Exploring TMS pricing structures

Today’s translation management systems (TMSs) handle structured translation processes but are poised for much broader usage across the enterprise. Here, we explore the expanding scope of TMS and consider the pricing and business implications of sharing language tools and assets among the entire knowledge workforce.

Translation is fundamental to any global enterprise. Viewed from one angle, information moves from one language to the next in a formal process, wherein the company’s messages get communicated and products are documented. A trained, professional staff manages this flow of words, projects and assets in a durable business process, often coordinated by a centralized team.

Viewed from another angle, translation is needed everywhere, every day and probably gets dealt with on an ad hoc basis using whatever resources are close at hand. In this decentralized context, disparate business units, functions and regions call up their own language resources to conduct their day-to-day activities. As the needs of global markets, supply chains and operations affect more functional groups within the enterprise, enterprises will grant access to centralized translation tools and processes to ever wider swaths of employees. From drivers to shop floor assembly workers, today’s workers are all knowledge workers, and knowledge workers need language tools.

We expect TMS to play a central role even as shallower interfaces and simpler processes crawl out to an ever broader set of users, eventually achieving ubiquity in the enterprise stack. What does “ubiquity” mean in this enterprise context? It’s when translation tools become an assumed part of any information system. This means authoring and software development interfaces, content management systems and production information systems, marketing automation and social management, customer relationship management and enterprise resource planning, e-mail and messaging, as well as proprietary information systems such as recipes, process documentation and service manuals. 

This anticipated level of ubiquity poses a pricing and deployment challenge for enterprises. The transition of TMS from a tool used by a small cadre of specialists to an enterprise-wide deployment accessible by anyone with a language need will cause headaches for planners, procurement staff and the software suppliers they buy from. Negotiating the price for this ubiquitous service will be a challenge as both parties assign value to the resource. Common Sense Advisory research has shown a trend toward value-based or usage-based pricing models that charge a fee against metered volume, whether measured as words, bytes or transactions in the system. Curiously, the ubiquity argument can be used both for and against value-based pricing in TMS.

Let’s look at the “for” argument, that translation is a utility that must be metered.Every knowledge worker may need translation, but how much and what they need will differ. Many buyers will want to associate the cost of translation directly to the business function to which it is applied. For these users, value-based pricing makes the most sense. Functions that require more volume, higher quality and faster speeds will pay more. As with water or electricity, such translation can be metered — externally to optimize volume-based discounts or internally to optimize expense allocation.

Let’s also consider the “against” argument, that translation is a core function that should not be metered.Ubiquitous usage should drive costs low enough to grant universal access via site licenses. As a core technology exposed through any number of other content interfaces and business applications, it becomes a cost of doing business. Enterprises will simply buy a site license and allocate cost just as they do for payroll processing, human resources or facilities management. Metering merely creates unnecessary overhead.

Which of these pricing models will work best for you? It depends. Metered use schemes allow TMS buyers to allocate internal and external costs (for depreciation, amortization, IT management and maintenance costs) to internal departments according to the norms established for value or usage. Companies focused on cost containment may prefer this method, as will companies with disparate business units or brands where costs need to be separately managed.

Companies focused on growth or unified around a single flagship product or brand may prefer the simplicity of the fixed cost approach. If translation management is a permanent requirement in the enterprise information stack, many companies will view site licensing as the lowest total cost option for software acquisition. More experienced TMS users should buy a site license as a capital expense (CAPEX) but allocate maintenance and support tariffs. The metering function offered by more and more TMS suppliers lets savvy buyers achieve the lowest total cost that comes with a site license while still managing to produce variable-cost charges internally for each business unit, functional department and project.

In conclusion, the tough decision between value-based pricing and CAPEX-style purchasing will not end anytime soon. Metered usage, even at companies that have bought a site license, continues to have an appeal as companies attempt to allocate charges. This value-based pricing requirement will have a lasting effect on how TMS is configured, independent of how buyers pay for the software.