Personal experience shows that all localization clients are interested in terminology, without exception. However, only the very large organizations actually seem to maintain a terminology database. When our sales people ask new prospects about this, they often get an answer along the lines of “We tried to put something like that in place, but then just abandoned the whole thing”, usually because nobody had the time, the budget or felt responsible to maintain it. And yet, without constant maintenance, any form of terminology management is doomed to failure. There again, if most companies do without it, who really cares?

The size and overall utilization ratio of Google means we can use it for a basic public opinion poll. If you type “importance of terminology” (in quotes) into the Google search field, you get exactly 888 entries. That isn’t much, but still a lot more than you would get from searching for something like “ROI from terminology”, which will generate zero entries, whatever word combination or alternative formulation you may use. If you run a second search with ROI alone, you’ll get about 11 million entries.

This quick test shows that many people seem to feel fairly concerned about ROI, but almost none expect it to come from terminology. By the way, ROI far outranks most other buzzwords in modern business management, such as “cost savings” (5 million), “time to market” (3 million) or “business performance” (1.5 million), and there are almost 200,000 pages discussing “ROI tools”, with nearly a dozen new ones appearing every day.

Although the actual value of this simple test is arguable, it at least illustrates that ROI is among the top concerns in the business world, and that almost every cubic inch in each and every business sphere has now been analyzed to make sure it generates a decent amount of ROI… with the very exception of terminology. Even though terminology by itself seems reasonably well known – you get almost half as many Google entries (46.9 million) as you get with ROI, no respected business expert seems to consider terminology management as a means with which to generate ROI. Linguists themselves are seldom known for their interest in finance, and company management will consider their linguists as a cost. This may partly explain why very few people ever tried to put hard figures on ROI from terminology management. However, there are a few other reasons, and looking at them will help us better understand the needs.

Over time, terminology has almost become an allegory for quality. If you open any of the 888 Google entries where terminology is recognized as being important, the authors mostly talk about improved quality at multiple stages of the content production chain. The most commonly shared view is that terminology helps to “improve the quality of the content” and, indirectly, “customer satisfaction”. Some articles try to push matters a bit further, finding more areas where terminology management would have a positive impact. A few even try to figure out how to quantify all of this, but none of them come up with any actual figures.

If terminology specialists share the view that terminology has a purely qualitative impact, it is by no means surprising that business experts only concerned with hard figures ignore the matter completely. As most localization managers working in large corporations probably already know, anyone who has tried to sell terminology management to upper management will have noticed that the very first question they are asked after finishing their presentation is “What does it cost and what is the ROI within 1-3 years?”

It is the standard question when you ask your boss for money to launch a new project. In such a situation, you shouldn’t bore them with long explanations about inconsistency or quality improvements, nor should you venture onto such quicksand issues as customer satisfaction or corporate brand image support, because your boss will ask you to prove your point, and provide tangible figures for good measure. They may agree that managing terminology would certainly be a good thing, and that anything done to make customers happy is a step in the right direction, but their CFO is not open to such philosophical considerations. All a CFO cares about is figures.

Before we look at a case study, we should clear up a source of consistent confusion about ROI. Most people think that you simply deduct the additional project cost (investment) from your additional earnings. That would be correct when playing Poker, but in business you need to consider the manufacturing cost of your merchandise, and subtract your project costs from your profit, not your gross revenue. This leads us to the universal formula for ROI:

The formula shows two important points: (1) hard figures are needed, and (2) to get them, we need metrics. Finally, to crown it all, we need to be very convincing, because serious terminology management doesn’t come cheap.

In the following case study, we confront the actual costs (investment) with the financial benefits. Since confidentiality agreements do not allow us to divulge the company's identity, we will refer to the client as TMC, an acronym of terminology management client. We will use this case study because it illustrates the complexity of corporate implication in terminology management.

TMC has been localizing for more than 20 years. During the first 10 years, all products were translated into 5 languages. Throughout this period, TMC invested a lot of time and effort in maintaining its terminology lists (Excel). When additional products and languages were subsequently integrated, the terminology lists soon became neglected before being abandoned completely. This is a very common process, even if you might expect the opposite; many companies start L10N with commendable intentions, but in the heat of the battle, they somehow simplify the process. Faced with time and budget constraints, which have long since become the rule, only the most urgent needs are covered.

A few years ago, TMC had numerous products, some of which were localized into more than 20 languages for 40 subsidiaries and partners all over the world. Although the company had an internal writing team, most of the content creation and all of the translation were outsourced to agencies or freelancers. Memory management was irregular and terminology management nonexistent. TMC relied on their agencies, which fully trusted their writers/translators to maintain an appearance of consistency. Occasionally, TMC made random in-house quality checks conducted by employees of their subsidiaries and partners.

Lack of process and the usual turnover in terms of agencies, writers and translators brought numerous inconsistencies over the years, and content quality became increasingly unpredictable. Various attempts were made to improve the situation, but the lack of both a thorough process and an adequate budget meant TMC were unable to regain control over the process.

Then things suddenly changed from the top. After a change of ownership (involving institutional investors from finance and industry), the whole company changed course: business was completely redefined, or rather extended, and all major divisions underwent close inspection. Since the core activity was extended, new products were developed, and a great deal of rebranding was planned.

The rebranding effort, which in this case meant a change of corporate image, naturally led to the question of content creation and localization, and finally to terminology. Only a few weeks after the takeover, TMC launched an RFP, contacting several organizations, a few of them totally unknown in the localization industry, to audit their current process and submit proposals for a decent terminology policy.

The terminology project was considered to be an important part of the rebranding effort, and was therefore fully supported throughout the organization. Needless to say, conditions for the audit were excellent. The most astonishing fact during initial discussions with the inner circle of actors (managers of the documentation, training and marketing divisions, but also of the help desk and support) was the surprising amount of interest shown in terminology by units that would not exactly be at the top of the auditor’s lists, such as the legal and financial departments, or the corporate information service. The auditing team came to the conclusion that a more global approach was needed, essentially a more open vision of what terminology management could achieve for TMC.

Here, we won’t go into details of the audit or results; the subject of our article is ROI. It is nevertheless important to mention that the auditors finally suggested a high-performance database web application with a simple, user-friendly browser interface and therefore easily accessible over the TMC extranet from any PC with Internet access. Predefined user groups logged into specific areas according to their tasks and user rights. This solution seemed to be the most appropriate given the fact that an increasing number of actors from various divisions across the corporation showed an interest in standardized terminology, including TMC subsidiaries, partners, and subcontractors throughout the world. The application was based on a smooth and scalable workflow, with “a minimum burden on the client side”, which included ongoing remote linguistic and technical maintenance.

The combined tools-service offer represented a major difference compared with competitors during the initial RFP. As mentioned above, the most efficient terminology tool is not worth the time taken to install it if ongoing maintenance can't be granted. The uniqueness of the winning proposal was to ensure ongoing maintenance, both linguistic and technical, at a very competitive price. It also included the hosting of the web server and the continuous update of the terminology database in real time by moderating the workflow between TMC translators, reviewers, and interested internal divisions. A set of additional service options, such as integration with authoring tools and further development to enhance available and future features, was offered as well.

After the presentation of the audit together and the suggested solutions, the TMC management team was enthusiastic. This didn’t avoid them asking the question: “What does it cost and what is the ROI within 1-3 years?”

During the audit, the matter had been discussed with all TMC teams involved, which in this case included the financial department. As usual when no reference values are available, the parties had to agree on pertinent metrics and the most suitable means to collect information. Right from the start, any reference to qualitative advantages without any direct, measurable financial impact was discarded; typical examples would be “improved quality”, “customer satisfaction”, or “corporate brand protection”. In fact, the auditors concentrated on productivity gains or time reduction, which is much easier to measure and then convert into financial data.

All divisions involved were asked to measure the time they spent on terminology-related matters, such as looking up specific terms and expressions (documentation, marketing, legal departments), searching for appropriate translations (development, training), or sorting out consumer requests that were due to nonexistent, contradictory or otherwise confusing terminology. A few divisions already had a fairly precise idea, which merely needed confirming. It was agreed that for an initial one-month period, all participants should discipline themselves to note down - every day before leaving - the estimated time they spent during the day on terminology-related matters.

As usual in such surveys, there is no way of verifying the seriousness of the results. However, the consistency of the replies throughout the divisions together with the number of participants (more than 200 individuals) provides a minimum guarantee concerning the relevance of the figures obtained. The results were also discussed with each division, and a few suspicious or apparently overstated values were balanced out. Although the resulting values are specific to each company and cannot be used as average data, we will provide the records we obtained with TMC to illustrate the financial figures obtained subsequently. The figures below represent the average time spent on terminology-related matters, expressed as a percentage, where 5% would be 2 hours per week.

• Translation Review: 25%
• Translation: 5%
• Help Desk: 5%
• Technical writing: 3%
• Training Department: 2%
• Corporate Information Services: 2%
• SW/Web Development: >1%
• Legal Department: <1%
• Financial Department: <1%

Although they showed a lot of interest in our project, the Legal and Financial departments replies were not included in this survey because their gain in time seemed irrelevant, and measuring the real value of a terminology system for them would require different metrics. It is nevertheless important to note that once a terminology system is in place, the actual benefits reach far beyond the measurable financial impact.

Translators and reviewers were considered proportionally to their annual occupation ratio (average over 5 years). As for the software developers, possible gains came not only from looking up terms, but also from pre-testing facilities and easier updates. For example, small updates involving a few words could be done on the spot, which suits both developers and translators. Besides technical writers, translators and reviewers, those who spend most time on terminology-related matters are employees working in Corporate Information, Help Desk and Customer Support.

The above values were then compared to the average workplace costs per division, which included salary, social charges and other related costs (fixed costs per head are generally well known by the financial department). It led to some surprising figures. For example, for 10 technical writers spending just 5 hours less per month on looking up terms and expressions, the actual gain is 50 hours, or 600 hours a year. If we assume an average cost per writer of USD80/hour (all included), the savings amount to approximately USD48,000 per year, for the writing team alone!

Without going into too much detail, the results showed that TMC’s annual gain from a well maintained terminology management system would be close to USD170,000 across the company. Given that TMC operates with an average profit margin of 50%, the actual extra profit resulting from terminology management, according to the explanation given in the first part of the article, would be USD85,000.

Initial setup costs included hardware and software, together with the TMC-specific interface and workflow development, database licenses and setup costs, as well as the validation and import of existing terms. This terminology was to be extracted from validated documents. The auditors also added TMC's communication costs, which basically result from the time spent to write an e-mail communication distributed in 3 waves, and the time estimated for presenting the system, with quarterly reminders to employees.

Other aspects of the extremely powerful terminology system were not taken into account either, such as the possibility to use it, among others, to search for multilingual reference material corporate-wide on all accessible hard drives, or the prospect to link it to the translation memory with a two-way search function. In order to provide clear figures, our survey concentrates on the core function of terminology searching.

Based on 5 languages for starters, the initial setup costs for TMC were USD63,500. This sum would be written off over a period of 3 years (USD21,200/year). The annual fixed costs (maintenance & software updates, database updates, workflow moderation, etc.) are USD10,000, with an estimated 20% decrease per year.

The above costs apply to TMC. For a smaller organization, the costs involved would be considerably lower. If we compare the annual costs to the extra profit, we get the following for the first 3 years:

In other words, TMC will already get a 172% ROI during the first 3 years. After the third year, when initial setup costs have been written off, the ROI will increase dramatically, becoming one of the most efficient investments in TMC’s history:

Needless to say that after presenting the ROI estimate, the project was accepted without much further ado.

This case study illustrates the importance of hard figures when selling linguistic services to business people who are purely finance-oriented. It also shows that there is little point hiding behind an exclusively qualitative line of argument, which in any case is not likely to convince upper management. Terminology management, as well as localization services in general, have an important impact on sales and profit, and this must be backed up with hard figures. Getting this message across would certainly help get localization service companies out of the disgraceful corner where they are still considered as an onerous burden, and show that we actually participate in creating wealth.

, Strategic Development Manager at WhP.