to accommodate non-Americans. Other firms are aware but not there. Few executives miss that the Webs www stands for worldwide. However, its not clear that have made the leap to realize that a prospect anywhere can now test their value proposition against their competitors. The proof of this is that repeated studies of top U.S. companies show that about half to two-thirds arent investing to turn foreign visitation into more business or more satisfied customers. Still others see plenty of business at home, so why leave? There is a contingent that can feel justified in staying at home. Its hard to argue with someone who says that meeting the needs of over 280 million consumers in the United States is business enough for anyone. The same holds true for other large-population markets like Japan (126 million), Germany (83 million), or China (over 1.25 billion).

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Bringing Home the Localization Bacon

Personality Type

Treatment Plan

Globally delusional

Recognizing that youre delusional is the first step in the cure if you think that your home market language and currency is enough today, what will you do once you have saturated your domestic market? What will you do when you find your major rivals mining lots of new business from countries that you ignored? Ask your IT department to start measuring your international traffic and try to gauge the mindshare or sales that you lost because prospects couldnt understand your value proposition or complete a transaction. Few firms collect as much data about Web traffic as they should, whether its about fellow citizens or foreigners visiting their sites. The data is there to collect, analyze, and act on. Few CEOs at publicly traded companies would feel comfortable addressing shareholders with statements like you know, were happy right where we are. Sales are about as high as wed expect them to be, and we dont pay any attention to our competitors. Opining that your domestic market is big enough doesnt hold water for very long. Competitors domestic and international will strive to take away share.

Aware but not there

Stay-at-home

Table 1: PersonalityTypes of Companies Still at the Globalization Starting Line Source: Common Sense Advisory, Inc.

Globally Savvy Firms: Companies Cut the Domestic Umbilical Cord

As the planetary newbies evolve, some will see an opportunity to use the Internet to serve their foreign customers better, increase their online business in new markets, or push their brand around the globe. Everyone needs the ammunition to convince the budgetary powers-that-be that globalization will enhance shareholder value. Some of that ammo will come from the tales of successful companies that have proactively sought to extend their reach to consumers and business partners around the world. We see a recurring pattern of successful firms from the high-tech arena computers, aerospace, and consumer electronics all of which offer products that cross national boundaries and cultural preferences. However, these globally aware firms, too, represent a spectrum of evolution. In working with companies that have burst out of their domestic markets, we see: Toe dippers. These firms typically react to some event like a demanding national distributor or an aggressive competitor and thus adapt product, marketing, or Web sites to local market needs. Such localization
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June 2002

Bringing Home the Localization Bacon tends to be incomplete, involving either limited translation of some content or an ability to deliver via local shippers. The prototypical toe dippers often find themselves entering a national market, but without conviction, budget, or management support.

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Stubbed toes. A highly visible procession of well-known brands entered international markets in a haphazard fashion. They might have allowed local business units to set their own online agendas, usually divorced from the corporate brand, message, and look and feel. The net result is a fragmented international presence with very little leverage of the assets that make these companies such a powerful force in their domestic market. Nonetheless, they continue investing internationally but not without hand-wringing concern about the cost, the opportunity cost, and the ultimate return.
Treatment Plan

Personality Type

Toe dippers

If youre a toe-dipper, some structured research like focus groups and interviews with customers and prospects will probably show you that youre leaving money on the table and spending a lot more money than you have to due to inefficient translation and localization processes. If you have resources such as local staff in a market, work with them to find some assistance with conducting such research. If you dont have staff in-country, look to marketing and public relations agencies for help in setting up such focus groups. One thing to watch out for: In hard economic times, proof that you are wasting money through inefficiency or that could be earning more might result in a knee-jerk reaction to do eliminate international efforts rather than trying to improve or extend what youve been doing by accident. Executives at many such companies wrap themselves around the axle of indecision and regret. Convinced that theyre spending far too much to get much too little, they do nothing. Its time to grab the tiller and let everyone know where you want to be globally even if you decide to hold the course for now. Any decision to enter a market requires a systematic analysis of what exactly are your products and how universal or locale-dependent they are. Failure the first time around is par for the course. If your first forays dont work out, analyze the misstep and figure out how to do it right. Remember that this is a business issue first and foremost.

Stubbed toes

Second bouncers

Table 2: Personality Types of Companies that Are Actively Localizing Source: Common Sense Advisory, Inc.

Second bouncers. Some companies created international sites in response to real or perceived market needs, often spending enormous amounts of
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Bringing Home the Localization Bacon money and manpower creating manual and jury-rigged processes to make their corporate message, brand, and product offerings consistent worldwide. While they failed the first time around to meet customer or market needs, they succeeded on the second bounce. Now that youve finished playing amateur psychologist, its time to apply your learnings to the job at hand that is, putting together a case that will convince your management that your plans for international market entry or continued support will further your companys goals and increase shareholder value.

Seven Most Effective Arguments for Globalization Budgets

What rationale for going global will be most compelling to the holders of the budgetary purse strings? Look to the masters, a small but growing cadre of multinational firms like General Electric, Millipore, and Oracle that have evolved their corporate Web sites into critical channels for communicating, collaborating, and transacting with customers, partners, and employees in key markets around the world. They have transformed their flashy Internet sites into an integral element of the channel mix they use to sell to and service customers worldwide. This more ambitious group seeks to become truly international businesses, looking to achieve big returns on their ambitious efforts in revenue, branding, and customer service. When its time to make the case for a bigger budget to enter international markets, here are seven tried and true reasons (see Table 3) that go beyond the top-of-mind reasons like making more revenue, bending to the demands of the Dow or the FTSE, or knowing what their competitors say they are doing.

Reason 7: Increase Revenue and Share from Global Markets

Revenue justification for international expansion can take a lot of forms. Here are just four that other companies have used to justify increased attention to the needs of international buyers. Meeting a legal requirement. European Union law mandates that some communications must be in the language of the buyer. Canadian law permits the use of both English and French in any forum, while Qubec law gives a primacy to French. Regulation aside, strong cultural and

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political preferences in Qubec argue for making a Canadian market Web site available in both languages.
Reasons 7 6 5 Increase revenue and share in global and domestic ethnic markets. Growth will come from selling into new markets and reaching new communities in existing ones.

Beat competitors. Market reconnaissance and quick reactions to competitive parries will be critical as you extend your firms reach. Heighten brand awareness. Your brand may be all that separates your company from being seen as a commodity. Make sure that key world markets know your brand and what it represents
Shorten time to market. You may not see much value from putting your products online, but you could see enormous value in Internet-enabling internal systems and hooks. Look for internal and business-partner relationships that could improve your effectiveness. As you extend your supply chain, it will become multilingual. Improve collaboration. The efficient flow of information and knowledge within and between companies will be a major differentiator between you and less data-savvy competitors. Lower the cost of doing business. Taking expense out of critical processes and customer service will improve the balance sheet, thus raising the return on global investments Focus on your customer. Satisfying customers and making each interaction more profitable will mean more profit and pleased shareholders.

Table 3: Seven Reasons to Continue Investing in Localization Source: Common Sense Advisory, Inc.

Reason 7: Increase Revenue and Share from Global Markets

Revenue justification for international expansion can take a lot of forms. Here are just four that other companies have used to justify increased attention to the needs of international buyers. Meeting a legal requirement. European Union law mandates that some communications must be in the language of the buyer. Canadian law permits the use of both English and French in any forum, while Qubec law gives a primacy to French. Regulation aside, strong cultural and political preferences in Qubec argue for making a Canadian market Web site available in both languages. Hedging revenue bets. Planners at successful global companies feel that theyve done better than their domestic counterparts exactly because theyre international. Besides being able to sell into markets around the world, they can use their multinational portfolios to smooth the peaks and valleys of individual markets. For example, many large manufacturers find that they must pay close attention to world markets,
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Bringing Home the Localization Bacon recognizing that each region comprises a major chunk of its revenue. That way, when the Japanese economy slumps, they might increase its investment in healthier markets like Europe or Latin America that might be firing on all cylinders. Sales cycle compression. Some early movers have employed the global Web to compress sales cycles across channels. One manufacturer of sophisticated electronic products, for example, operating online in over 20 world markets. It its online systems to duplicate the sales engagement model that it employs in its face-to-face marketing. Online, prospects register for events, providing more detail that feeds the companys sales profiling tools. This lets the company promote anonymous users to suspects to registered users, which then cross the online divide to a human sales representative. This personalized approach yields better conversion rates and more loyal customers, ultimately increasing profitability. Baldfaced pitch for more business. More revenue is a market that doesnt typically carry much weight in a down market where any spending is suspect. Online, firms like Amazon and Travelocity have the luxury of identifying markets whose citizens buy the most books or travel more than anyone else do. Automakers know that they wont sell many cars online, but they do know that if they make more product information readily available online in key markets that prospects will be more likely to buy their cars.

Reason 6: Beat Competitors to These New Markets

You can use the global Web to get into new markets quickly and establish a strong presence before your competitors do. If your archrivals are already in key international markets, you can use the global Web to initiate an offense more quickly than by any other channel. Investing smartly in a localized presence, you can look, feel, and act more local than some less Web-centric, in-country rivals. Your counterpart over at your longtime competitor is plotting to take advantage of these same opportunities. This familiar old foe has decided to unwrap a new killer program for Latin America. Meanwhile, rivals that you dont even know about from other markets are figuring out how to beat you to the punch, both internationally and in your own domestic ethnic markets.

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Everyone remembers how Amazon.com sped past established booksellers to gain critical share in the early days of the Web. Even with the burst bubble of dot-comdom, companies like Barnes & Noble and Bertelsmann are still trying to catch up to Amazons share. Others, like Borders, have thrown in the online towel and named Amazon its Web distributor. The Web still offers this quick deployment of a sales channel.

Reason 5: Heighten Brand Awareness

Brand is what makes a can of Coca-Cola worth US$1.00 and Sams Cola only US$0.25. Much of the stock market value of companies like Coca-Cola, Levi, and Nestl derives from their brands, rather than from the factories they own. With such enormous equity tied up in brands, companies both large and small use the Web to increase awareness of brands and the products associated with them into new markets around the world. Over the last few years the top ten Web sites have accounted for upwards of 60 percent of all traffic. These higher prices and online traffic come from the goodwill associated with a brand, a hard-won value resulting from the trust that a strong brand engenders among its customers and partners. Projecting a brand into new markets can increase the equity associated with it, at the same time that this global thrust puts the brand itself in jeopardy. Most businesses that call themselves global are mere pretenders, not having done as well outside their home markets as they claim. Web channel initiatives bring this to light pretty quickly. Building a brand often takes decades its about trust and promises. On the Web, visitors still go to names that they know and that evoke value, responding to Max Factors claim that in the factory we make perfume. In the department store we sell dreams. With branding budgets in the hundreds of millions, companies want to see their efforts extend beyond the small patch of their headquarters country. They want to see brand attributes correctly and consistently represented in each of their target markets. But global companies all too often rely too much on in-country managers to handle branding issues in each market who typically drop the ball on corporate branding constancy in favor of their wellmeaning but under-funded and often under-thought hometown efforts. On the domestic front, the upside of using the Web to push your brand is getting through to ethnic audiences that might not be exposed to your target media like big city newspapers.

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Bringing Home the Localization Bacon

Reason 4: Shorten Time to Market

To continue reaping the benefits of improved supply chain automation, about half of U.S. consumer goods companies said they planned to increase their IT budgets in 2002. These Internet-based supply chains allow companies to integrate their product, component, and data providers into a rich collaborative flow of shared, current information. Multinational companies will extend their supply chains into other countries to accelerate their ability to service customers, innovate, and beat competitors. Because of the Web, airlines can roll out and publicize competition-motivated revisions to its service offerings much faster through its Internet sites than it can through updating and publishing hardcopy collateral and price lists. For a U.S.-based medical device maker, the Web has become the primary means of getting product information to its market, so closing the gap between delivering a product and marketing it is a critical element of its worldwide strategy. Of course, the benefit comes only from having products that can be launched into multiple markets and that have international appeal. One telecom equipment manufacturer watched its competitors in telecommunications products in languages that it could not support. When it did choose to enter a new market, the company took an ad hoc approach to localizing its products, losing precious time in introducing its products outside its North American home base. To match its more adaptive competitor, this firm plans to make global marketing requirements part of the initial design stage of every project. Richer dialogue with buyers fosters better incoming data for product development and market research scoping as companies extend their ambitious domestic supply chain applications to include international providers.

Reason 3: Improve Collaborative Efforts and Knowledge Management

Much of the benefit of investing in globalization will come from improvements in moving information around internally to the people who need it and sharing this knowledge with your sales channels. This inwardfacing effort may fall under the banner of knowledge management or enterprise information portals (EIP), both of which are still in their infancy in most companies. A medical supply firm uses its global Web to organize branded materials, digital assets and other files though an online repository for reuse by local
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sales representatives and marketing groups. In Europe, it leverages the same technology to communicate with its physician audiences. In Japan, where dealers are its primary buyer, the firm is developing an Extranet to give its distributors access to digital assets and product literature for reuse plus customer-specific data like inventory, past purchase history, and payment details. The company figures that these online capabilities will deepen it relationships with doctor-buyers and dealers. A European auto manufacturer is linking each of its dealerships in different countries to the respective national corporate site. This connection will allow each dealer to present product information, news, and special offers to prospects and customers. The company also plans to answer consumer inquiries within one business day, a process that previously took much longer due to the silos of information inside the company and in each country unit.

Reason 2: Lower the Cost of Doing Business

Once you decide to do business internationally - whether customers find you or you actively seek them out - youll have to market to your new audience, sell to them, and support them after the sale. Early movers have found that these must-do components of commerce cost out cheaper on the Web. Take the cost of market entry. Seeing international market demand for its clothing, catalogue retailer have saved marketing dollars by launching Web sites before printing their branded paper catalogue, a publication that can account for about 40 percent of operating costs. Besides price, catalogues sent to a rented list had low conversion rates. Small sums invested in advertising gets traffic flowing to sites in international markets. As those international sites evolve their own followings, the company can follow up with a printed catalogue - sent to previous buyers who are more likely to buy again. As online penetration increases around the world, demand for customer service in the language of the international or ethnic buyer will rise in lock step. This localized information is a basic cost of doing business, but can be quite costly as companies staff call centers to meet the demand. You can use the Web to deflect much of this voice traffic to away from expensive call center reps to online resources like Frequently Asked Questions (FAQs). Ideally, prospects can review product offerings, safety advisories, technical data, and competitive descriptions on their own, allowing sales and customer service representatives to focus on higher value-add activities.

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Bringing Home the Localization Bacon This online support can dramatically reduce costs and staffing levels in call centers. For example, researchers have found that costs for companies offering local language and self-service capabilities drop substantially when buyers serve themselves rather than speaking with a costly customer service representative. Online customer self-service costs a business only US$1.00 per customer inquiry versus US$33.00 for each call handled by a customer service representative. Applied to even thousands of interactions, these savings can be huge. A service-oriented raw materials supplier can offer higher service levels to key customers while it serves a wider customer base - all without additional resources. This lowers the cost of serving international customers 24 hours a day because fewer customer service representatives are needed to service calls during what would be - without this international business - offhours. Over time, this supplier expects customer satisfaction to improve, a crucial driver given the typical five to ten times cost of acquiring a new customer over retaining your best customers. The benefit of speaking the customers language extends deeper into the buying cycle. Improve the look-to-buy ratio. In one study, nearly half of the orders placed by people living outside the U.S. went unfilled due to process failures. Due to language difficulties and differences in address formats, companies sent orders to the wrong address or shipped the wrong items thus driving up both shipping and telecom costs as customers tried to get what they ordered. Transferring support and sales inquiries to the Web. You can reduce the cost of sale by having business customers and partners serve themselves when they buy upgrades, add-ons, accessories, training, services, or documentation. Further, by automating the buying process, the company hopes to cut costs and speed up delivery by eliminating the manual administration processes and checks that accompany orders taken by error-prone humans. Improve back-office processes. Behind the scenes companies can save large amounts by improving their supply chain and materials procurement systems. Another automaker found that it had saved more than 17 percent of the total cost of parts purchases since it began on-line bidding processes for car batteries, fasteners, stampings and water shields. The company cut the time it took to send production program information to suppliers from 14 days to one day without decreasing the amount of data. The company is now working with suppliers to
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rationalize its data and document formats into well-defined structures using international formats, allow information to be translated, and thus bring a wider range of suppliers into the auctions. Industry marketplaces such as Covisint, the online trade exchange, and initiatives such as RosettaNet for the computer industry will benefit from efforts to standardize formats and interfaces to allow suppliers and buyers from around the world to participate.

Reason 1: The Customer Is at the Center of Everything

All of the benefits of going global ultimately come down to satisfying the customer, whether its a consumer buying a travel package or a procurement clerk buying ten tons of plastic. While many customers outside the U.S. market are fully capable of meeting your demands for them to speak in English and spend dollars, that wont be the case forever. If global business is part of your corporate agenda, dealing with international customers on their terms should be a top priority. Successful companies will extend their personalization schemes to be more sensitive to the realities of individuals living in other markets.

As You Make Your Budget Case

These possible returns on your globalization investment will not be the same or even applicable across your enterprise. In fact, they will be different from company to company, from project to project within a company, and even from market to market for the same company. Returns will also vary over time, as a companys needs may change over time from simple market entry to a Jack Welch-like desire to be number one or two in a given market. In all cases, what smart globalization advocates will do is pick the reasons that resonate with their management and make the case accordingly. With those caveats in mine, here is some summary evidence for these business-critical reasons for globalizing and using a multilingual-enable Internet to support your efforts. Increase revenue and share in global and domestic ethnic markets. Know why youre entering any given market. A good way to do this is develop strong rationale integrated with business reasons, backed up -by metrics, and adequately supported with a realistic funding plan. Beat competitors. Invest in competitive reconnaissance. Enlist sales reps and trade partners for signs of threats beyond your immediate horizon.
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Bringing Home the Localization Bacon Figure out which markets will be most important to your company - and your competitors - and plan accordingly for the right level of support. Heighten brand awareness. Analyze your corporate branding standards and practices in the context of your global markets. Listen to your country units and incorporate their concerns and needs in your plans. Shorten time to market. Invest in technology infrastructure to make it flex better for international needs, and process improvement to speed the flow of multilingual content through your processes. Improve collaboration. Get involved with the collaborative software and knowledge management activities within your company. You can ride these funded initiatives to a more collaborative Intranet and internationally enabled supply chain by expanding their horizons beyond your headquarters. Lower the cost of doing business. When developing FAQs and other self-service systems, build out the same capabilities in your key international markets. Invest in technology and process enhancements so that this information is up-to-date and consistent.

Coming up with the arguments for going global is only the first step. The next is marshalling the numbers that gives teeth to revenue enhancement, cost cutting, better service, and improved look-to-buy ratios. When Common Sense Advisory returns to this topic later this year, it will provide concrete information on quantitative data and the best practices for ROI analysis of leading corporations.

June 2002

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Around the World with Common Sense

In this section of our report, we share things that we observed or discovered in the course of our research, travels, and interactions with localization practitioners, vendors, experts, and other hangers-on. Every now and then we throw in some industry analysis, as in the first item about the Trados acquisition of Uniscape. ******* Trados gobbles up Uniscape. Late last month translation tool supplier Trados bought Uniscape, a struggling globalization management system (GMS) provider. Characterized by both parties as a merger, we believe that this acquisition will accelerate consolidation in an industry that needs some help. Long the bastion of mostly small- and some medium-sized enterprises, the translation technology and service industry has had a difficult time both communicating its value proposition and becoming a strategic marketing and development partner to its customers. In this context, the Trados embrace of Uniscape was inevitable. Like most suppliers of desktop software tools, Trados saw that it must become more strategic to its customers, lest its standalone offerings be marginalized by other technology or service solutions. Trados decided that the quickest path up the enterprise food chain was to buy rather than build. In todays challenging market, Trados said that it had the pick of the litter and analyzed how well Global Sight, Idiom, and Uniscape fit the bill. Trados management said that Uniscapes multi-user, server-based translation workflow backbone most closely met its needs. Interestingly, Uniscape-archrival Idiom claimed that it never got the acquisitionsniffing call from Trados. Why not? We think its because Idiom had just completed a deep integration with Atrils Dj Vu, a Trados rival. Over at Uniscape, the management had a different problem who wants what we have to sell? The company has worked through several business plans, each time coming to realize that it lacked both the scale as an enterprise supplier and a comprehensible product line needed to get its foot into many corporate doors. Like its GMS brethren Idiom and Global Sight, Uniscape had recently turned its focus to linguistic tools such as server-based translation memory, thus putting it on a collision course with translation tool suppliers like Trados.

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Bringing Home the Localization Bacon Like many small companies struggling to take off in an uncooperative market, it was running out of runway. Theres only so far that the $220 million (thats right, 220 extremely large bills) invested in this category from 1999 through early 2001 will take you. In a report early next year, we will discuss with localization buyers and practitioners why this category hasnt caught on. ******* Hmm, maybe theres a book in that title? The CEO of a translation services firm told us that his second quarter could be characterized as Business without Orders. ******* Note to self: Get a vendor badge or just stay at home. At the March LISA conference in lovely Crystal City, a soulless section of greater Washington, D.C., the audience was thick with C-level executives according to the managing directors introduction, most of the audience bore the title of vice president or higher. Unfortunately, as has been the case at too many industry conferences, the lions share of those execs were from localization technology and service suppliers. Pity the handful of actual buyers who couldnt go to the rest room without being hounded by vendors. But the most egregious offense came in the kickoff speech for the conference when Convey Softwares newly minted CEO used her speaking slot to deliver a sales pitch to her assembled competitors. Combined with speakers extolling the virtues of doing business in Kyrgyzstan, Romania, and Latvia, were wondering about whether well sign up for the next conference in Heidelberg. ******* But at least LISA had its conference. Not so fortunate was the Globalisation Management Strategies Conference (GMSC). After conferences in 1999 and 2000 that raised the level of discussion at industry conferences and included a large percentage of practitioners, GMSC postponed its May 2001 conference to November and then again to this spring. Weeks before the rescheduled conference, it pulled the plug again the victim of declining travel budgets, decimated educational funds, and the continuing post-9/11 concern about travel. Maybe next year? *******

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Reading the z leaves or zed on arrival. GMSC has been quite religious about its de-zedification of words like localization and globalization. LISA, on the other hand, has been moving away from its own Localisation and favoring (favouring?) the American ization suffix. Our personal favorite of English miscegenation happened in South Africa. Someone asked after a presentation in whether you had a stiffy with your presentation. After a quick think, we realized that our lovely interlocutor was asking for a copy of the speech on a floppy diskette. ******* Chevy Nova. No va. Get it, ha-ha! Tired of that hackneyed apocrypha? So are we, but relief is on the way. In research for an SAE conference speech on multilingual communication, we ran into some sophomorically entertaining but actual examples of product names. First off, theres the Mitsubishi Pajero. Its not bad until you realize that its Spanish slang for someone whos a frequent onanist. Then theres the Nissan Moco, a tiny little car named for the Spanish slang for nasal mucus. As a miniscule city car, its of course advertised with the claim that El moco lo puedes guardar en cualquier sitio (the snot you can keep anywhere). Finally and this one is as accessible to non-hispanohablantes as the Nova ever was is the Mazda Laputa, advertised as Laputa ha mejorado su seguridad y ampliado su interior... Cuerpo diseado para resistir impactos frontales. Of course it has improved safety features and an upgraded interior, not to mention a body designed to withstand front collisions. Elsewhere in the advertisement we learn that the Laputa has attractive styling, excellent maneuverability, and easy handling. Wed expect nothing less. Are these names the result of conscious irony or ignorance? Nolent contendere.

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Bringing Home the Localization Bacon

About Common Sense Advisory

Common Sense Advisory, Inc. is an independent research firm committed to objective research and analysis of the business practices, services, and technology for localization. With its buy-side research, it endeavors to improve the quality and practice of international business, and the efficiency of the online and offline operations that support it. To find out more about our research and how to subscribe: E-mail us info@commonsenseadvisory.com. Visit www.commonsenseadvisory.com/en/subscribe. Call +1.646.286.7975.

Future Research
Common Sense Advisory seeks interviewees from the community of people involved in building business applications for international use. If you would like to be interviewed or have clients who would like to share their experiences, please e-mail us at info@commonsenseadvisory.com. We anonymize participants and hold all information in the strictest confidence.

Copyright Information
Published and Copyright 2003 by Common Sense Advisory, Inc. All rights reserved. Common Sense Advisory, Globa Vista, Quick Take, and Technical Take are trademarks of Common Sense Advisory, Inc. All other trademarks are the property of their respective owners. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher according to the policy described at www.commonsenseadvisory.com/en/citationpolicy.html. Information is based on best available resources at the time of analysis. Opinions reflect the best judgment of Common Sense Advisorys analysts at the time, and are subject to change.

June 2002

Copyright 2002 by Common Sense Advisory, Inc. Unauthorized Reproduction & Distribution Prohibited