CyTerm business case

Author: Chris Turner, www.cycom.co.uk

Overview

The globalisation of markets and the increasing complexity of products and the economics of publication enabled by the Web is causing a growth in the demand for multilingual documents.
A guess is that growth rates exceed 30% per annum. The supply side (translators) will not be able to meet demand without productivity improvements. The translation process needs to be re-engineered and all participants roles re-evaluated. It is expected that many steps in the process can be automated with software support and on-line resources. Machine translation is but a fragile component suitable only in a limited number of cases and critically dependent on the quality of termbanks and mark-up of the source material.
The CyTerm project will provide software and on-line resources to facilitate the re-engineered multilingual document production processes. It is anticipated that it will gain a large market share by translators by virtue of low price and also a large market share by agencies and companies by virtue of its whole life-cycle engineering approach and compatibility with the translators tools.
Currently many large companies are trying to dominate the translation industry by acquisition hoping for efficiency improvements by economies of scale. Cycom believes that a "virtual enterprise" comprised of collaborating small players supported by communications and process automation can compete with the "in-house" players.

Market size

A comparable competitor, Trados, dealing only in translation software has revenues of £1.5M/pa. It is expected that Cycom can take more than half that market at 10% of the price or £75K/pa. Trados expect 100% per annum growth to £6M/pa in year 2000.
The EC market expenditure in document databases in 1994 was Euro650M. It is estimated that 50% would need monolingual terminology support and 10% multilingual terminology support so a potential market of Euro300M for document databases exists of which 10% for software support might be reasonable i.e. Euro30M/pa.
The number of world-wide translators might be 500K. If 10% world market share could be
achieved at £10 profit per head this would be £500k. The software should be used by authors as well as translators and so we could double these figures.
Cycom aims to earn a small amount on each trade of a term, say £0.001. The amount of text is estimated at 30 million pages with say 10 terms per page which would be 300M term usages or £300K
Altogether a revenue of  £200K per annum looks achievable with growth rates above 30% per annum.

Investment

1-2 man years at £100K/per man year.
Return on investment is 100% over 4 years.

Competitive advantages

Cycom uses Java technology for implementation and the UML process for engineering design. Competitors are using C++ and Microsoft windows technology with unknown software engineering method. It is expected that the software engineering standards and tools employed by Cycom will result in lower total cost of production and maintenance as well as a lower product complexity which will allow higher levels of functionality to be achieved before the complexity barrier is reached.
Cycom has studied and is re-using the research results of universities and EC funded projects as well as standards developed for ISO and LISA. The adoption of existing and new standards will permit Cycom products to interoperate with competing and complementary products. Cycom has a commitment to open standards which will protect the customers investment in data input.
Cycom marketing is low cost and product pricing is low entry cost. This will reduce the risk to the customer which should permit Cycom to acquire the low end customers. Compatibility with competing products will permit acquisition of high-end customers who may be expanding the number of licences.
Cycom will provide an on-line resource and an inter-customer trading environment. It is expected that Cycom will have the highest level of networking ability given its experience in the network computing models. Cycom will be recognised as number 1 for network computing even if other aspects (such as integration with word processors) is not as strong as competitors.

Marketing model

Cycom needs to have a revenue stream to fund on-going development, but also needs a low entry price to attract market share. Cycom has faith that its products will give good on-going value to the customers but it does not believe that all customers can be convinced of this value before actual use. Cycom's on-line resources will be funded by a combination of subscription and pay per term. The pay per term model will not produce much income in the early stages and so the main income will be by subscription. The software will be free to subscribers but priced at Trados style prices for non-subscribers giving the customer choice of low cost without devaluing the product and providing a exit path for those that do not wish to continue to subscribe. Over a 10 year period, subscription revenues might accumulate to values achieved by Trados on first sale, but the customer will have had a risk free path and will have earned much greater amounts from productivity enhancements and term sales. Provided the products are good then competitors will not be able to match Cycom on price without adopting the same subscription model.
The subscription model provides a revenue stream to ensure that the products are improved and yet does not impose any barrier to customer adoption of the improved versions. This will reduce marketing efforts.
It is expected that most marketing will be via direct email, web searches, newgroups, magazine reviews, and personal recommendation. Key movers and shakers will be identified and education and demonstration efforts directed at them until they endorse the product.

Third party support

Cycom aims to build up a term trading environment so that term authors can directly profit from their terms. Many thousands of individual experts (in a particular language and subject) can together build a very comprehensive term resource which is best accessed via the Cycom on-line environment. Cycom can benefit from the increased attractiveness of subscription if such an on-line resource is available. For many customers the term resource is of greater benefit than the software tools.
Software vendors are also third parties who can interface with the CyTerm products via java API's which will be open and public.
Cycom will act as the agent for the members when selling term resources to larger buyers such as MT suppliers or printed dictionary compilers.
The ability of third parties to profit will ensure that the value of a subscription can be grown without direct effort and expense on the part of Cycom.

EC Funding

The effect of the CyTerm project on european business efficiency and global marketing (hence competitiveness) and regional participation and will be the same as the effect desired by many EC language projects (funded in millions of Euros). It would be logical for the EC to contribute to the CyTerm project to speed up that effect although logic is not necessarily expected from public bodies. It is hoped that research results and term resources will be obtainable at zero cost from EC projects but CyTerm will need to have demonstrated a good market share first.
Cycom may be in a position to bid for future EC language projects.

Summary

Although the market is variable it is probably able to sustain a low overhead operation such as Cycom. The market is new and growing and the incumbent competitors have a cost structure which is unsustainable if Cycoms marketing model becomes successful. The competitors have less internet and networking experience than Cycom. There is no barrier to Cycom dominating the multi-lingual document engineering markets.
 
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