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SDL Strengthens Global Information Management by Buying Tridion
Posted by Donald A. DePalma on April 24, 2007  in the following blogs: Translation and Localization, Web Globalization, Business Globalization, Technology, Interpreting, Market Data, Global Marketing, Best Practices, Supplier Business Issues
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Nearly two years ago SDL bought Trados in the first major consolidation in language-related technology this decade. Today SDL announced a far more strategic move when it said it would buy Amsterdam-based Tridion for 55 million in cash and invest another 14 million in the business. This values Tridion at 2.6x revenue, a typical software industry multiplier. We think this is a market-changing acquisition:


  • SDL moves up the food chain into real information management. Without Tridion, SDL's global information management (GIM) capabilities start very late in the information life cycle -- when the content is fully baked and ready for translation. Tridion gets SDL into the show at the very beginning -- when the CIO is involved, when information architectures are being discussed, and when products worth hundreds of thousands of dollars are being sold.

  • SDL enters the CMS space with a top-shelf product. Tridion's R5 consistently ranks in our analysis as one of the most global-ready web content management systems. The SDL-Tridion business unit will sell CMS solutions and integrate R5 with SDL TMS. Tridion's executive team committed to staying with SDL for 2 years, thus ensuring continuity and execution. The companies began cooperating several years ago on work they did for Canon. More recently they announced tighter product integration that we dismissed as a bit of a Barney ("I love you, you love me") due to limited specifics -- now we know why the February news was so vague.


  • The companies share that old-time XML religion. Tridion has been built on XML from its start in 1999. More recently, SDL began running with the XML message. This commonality of message and architecture has great potential for integrating CMS, authoring driven by translation memory and terminology repositories, and smart automated translation in mainstream workflows. A caution: SDL has built open interfaces before, but restricted access so that only its own client software could get in. The company has a great opportunity to build an ecosystem around XML and Tridion; it must resist the temptation to make it proprietary.

  • SDL overturned the conventional wisdom (including ours) for this market. In 2000 we speculated that it was only a matter of time before a CMS supplier saw the value of translation management technology and bought an Idiom or Trados. None of the big CMS players believed in the globalization opportunity and didn't buy. With more companies recognizing the importance of an online global presence for branding and market expansion, Tridion integrated with one of the better translation management systems positions SDL well for the next wave of website globalization.


Of course, such a brilliant strategic move leaves some folks on the sidelines. We expect further consolidation and some major changes in strategy as the globalization ecosystem shuffles in reaction:

  • Technology partners. For SDL, having and selling a web CMS solution won't go down well with partners like Day, Interwoven, RedDot (Hummingbird), Vignette, and XyEnterprise. Tridion wasn't as far along in partnering with TMS suppliers, but it was reportedly deep in discussions with SDL nemesis Idiom Technologies.


  • Language service providers. SDL has upped the ante for LSPs. By buying a world-class CMS with some notable successful international implementations, SDL moved the sale of services further up in the decision chain. The company also distanced itself from those pure LSP competitors -- it can now boast to financial analysts and equity markets that it is really a technology company and further pump up its stock.

  • Hybrid LSPs -- those with services and technology. Archrival Lionbridge, which made its bets on application development and maintenance in India and China, will find increased pressure to open its translation workbench to non-Lionbridge projects -- and even to productize it for sales divorced from its services. Translations.com and Welocalize, the most avid buyers in the market, could join this new arms race by buying up another globally aware CMS like Day Software (US$15 million in revenue last year). We expect that this news upset planning sessions at Sajan and the thebigword, companies with very good technical solutions but not enough feet on the ground to generate the bump in revenue that companies would want.


We should note that the biggest difference between this acquisition and that of Trados is that there is no conflict of interest. It is perfectly legitimate and it makes all the sense in the world to tie the sale of a CMS with language services. The problem with Trados was the perception that SDL always competed against its clients, netting an unfair advantage.

The bottom line: This acquisition puts globalization on the main stage of content management. With R5 added to the SDL arsenal, buyers will have a world-class, world-ready CMS with fully integrated translation management capabilities to consider for their global website deployments.

 

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