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Welocalize Enters the Translation Management Fray
Posted by Donald A. DePalma on May 29, 2008  in the following blogs: Technology, Market Data
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This week, Welocalize told us that it had purchased Transware, an Irish LSP that owns some vintage translation management (TMS) technology. We checked in with CEO Smith Yewell, who told us that the acquisition brings more revenue, production, and, most importantly, that TMS engine.
  • More revenue. As is always the case with privately held LSPs buying smaller firms, Yewell was somewhat guarded with financial details. However, he did acknowledge that the deal closed in the usual range (0.7 to 1.2 times revenue). Last year, Transware reportedly booked more than US$10 million in revenue, which would provide a sizable bump to Welocalize's 2007 revenue -- see our newly revised "Ranking of Top 25 Translation Companies."
  • More production. Welocalize picks up Transware's production facilities in Dublin and Sligo (Ireland), adds to its e-learning competence, and brings in some brand-name clients like Dell, GlaxoSmithKline, John Deere, Lowe's, and SkillSoft. With its rich media and loads of content, e-learning presents a great opportunity for language service providers to grow their businesses beyond websites and technical documentation.

  • Translation management technology. As part of the deal, Welocalize gets the Transware Ambassador (né GlobalSight) technology. Along with Idiom and Uniscape (subsequently Trados GXT), GlobalSight was one of the first suppliers in the misnamed "globalization management" sector. GlobalSight was absorbed by Transware in April 2005, right around the same time Lionbridge acquired its flagship Logoport technology. At the time, we praised the Lionbridge purchase while panning the Transware deal, noting that "many agencies remain nervous about acquiring technology from a competing language services provider" and that "Ambassador will find few buyers among language service providers." As we predicted, Transware had as little success selling its TMS as did GlobalSight in its 7 years of marketing it.
Yewell confirmed our suspicion that this orphaned technology drove the acquisition. In October 2007, Welocalize was named a Platinum Partner in Idiom's LSP Advantage Program, a few short months before SDL acquired Idiom. As many of Idiom's 3 dozen LSP partners have told us, they felt very uncomfortable buying their core technology from a competitor. Some LSPs have come to grips with this issue, as demonstrated by RWS Group's announcement this week that it had committed to using SDL's translation automation products. Before trothing his future to Idiom, Yewell saw the potential downside and sale of his strategic supplier -- to wit, the venture capitalists were nearly 10 years into their investment and getting anxious -- but went ahead with using WorldServer, figuring that the sale of Idiom was still some years out. Whoops! But Welocalize wasn't the only company surprised by the event or the timing.

Why does Yewell think his experience with Ambassador will be any better than Transware's? He has more money and a strategic vision. Compare Transware's acquisition of GlobalSight to similar purchases by Lionbridge and Translations.com. The first thing Transware did upon acquiring the GlobalSight asset was to distance itself from the technology by offshoring development to China-based Augmentum. Upon being made redundant, the GlobalSight Ambassador development team in Colorado decamped for Translations.com, where they began working on the TMS that Translations.com had acquired from Convey Software (originally eTranslate). Translations.com invested heavily in the engine, yielding its GlobalLink product, and it now sits at the center of an ambitious technology division to which it recently added Alchemy Software Development. Similarly, Lionbridge made Logoport the core of its platform strategy for Freeway. In stark contrast, struggling Transware failed to invest in Ambassador to keep it competitive, thus displeasing its very few customers and hobbling its competitiveness.

Despite the years of minimal investment, Yewell thinks that there's some good technology left under the Ambassador hood. He promises that Welocalize will spend the money that it takes to make Ambassador a contender -- not just as a captive solution for Welocalize service customers, but in the commercial off-the-shelf market with its voracious appetite for features, robustness, connectivity, and scalability -- look for our report on "Evolution and Revolution in Translation Management." Welocalize will have to make good on its vision, re-organize to market and sell software, and fund the update and continuing commercialization of its TMS. These demands will challenge the company in ways that it has never been tested -- and in ways that have blown other firms out of the market.

 

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Keywords: Mergers and acquisitions, Translation management systems, Translation technologies

  
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