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Lionbridge Protects Its Connectivity Strategy with Purchase of Middleware Provider
Posted by Donald A. DePalma on October 14, 2014  in the following blogs: Technology, Translation and Localization, Web Globalization, Market Data
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Last week Lionbridge announced that it acquired Clay Tablet, a supplier of software that integrates content management systems (CMSes) with translation processes and technology. Lionbridge said that its new acquisition would operate as an independent company. We spoke separately with Clay Tablet founder and CEO Robinson Kelly and Lionbridge’s Chief Sales Officer Paula Shannon to find out what they’re planning. 

First, let’s look at the deal itself. Clay Tablet is a small software company based in Toronto, Ontario. It has fewer than 50 employees, with revenue “in the millions of dollars, rather than the tens of millions,” according to Kelly. Well-known brands such as Herman Miller, Honda, Nikon, and SAP use its technology to manage global content flows. Lionbridge, whose nearly half-billion dollars in revenue makes it the largest commercial provider of language services, did not disclose how much it paid for Clay Tablet. However, it did say that the acquisition will not affect 2014 revenue and will be “modestly accretive to earnings in 2015, including minimal integration and acquisition costs.” In other words, Clay Tablet will not add enough to Lionbridge’s revenue that would cause financial analysts to take notice.

So if not to add revenue, why did Lionbridge buy Clay Tablet – and why did it decide to let the company operate independently? And with so little money involved, why should anyone care about this acquisition? Common Sense Advisory sees a few reasons behind the purchase – and they’re all issues faced by other LSPs targeting complex content-centric enterprise and customer experience (CX) applications:
  • It supports interoperability with a wide range of systems. According to Shannon, the vast majority of Lionbridge deals involving CMSes – such as Adobe Experience Manager and Sitecore – use Clay Tablet to link those systems to its translation services. Most enterprises employ a broad array of systems of corporate record and social engagement to run their businesses – and many need to be offered in multiple languages. Lionbridge gains control over the leading middleware supplier for connecting those content sources to its own Freeway managed service and a variety of competing translation management systems (TMSes) and translation workflow environments. 
  • It lowers translation costs. The decade-old mission of translation management has been to eliminate humans from tasks that should be automated, restricting their involvement to areas where they can add value such as high-quality translation, domain specialization, or stylistic enhancement. Clay Tablet’s translation request broker is software that supports connectivity between multiple systems. Shannon told us that, “The transaction cost of moving files around often exceeds the actual cost of a translator’s time.” Developing its own connectivity software would have cost far more money and taken years to reach the point where Clay Tablet is today.

  • It enhances Lionbridge’s relationships with CMS providers. Not having its own content management system puts Lionbridge at a competitive disadvantage in some accounts. Four other LSPs near the top of our list of the 100 largest providers offer their own CMS, integrated with translation management – TransPerfect (#3 on the list), SDL (#5), STAR (#6), and euroscript (#7). Clay Tablet boasts strong relationships with the major CMS providers – ownership means that Lionbridge can bid a more compelling content management story against these rivals. For these deals, Lionbridge becomes a one-stop shop in place of the joint selling and two-license approach that it offered with Clay Tablet prior to the acquisition. 
  • It was a preemptive purchase. With the growing amounts of cash flowing into the translation sector, it was only a matter of time before some company decided to buy Clay Tablet. Given its dependency on the technology to support its growing practice in marketing-oriented content, Lionbridge did not want Clay Tablet to fall into the hands of a competitor. Which competitors? Clay Tablet currently supports connections between leading CMSes and Lionbridge’s own Freeway, SDL’s TMS and WorldServer, SAJAN’s Transplicity, Smartling, Welocalize’s GlobalSight, Wordbee, and XTM.
Will this independence actually play out? In statements sure to be questioned by the market, both Kelly and Shannon emphasized that the company will remain independent. Kelly claimed that, “We’re still neutral – the company, the logo, the brand stays. When we’re working with SDL or VistaTEC, it will be just us without Lionbridge. There will be a wall between us and Lionbridge.” Shannon confirmed that approach, but said that Lionbridge would white-label the Clay Tablet connectors that it needed for its business and work with the company selling integrated deals. She also said that Lionbridge will bend over backwards to keep the trust of Clay Tablet’s customers and partners. 

How confident should LSPs and language technology vendors be in these assurances? It should be apparent very soon from its actions and contracts whether Lionbridge will actually allow Clay Tablet to work with its competitors – and whether rivals feel comfortable with a Lionbridge-owned middleware company. We are sure that most competitors using the technology today would welcome an ironclad commitment to this neutrality. However, we assume that most have already begun reviewing alternatives. During the year or two that it takes them to make their decisions, the behaviors of Lionbridge and Clay Tablet will determine how many of the current deployments stay active. If users are not comfortable with what they see, the separate Clay Tablet brand will fade away.  

In any case, owning Clay Tablet ensures Lionbridge's control over its connectivity future. What Clay Tablet gets is scale and distribution – and the increased cash flow to allow it to improve its offerings. If the company can serve four masters – and Lionbridge allows it to do so – buyers, LSPs, translation tech vendors, and CMS suppliers will benefit from a stronger Clay Tablet.  


 

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