SDL’s executive chairman admitted the company put the "wrong salesmen" in "wrong opportunities," which led to "disappointing" win rates for its customer experience management suite.
David Clayton told CMSWire that SDL was caught in a never-ending game of catchup with Sitecore and Adobe. As a result, the Maidenhead, England-based language and content technology provider is selling off the products that once competed with those two firms: its social intelligence, campaign management and e-commerce optimization platforms.
Clayton said SDL's messaging was too orientated toward a suite approach rather than going to market with point-focused CXM solutions. "Our marketing message has not resonated well with the market. We were engaged in sales situations where really what SDL was offering was not what the market wanted to buy,” he said.
Lost Cash in 2015
SDL's moves comes as the company today reported a wider year-over-year pre-tax loss for 2015. The company today reported a loss before tax of 25.2 million pounds ($35.67 million) for the year ended Dec. 31 after booking an impairment charge on its restructuring, compared to profit of 9.4 million pounds ($13.3 million) last year.
“The results have not been what we’ve wanted, and that’s why we are making this change,” Clayton told CMSWire. “We perhaps slightly lost our focus, and we were going after opportunities where the solutions from SDL were not sufficiently differentiated relative to some of our competitors.”
Clayton, formerly non-executive chairman of SDL, assumed the role of executive chairman in October after Mark Lancaster stepped down from the board and his role as CEO. The company is still searching for a new CEO.
Back to Language
SDL is refocusing on its language translation services and technology products. It now views its Global Content Technologies (GCT) — composed of web content management (WCM) and documentation products — as complementary to the language suite.
The company announced in January that it plans to sell its Fredhopper (e-commerce optimization), Social Intelligence and Campaign & Analytics businesses, which it deemed to be non-core.
SDL acquired these tools over the past six years. Clayton told CMSWire about 300 employees will be affected by the changes. SDL has about 3,980 employees globally, according to a company spokesperson.
“Our legacy has been in language and global content,” Nuno Linhares, director of product management for SDL, blogged about the changes. “And to continue this legacy and deliver world class global content management solutions maximizing language as our key differentiator, we have taken steps to divest in the areas that don’t support our unique value proposition and reinvest in areas that do.”
What Makes Money?
Language services is trading at record profit levels and high levels of repeat revenues, according to SDL's yearly earnings report released this morning. Language technologies and global content management were broadly flat in 2015 in terms of trading.
The performance of language allowed SDL to be patient with its underperforming CXM products, Clayton said in an earnings statement for the first six months of 2015.
But that patience has run its course.
"Our CXM strategy has failed to gain traction," Clayton said in this morning's earnings report, "resulting in a significant decline in new technology bookings in our CXM business, with a commensurate increase in losses from these products."
According to this morning's earnings report, SDL makes the most money from Language Services:
- Language services: $216.4 million or 57 percent of total revenue, up 4 percent this year
- Global technologies content: $72 million or 19 percent of revenue, down 1 percent
- Language technology: $51.9 million or 14 percent of revenue, down 2 percent
- Non-core businesses, which SDL's selling off: $37.5 million or 10 percent of revenue — up 7 percent in revenue, but total bookings fell 6 percent
Wrong Marketing Message
SDL's marketing message with its CXM products failed, Clayton told CMSWire, because it touted itself as a one-stop shop for all things customer experience management: marketing analytics, social, web content management, among other capabilities.
“We were effectively saying we could do all these things. Personally I don’t think the market was looking for a full end-to-end integrated customer experience management solution from a single vendor.”
Clayton, after talking to CIOs and CMOs, concluded that more organizations were in this boat: “I’ve already got my solutions. Now show me how yours co-exists alongside them.”
Not the First Shift
SDL has been reinventing itself several times in the past few years. In late 2014, it announced it planned to consolidate its marketing cloud from seven product groups to four. The new product line-up looked like this:
- Digital Platform, which included web, campaigns and e-commerce tools
- Knowledge Center, which became the new home for its documentation products
- Customer Analytics, which combined analytics and social media tools
- Language, which remained unchanged
Good Product, Bad Package
The product’s “very good technically,” White said, adding, “it’s shame the marketing hasn’t been better.”
SDL was “fully competitive” with Adobe and Sitecore and other leaders in the experience management field, White added.
“They just have had a lot of trouble with how to package their software and bundle capabilities and tie that together with their marketing message,” he said. “The real challenge is product packaging and marketing. Demos and proof of concept are what sell products.”
Scott Liewehr, president and founder of New York City-based Digital Clarity Group, said he’s been advising SDL to return to a focus on its language roots for a “really long time.”
“It’s unfortunate because it took a lot of pain to get to this point,” he told CMSWire. “They were once the flower child and were on the top part of every wave and quadrant out there but they lost sight of themselves. They saw the success of Adobe and Sitecore and basically went on to try to become them.”
Clayton countered that SDL does better than Adobe and Sitecore with clients that have massive global content deployments with hundreds and thousands of sites. But, he admitted, when going head to head, either Adobe, Sitecore or SDL is usually in the wrong place. “Maybe during the last year too often that was us,” Clayton told CMSWire.
With the language technology at its disposal, SDL won't disappear anytime soon. It's always maintained a “good reputation on language side of the business but just hasn’t been able to get the content side of the business going,” Liewehr said.
“I am bullish they are doing right thing,” Liewehr added. “They have a specific purpose. They’re not looking to different buyers. They can cross-sell capabilities for those who buy global content and can also benefit from language technologies and vice versa.”