Global B2B—a KM perspective

In our February issue, author Peg McDonald discussed the business imperative and KM challenges of globalization. This article addresses the whys and hows of globalization, the legal hurdles and Web site design for international B2B.

Today, there is a growing demand for business-to-business (B2B) solutions for globalization. Those who track site visitation, such as VerticalNet and Quadstone have noticed the uptick in international traffic. Even when there is no globalization effort in place, they say, there are many foreign visitors to U.S. business sites, as well as U.S. visitors to foreign business sites, sometimes amounting to 50% of the hits per day. Many, according to the site trackers, are seeking overseas business partners or customers.

One major reason that foreign firms are eyeing U.S. partners and vice versa is the increasingly competitive global market-place. As the world has become more connected, both through traditional media and the Web, the barriers to doing business abroad have been lowered. And in many cases, better products at lower prices may be obtained by sourcing globally instead of locally.

One example of a global B2B solution is Global Exchange Services GE, one of the largest electronic commerce companies in the world. GE provides a clearinghouse for $1 trillion in B2B transactions for some 100,000 trading partners in 42 countries. The KM challenge that GE faced was how to over-come barriers to global B2B between large international “hubs” and their small, but important partners—who are the “spokes.”

“We recognized that, besides our large local trading partners, there are many smaller global players that the big entities trade with. And those smaller players are critical in the global B2B process. What we wanted to do with TradeWeb was to provide a ready platform for these smaller suppliers to do business in the international space.” says Doug Erwin of GE Global Exchange Services. “Now, TradeWeb serves 6,000 of them in four different languages. They can take orders and send invoices on the Internet; they don’t have to buy their own EDI-enabled systems. There’s not a high enough volume of business for the small guy to invest in EDI. Tradeweb provides an easy, low-cost alternative.”

Another reason driving global B2B is that the growth potential in many industries is in non-U.S. markets. In areas such as personal electronics and entertainment, Asian firms have come to dominate the consumer marketplace. Thus, U.S. manufacturers of chips and other electronic components must increasingly look to sell overseas. Often, such U.S. suppliers need to do more than just translate product specs and prices into foreign languages; they need to provide a more responsive solution.

For example, Xilinx, a California chip manufacturer, found that it had to provide dynamic support for Japanese engineers trying to make product spec decisions on the fly.

Its market used to be the big U.S. net-working providers—like Cisco and Nortel. When Xilinx started supplying chips for consumer products, like PDAs, found itself dealing with foreign manufacturers, primarily in Japan. Doing business with them remotely by phone and fax was impractical. So the company created JWeb, an Internet solution, with help from the globalization experts at Idion.

JWeb lets Japanese design engineers find the best component online. They can do the homework, submit their designs and specs on JWeb, in their own language. On Xilinx’s end, the system generates an e-mail to a local office or distributor to follow up on the sale.

“One interesting thing that Xilinx did was to position itself as a portal for electronic engineer shopping for components. JWeb has lots of links to others in the industry. That means that potential customers will visit the Xilinx site, whether they order at that time or in the future. And ultimately, attracting international traffic to its site will generate international business.” says Don de Palma, a VP at Idiom Inc.

“JWeb is a great example of a globalization and KM extranet solution. What Xilinx is doing is making its experience in the Asian market avail-able worldwide to its employees and distributors. Now, with the normalization of trade relations with China, Xilinx will have more global opportunities in the huge consumer electronics market—some 1.25 billion people—that will emerge there.”

IT support is another area that has interest in global B2B solutions. Gone are the days of static content when IT documentation arrived in hard-copy form. Now, documentation changes almost continually as software is updated faster and faster. Software vendors such as IBM IBM and WordsToHyperlink Hewlett-Packard are constantly faced with changing their technical documentation and then translating into multiple languages.

SAP, a leading international software producer, had just such a problem: providing global tech support for its complex, mission-critical R3 software which is used by companies worldwide. One of SAP’s key KM challenges is to provide continuous upgrades and updates in multiple languages. A second challenge that SAP faced was to manage multiple versions of software and tech support docs as they evolve both centrally and locally.

“We realized early on that simply throwing human translators at the problem was not the answer. The solution was to involve Machine Translation, Translation Memory and human translators in a coordinated workflow system. We had to provide accurate translations in several languages, and it had to be fast.” says project manager Chris Pyne of Lionbridge, a globalization consultant to SAP.

“The system is based on a prototype that SAP began piloting in 1997. In 1999, working with a team from SAP, we moved to a far more powerful NT-based system. One of the things we learned was to make sure your source text is as uniform as possible upfront. We also found that you have to give human translators some autonomy to tweak the system.”

Lessons Based on the experience of these and other global players, there are several lessons for those just entering the global B2B marketplace:

1) Globalization equals professionalization. One of the most important things to do early on is to conduct an assessment of readiness and to formulate a strategy. Consultants and analysts like IDC’s Anna Giraldo-Kerr question the wisdom of moving too quickly, before readiness to globalize is established.

“Once you have a Web site, you have a global presence. You have to be ready to respond professionally to potential foreign opportunities,” she says. “Companies that want to globalize need to look first at issues of demand—where are the potential business partners who want to trade with me, or whom I want to buy from? Then, you need to think about the technical hurdles, like who’s online, how good the telecomm net-work is in that country or region. Is this market equipped to handle widespread Web communication?” says Kerr.

“The last thing you want is to be the laughingstock, instead of the credible presence. As they say, fools rush in. That’s especially true in the international mar-ket.” says Xilinx’s VP David Stieg. “The need to test and iterate until you get it right is one of the key reasons we addressed Japan first, as sort of a test bed for other Asian markets. Eventually, we hope to transfer the lessons learned to Korea, China and other strategic targets.”

2) Learn the art of multicultural deal-making. Often, U.S. executives falsely assume that the only significant barrier between them and their overseas counterparts is language. Not so, analysts and experts say. In fact, differences in culture may be the most important factor to consider in global B2B.

“One of the key factors that American businesspeople don’t seem to get is deal-making is done very differently depending upon the culture. While the American executive may rely on legal formalities and financials to decide on a deal, the Spanish or Japanese executive often prefers a lengthy ‘getting to know you’ approach,” says Katrina Teague of Lionbridge. “Deals are made over long lunches, not on a handshake.”

In addition, many globalization consultants note that Web sites aimed at overseas partners must be localized, not only linguistically, but in terms of presentation and content. (See sidebar: “Designing your Web site for global B2B.”) It’s important to validate your site vis-à-vis the local culture to avoid gaffes like using green in some Muslim countries where it is considered sacred.

Another aspect of doing deals abroad relates to differences in what is an accept-able way to conduct transactions. Stieg notes that many of Xilinx’s overseas partners require paper vs. electronic confirmation of orders. Also, he says, in many countries, businesses will not accept electronic funds transfer, but require some form of physical payment, whether by corporate check or other means.

3) Pay attention to content management. Perhaps the most pressing of the KM issues in global B2B is content management. Most U.S. companies are just now tailoring their U.S. Web sites to accommodate the acceleration of information, like Web casts. But the global challenge of today’s increasingly dynamic content will only become more complicated, according to those knowledgeable about the globalization business.

Early global Web sites, whether by design or by accident, were often predicated on a more static model. This pre-supposed a turnaround time that would allow content to be evaluated for relevance, then translated, then routed. The challenge now, the experts say, is to process a high volume of multilingual data or content all the time, coming from everywhere.

“The Internet is accelerating the speed of transmission. Nowadays live content is freshly made every day. What’s needed is a more interactive solution,” says Walter Smith of Global Sight. “The nature of many Web applications today is more dynamic. In the case of live news feeds over the Web, you are dealing with fast moving content. You have to ask: Are my current Web site and the back-end systems into which it hooks built to handle the traffic?”

“To go global on the Web today, companies should think in terms of a real time, rather than sequential, multi- lingual solution. Companies going global need to think about content management for the long term.” says Roger Jeanty, Lionbridge CEO.

4) Leverage local relationships. The multicultural nature of global business creates a degree of complexity that can’t be easily satisfied just by establishing a Web presence, the experts say.

Businesses cannot underestimate the value of a local presence and the insight that having an on-site window into the culture represents. Local partners can help provide the answer to problems of trade regulation, and tariffs, and legal and regulatory complexities. (See sidebar: “Addressing legal hurdles.”)

“We use our network of local offices and distributors to fulfill orders, to figure out the pricing in local currency, and to arrange payment by the preferred method—which, outside the United States is typically not by credit card, says Xilinx’s Steig. “Plus, while we try to provide as much customer support as we can on our Asian Web site, we’re not yet fully interactive there. So our local offices and distributors provide valuable real-time support in responding to our business customers’ questions.”

Sidebars-Global B2B

Addressing Legal Hurdles Some of the thorniest problems in globalization, say the experts, are legal and regulatory. Things such as copyright and trade reg-ulations can inhibit doing business overseas. One of the toughest issues here is the variation and fluctuation of international tax rules.

TaxWare International of Salem, MA, stands out as emerging KM internationalization consultants in this space. TaxWare makes specialized software that covers tax rates in the United States, Canada and 30 other foreign countries. Currently, they are in the process of going online with their service.

“Commercial tax rates vary from country to country (sometimes even within countries like Brazil and India). Tax rates change fre-quently, too—so frequently that we update our solution monthly. And then, besides knowing the current rates by locale, you have to know them by product or service. It’s a huge information management chal-lenge that lends itself perfectly to a central repository, which allows distributed, tailored access,” says CEO Dan Sullivan.

When you’re doing business overseas, you usually have to pay taxes at each step along the value-added chain. For example, all Euro coun-tries impose a VAT, or value-added tax, on all products and many services produced in their country.

“Say for example, you’re a U.S. firm that makes circuit boards. You buy the silicon in one place. The circuitry is added in another place, and the finishing touches are done in a third place. There are different VAT taxes at each point, and they’re fluctuating as you go along. Same thing could apply to a SW company, or a sneaker company—anybody who has an overseas production and distribution operation,” says Sullivan.

For firms trying to buy, sell and manufacture overseas, staying on top of changing tax rates, and then tracking the taxes owed and paid at each point along the line, is just one of the big KM challenges. Fortunately, more and more internationalization specialists, like TaxWare, are emerging to help U.S. firms manage the knowledge needed for global B2B.

“Designing your Web site for global B2B Translation and localization experts such as eTranslate, Lionbridge and others offer these tips for designing an effective Web site for global B2B:

1) Anticipate changing content. This affects long-range strategy for the site, including how flexible translation and updating solutions need to be, and what the trade-offs may be between the geographical reach of the site or its level of sophistication for a particular audience. For companies that anticipate continuously changing content, it’s often prudent to select an outside globalization/translation expert to assist with site development.

2) Limit user options. Many current sites allow the user many—even unlimited choices—by letting them “fill in the blank,” as in “my alternate preference would be ________.” In the case of multilingual sites, however, this is not usually a good idea because it complicates translation because of differences in linguistic structures. For example, adjectives precede nouns in English, but not in many other languages such as French and Spanish.

3) Route ad hoc queries. Responding to off-the-cuff inquiries is a challenge in global B2B. This is especially true in high-tech or complex purchasing decisions. An overseas engineer trying to specify a part, for example, might need quick technical sup-port via phone from the supplier. Often, the best way to handle this is by rout-ing such inquiries to a local partner, supplemented by an online FAQs feature.

4) Be concise and simplify. The more elaborate your message, and the more fancy graphics you add, the more likely you are to either confuse your foreign audience, or turn them off. And greater complexity of content and features only adds to translation and updating costs. Also, if you start out relatively simply, there is more room for future expansion on your site.

5) Make it easy to pick a language. When you are dealing in a multilingual environment, one of the most impor-tant features your site can offer is clear and simple choice of language upfront. This should be among the most prominent features of a multilingual site, and it should not be tied just to the user’s location or nationality because many languages cross borders. Its a good idea, experts note, to provide language choice links on each page in case the user did not start at the home page.

6) Localize the popular cues. Much of our communication, in the business as well as the social world, relies on visual icons and slang expressions that defy simple machine or cursory human translation. Its important to check and double-check your site for symbols and cues that have entirely different meanings in foreign cultures, such as certain hand symbols, colors or catchy phrases.

7) Validate locally. Above all, seek local review and validation of your overseas site. While all good Web designers recommend user testing, this is especially critical in the international market because of its greater diversity. Use local offices, partners or outside consultants to test and validate, and remember that usability is an issue that bears revisiting periodically.

Peg McDonald is a free-lance writer based in Cambridge, MA, e-mail peg_mcdo@yahoo.com.

Source: IDC Internet Commerce Market Model 6.0