Helsinki University of Technology

School of Mechanical Engineering

Institute of Industrial Management

ANTTI ARPPE

THE STRATEGIC OPPORTUNITIES OF A SMALL HIGH-TECHNOLOGY COMPANY ON EMERGING MARKETS

Thesis submitted in partial fulfillment to the requirements for the degree of Master of Science in Engineering

Helsinki, 1995-07-07

Supervisor	Ilkka Kauranen
	Associate Professor

Instructor	Krister Lindén
	Master of Science

HELSINKI UNIVERSITY OF TECHNOLOGY	ABSTRACT OF THE MASTER'S THESIS

Author and name of the thesis

Arppe, Antti:	The Strategic Opportunities of a Small High-technology Company on 	Emerging Markets

Date	1995-07-07	Number of pages	136

School	School of Mechanical Engineering

Chair	Mat-91  Industrial Management

Supervisor	Associate Professor Ilkka Kauranen

Instructor	Krister Lindén, Master of Science

Lingsoft is a small high-technology company founded in 1986 as a spin-off of research activity at the Department of General Linguistics of the University of Helsinki. Lingsoft's main business has been to develop linguistic modules and other solutions to be integrated into various software applications such as word processing or data base systems. In 1995, the company needs new information for guiding its future product development.

The primary objectives of this thesis are to present a product development strategy for Lingsoft, and to propose practical steps to implement this strategy. The emphasis of the product development strategy is on linguistics-based tools for information management such as terminology management and text classification tools. The research methods used in this thesis consist of interviews with key personnel of Lingsoft and its customers, a survey of trade and academic literature, and a market survey of Finnish organizations. The market survey  consists of a comprehensive questionnaire and thorough follow-up interviews. Altogether, 34 organizations were surveyed.

According to the market survey, no immediate new niche was found to exist for Lingsoft. Regarding the structure of the language industry market, the market survey indicates that there is a hierarchy of information management tools through which organizations proceed in an orderly fashion. Furthermore, organizations can be classified into three groups according to their information intensity, which is dependent on the role of information for the organization. These three groups proceed through the information management tool hierarchy at different paces. The market survey also presents a profile of potential adopters of future linguistics-based information management tools. Firstly, organizations that have experienced information explosion strongly in received information were potential adopters of future information management tools. Secondly, potential organizations are high in the information management tool hierarchy. In addition, organizational values were found to be an important factor in determining the adoption or rejection of future information management tools.

Without clear knowledge of a new niche, the main recommendation for Lingsoft's product development strategy is to concentrate on developing the company's main competency - providing linguistic solutions - through projects that contribute to this competency. This can be achieved through identifying lead user organizations and undertaking product development projects in cooperation with these potential organizations, for instance through beta test programs. Practical recommendations for implementing this product development strategy are emphasis on the reusability of project results, splitting new product development projects into smaller subprojects, placing emphasis on fulfilling customer needs and on evaluating tangible customer benefits, using old and present customers for publicity, and developing an effective after-sales program. Furthermore, Lingsoft should find strategic partners for marketing, and participate in an informal network of organizations complementing Lingsoft's competencies.

TEKNILLINEN KORKEAKOULU	DIPLOMITYÖN TIIVISTELMÄ

Tekijä ja työn nimi

Arppe, Antti:	Pienen teknologiayrityksen strategiset mahdollisuudet syntyvillä	markkinoilla

Päivämäärä	1995-07-07	Sivumäärä	136

Osasto	Konetekniikan osasto, Tuotantotalouden laitos

Professuuri	Mat-91  Teollisuustalous

Työn valvoja	Apulaisprofessori Ilkka Kauranen

Työn ohjaaja	Filosofian kandidaatti Krister Lindén

Lingsoft on pieni teknologiayritys, joka perustettiin vuonna 1986 Helsingin yliopiston yleisen kielitieteen laitoksella tehdyn tutkimustyön pohjalta. Yrityksen pääliiketoimintana on tähän asti ollut kielimoduulien ja lingvististen ratkaisujen toimittaminen, yleensä liitettäväksi erilaisiin sovellusohjelmistoihin kuten tekstinkäsittely- ja tietokantaohjelmiin. Vuonna 1995 yrityksen on päätettävä uusista tulevaisuuden tuotekehityksen suuntaviivoista ja toimintatavoista.

Tämän tutkimuksen päätavoitteena on esittää Lingsoftille tuotekehitysstrategia sekä käytännön toimenpiteitä tämän strategian toteuttamiseksi. Tuotekehitysstrategian painopisteenä ovat kielen käsittelyyn perustuvat informaationhallinnan työkalut, joiden sovellusalueita ovat esimerkiksi terminologiatyö tai tekstin luokittelu. Tutkimusmenetelmät ovat perinteisiä, sisältäen Lingsoftin ja sen asiakkaiden avainhenkilöiden haastatteluja, ammatti- ja tieteellisen kirjallisuuden tutkimuksen ja markkinatutkimuksen. Markkinatutkimus kattaa 34 suomalaista organisaatiota, ja siinä käytettiin perusteellista kyselylomaketta ja seurantahaastatteluja.

Markkinatutkimuksen perusteella Lingsoftille ei ole osoitettavissa selkeää uutta markkinarakoa. Analysoitaessa kielen käsittelyyn pohjautuvien markkinoiden rakennetta markkinatutkimus osoittaa, että informaationhallinnan työkaluilla on hierarkia, jonka kautta organisaatiot etenevät. Lisäksi organisaatiot voidaan luokitella kolmeen ryhmään niiden informaatiointensiteetin mukaan. Informaatiointensiteetillä tarkoitetaan informaation merkitystä organisaatiolle. Nämä kolme organisaatioryhmää kulkevat informaationhallinnan työkalujen hierarkian läpi eri tahdissa. Markkinatutkimuksen perusteella voidaan myös esittää kielen käsittelyyn perustuvien informaationhallinnan työkalujen potentiaalisten asiakkaiden profiili. Ensinnäkin potentiaaliset asiakkaat ovat kokeneet informaatiotulvaa erittäin paljon vastaanotetussa informaatiossa. Toiseksi potentiaalit asiakkaat ovat korkealla informaationhallinnan työkalujen hierarkiassa. Lisäksi organisaatioiden arvostusten havaitaan vaikuttavan merkittävästi asenteeseen hankkia tai jättää hankkimatta tulevaisuuden informaationhallinnan työkaluja.

Selkeän uuden markkinaraon puuttuessa keskeisenä suosituksena Lingsoftin tuotekehitysstrategiaksi esitetään, että Lingsoft vahvistaa perusosaamistaan - lingvistisiä ratkaisuja. Samalla Lingsoftin pitää aktiivisesti etsiä informaationhallinnan tarpeita, joihin voi soveltaa lingvistisisiä ratkaisuja. Tähän päästään identifioimalla informaationhallinnan tuotekehityksen eturintamaa seuraavia yrityksiä ja pyrkimällä yhteisiin tuotekehitysprojekteihin näiden yritysten kanssa, esimerkiksi beta-testausohjelmilla. Käytännön suosituksena korostetaan tuotekehitysprojektien tulosten uudelleenkäytettävyyttä, näiden projektien jakamista pienempiin osaprojekteihin, asiakkaiden tarpeiden huomioimista, konkreettisten hyötyjen arviointia, asiakkaiden käyttöä Lingsoftin markkinoinnissa sekä tehokkaan after-sales -toiminnon luomista. Lisäksi suositellaan, että Lingsoft hankkisi strategisia partnereita markkinointiin ja että Lingsoft osallistuisi yrityksen osaamista täydentäviin verkostoihin.

PREFACE

"All good things must come to an end"

Q to Captain Jean-Luc Picard at the end of the seven-year mission of the starship Enterprise in Star Trek: The Next Generation

This thesis marks the end of my eight-year mission at Helsinki University of Technology. Completing this work would have been a heavy and burdensome task indeed were it not for the help of many people.

I would like to thank my supervisor, Associate Professor Ilkka Kauranen, for keeping me on the right track and helping me in pruning many a side path despite my inclinations to make this thesis into something much bigger.

I would also like to thank Professor Martti M Kaila, especially for his advice prior to the beginning of my work on this thesis. His comments helped me avoid many of the pitfalls that await a writer of a thesis.

I would wish to express my appreciation to my instructor, Krister Lindén, for his keen interest in the progress of this thesis from the beginning to the very end. I greatly appreciate the numerous lengthy academic discussions we had throughout the work on this thesis, and his witty and thorough style of analyzing problems which greatly promoted the completion of this thesis.

I am also in debt to Professor Kimmo Koskenniemi, who first suggested the subject of this thesis. Without his visions on information management this thesis might never have been started. In addition, I would like to thank Professor Fred Karlsson for his insistence on an openly critical analysis of existing positions and for encouraging to think big. Furthermore, I would like to thank my co-workers at Lingsoft, Mariikka Haapalainen, Ari Majorin, Markku Norberg, Kimmo J Tykkälä and Mikko Silvonen for their contributions to the thesis. Their opinions reminded me not too often that an engineer's view of the world is not necessarily the only one.

I feel indebted to all the people that I had the privilege of interviewing for this thesis. I greatly appreciate the time and interest that the interviewees showed for my work, not to mention the many insights they provided. Especially I would like to thank my first two interviewees, Tuomo Telkkä at Siemens/Nixdorf and Kaarina Nazarenko at Helsingin Sanomat, for their frank comments. I would also like to thank my friend, Antti Pietilä, for helping me understand the interviewee point of view with his shrewd comments on my questionnaire.

I cannot appreciate enough the patience that my brother, Tuomas Arppe, has shown for my deliberations throughout the progress of my work on this thesis. With his stolid manner and straight-forward comments on what is essential, he pulled me many a time back down to earth.

I am especially grateful to my friends, Mika Naumanen and Hannu Rantanen, for taking the time to read through this thesis and comment on its contents and structure. I would also like thank my sister, Helena Arppe, for checking the style of this thesis.

Lastly, I would like to thank my parents for their encouragement and support throughout my studies. At this moment, I can appreciate their insistence on getting my studies - and especially this thesis - over and done with.

Helsinki, 1995-07-07

Antti Arppe

Abstract

Tiivistelmä (Abstract in Finnish)

Preface

1	Introduction		9
	1.1	Background	9
	1.2	Objectives		11
	1.3	Research methods	11
	1.4	Scope		12

2	Presentation of Lingsoft	13
	2.1	Background and history 	13
	2.2	Present business idea	16
	2.3	Product portfolio	17
	2.4	Lingsoft in the light of its technologies and markets	25
	2.5	Strategic partnerships	27

3	Market analysis		31
	3.1	Emergence of the language industry	31
		3.1.1	What is the language industry?	31
		3.1.2	Language industry in Finland	35
		3.1.3	Present trends and potential for growth in the				language industry	37
	3.2	Lingsoft's customers	39
	3.3	Lingsoft's present competitive environment 	43
	3.4	Market diffusion of linguistic tools	45
	3.5	SWOT analysis of Lingsoft's present situation	46
		3.5.1	Strengths	47
		3.5.2	Weaknesses	48
		3.5.3	Opportunities	50
		3.5.4	Threats	51
		3.5.5	Implications of the SWOT analysis	52

4	Literature survey	53
	4.1	Purpose and topics	53
	4.2	Integrated framework of organizational adoption and			diffusion of innovations	55
		4.2.1	Development process of a new product innovation	56
			4.2.1.1	Predevelopment phase	57
			4.2.1.2	Commercialization phase	59
			4.2.1.3	Lead user analysis 	60
			4.2.1.4	Beta testing	61
		4.2.2	Launch strategies of new products	64
		4.2.3	Adoption behavior	67
		4.2.4	Success factors of new products	70
		4.2.5	Overview of the framework	72
	4.3	Basic scenarios for new products	72

5	Market survey		75
	5.1	Purpose		75
	5.2	Target group	78
	5.3	Structure and conduct	80
	5.4	Immediate results	81
		5.4.1	State of information management in surveyed				Finnish organizations	81
		5.4.2	Demand for existing linguistics-based				information management tools in surveyed				Finnish organizations	89
		5.4.3	Demand for future linguistics-based information				management tools	91
	5.5	Analysis of the results	93
		5.5.1	Information management tool hierarchy and				information intensity scale	94
		5.5.2	Profile of a potential lead user customer	97
		5.5.3	Case studies	100

6	Conclusions		106
	6.1	Conclusions from the literature survey	106
	6.2	Conclusions from the market analysis and market survey	107
	6.3	Recommendations	108
		6.3.1	What should Lingsoft do?	108
		6.3.2	How should Lingsoft do it?	109

7	Evaluation of the results and their reliability and general	applicability		113

References			116

Appendices:

Appendix 1: Descriptions of Lingsoft's present linguistics-based tools	122
Appendix 2: Descriptions of Lingsoft's future linguistics-based tools	124
Appendix 3: Target organizations of the market survey	125
Appendix 4: Market survey questionnaire (original in Finnish)	126
Appendix 5: Market survey questionnaire (translation to English)	130
Appendix 6: Dependency analysis I	135
Appendix 7: Dependency analysis II	136

1	Introduction

1.1	Background

The coming of the information age and the information society has been augured for many years, if not for decades. One cannot, however, deny that a shift has occurred during this century in the emphasis of the use of human resources from the processing of material goods to processing information. Today one can truly speak of an information sector in the economy, consisting of "all those businesses, and units within businesses, whose function is to create, process, and handle information", as a counterpart to the production sector. In fact, about one half of the economic activity in the United States - and in other industrialized countries - has originated in the information sector since the beginning of the 1980's.

This growth of the information sector can be seen as a necessary and essentially rational response of the economy to the growing complexity and efficiency of the system of social production. This is the result of the progress of technology, with which the nature of work has changed in two ways. Work has become more specialized, and it has become more efficient. The outcome is that more and more people in organizations have become involved in so-called white-collar activities, constituting presently approximately 50 percent of the total workforce. In the future, the dominant factors determining economic output will be the efficiency and effectiveness of information handling functions: coordination, control and management. In other words, on the macroeconomic scale, economic growth in the future will be strongly connected to growth of productivity in the management of information.

Substantial progress in increasing productivity in the management of information has been achieved through the introduction of automated data processing such as word processors and electronic data base systems. The improvements do sometimes seem to be more in quantity than quality, however, as information is easier to produce or duplicate. In fact, in the United States alone one billion pages are produced every day. Furthermore, 1.3 trillion documents have been stored in United States business and government offices. Translated into figures for Finland, this would mean approximately 20 million pages produced daily and 30 billion documents in storage. Undoubtedly these quantities are bound to grow, and increasingly more of this information will be in electronic form. One can literally talk about an information explosion. In this situation, the onus is on organizations to develop an information management strategy and tools specifically for information produced in electronic form, tools that can keep up with the rate of production. This would mean fulfilling the following three objectives:

•	if information is produced in electronic form, there should be tools for its manipulation throughout its entire life cycle in electronic form
•	if information has been produced once in electronic form, it should be stored effectively in electronic form
•	if information has been stored once in electronic form, it should later be accessible effectively and dynamically in electronic form

It is evident that new forms of higher-level automated information management tools will be needed. In these tasks, the linguistic aspects of information have to be considered, as information is still mostly text. The coming of age of computational linguistics as an independent branch of science in the 1980's has made it possible to treat documents in electronic form linguistically. The diffusion of several commercial linguistic features into software applications, such as hyphenation and spell-checking into word processors, and computer-aided translation, are ample evidence that there is need and potential for a linguistic dimension of electronic data management. This is exactly the type of experience that Lingsoft has and can provide.

Lingsoft has been active throughout its existence in the development of linguistic tools for information management. Lingsoft was founded in 1986 to commercialize innovations in computational linguistics. For the first five years, Lingsoft mainly did project based work for organizations with specific needs for linguistic solutions. Since 1992, Lingsoft has conducted product development on its own. Lingsoft's aim in this has been to form a comprehensive selection of basic, traditional linguistic tools in four languages central for the company: Finnish, English, Swedish and German. This phase is expected to be completed during 1995. At the same time, however, markets for some of the these traditional linguistic tools are starting to show signs of maturation. Starting in 1994, Lingsoft has been exploring ways to combine its knowledge in linguistics with new market needs in information management.

1.2	Objectives

The primary objectives of this thesis are the following:

•	to construct a feasible product development strategy for Lingsoft
•	to present practical steps needed to implement this strategy

Simply put, this means answering the following two questions:

•	what should Lingsoft do?
•	how can Lingsoft do it?

In fulfilling these main objectives, this thesis also has the following secondary goals:

•	to assess the present products and technological resources of Lingsoft; in other words, the technology push of the company
•	to assess the potential present and future needs on the market; in other words, the market pull
•	to estimate the potential, growth and trends of the market and their impact on Lingsoft

It is interesting to note that these objectives coincide to a great extent with the strategic problems for management that Pavitt presents for specialized supplier organizations:

•	matching technological opportunity with users
•	absorbing user experience
•	finding stable or new product niches

1.3	Research methods

This thesis will use common research methods and sources with the following comments.

Literature provides a starting point for the thesis. The nature of the contents of this thesis, that is the novelty of the technology and business in question, may have the effect that the literature on the related subject fields is scant and off-the-mark. The purposes of going through relevant literature will be two-fold: to give a picture of what is presently known and established about the Lingsoft's field of business, and to provide the theoretical framework for the thesis. The study of literature will on the one hand focus on the language industry, and, on the other hand, on research results in market diffusion of new product innovations, in new product adoption, and in new product development processes.

In order to supplement the information found in the literature, this thesis will rely heavily on interviews of people familiar with or involved personally in the field. This will hopefully clarify the picture of what is actually going on and what changes are anticipated. Thus, employees of Lingsoft, its present customers, competitors, and partners, not to mention members of the academia, will be important sources of information.

To compile new information, a thorough market survey will be undertaken. The aim of this market study is to get an in-depth insight into what potential customers need, and what they are ready and willing to invest in. Therefore, the market survey will concentrate on a limited selection of core potential customers. The market survey will be conducted as a combination of a comprehensive questionnaire and thorough follow-up interviews of key people in the organizations. The results of the market survey will also be accompanied by a rigorous case analysis of selected organizations to elaborate on the key issues affecting the adoption process of the new product innovations that Lingsoft can provide.

1.4	Scope

This thesis will concentrate on the potential product concepts in information management that Lingsoft should strive at. In addition, this survey will attempt to establish the profile of a potential customer for these new products. Therefore, information gathered from the market will be of utmost importance. The emphasis will be on potential in linguistics-based information management systems, although the company does have resources in other fields, too. For practical reasons, the scope of the market survey will be limited to Finland.

The emphasis of the thesis will be in marketing and product development strategy. Therefore, overall strategy, organizational analysis, and financing will be examined only to the extent that they concern the main emphasis of the thesis. Furthermore, it is not the intention of this thesis to present an explicit full-scale marketing and product development strategy. Instead, this study aims at presenting a framework for developing such a strategy.

2	Presentation of Lingsoft

2.1	Background and history 

Lingsoft's beginnings can be traced to the meeting of two different approaches - and researchers - to the same linguistic problem in the early 1980's.

On the one hand, Fred Karlsson had been appointed Professor of General Linguistics at the University of Helsinki in 1980. Having originally specialized in the study of Finnish, Karlsson initiated research on the possibilities of computerized analysis of Finnish in 1981. This research program was given four years of funding by the Finnish Academy.

On the other hand, Kimmo Koskenniemi had given up his administrative post at the Computer Center of the University of Helsinki in 1978 in order to devote more time to research. Having originally studied mathematics, Koskenniemi came up with the idea of applying finite automata to the modeling of morphology. This idea finally matured into a scientific and practical theory now known as Two-Level Morphology (TWOL), which Koskenniemi presented in his doctoral dissertation, published in 1983.

Having these mutual interests, Koskenniemi joined Karlsson's research program at the Department of General Linguistics as a researcher in 1981. The first practical applications were hyphenation and generation of search prefixes.

Though the research program had a four-year grant from the Finnish Academy, additional funding was received during 1984-1986 from large Finnish companies such as Imatran Voima, IBM, Telecom Finland and Nokia. Typically, these companies financed specific research for which they had an explicit need. In other words, they subcontracted research from the Department and indirectly, from the University of Helsinki. Though natural nowadays, and actually desirable, in the 1980's this sort of cooperation with industry was still considered awkward in the eyes of the central administration of the University of Helsinki, as it was felt it might compromise the independence of research at the University of Helsinki. In addition, both Karlsson and Koskenniemi themselves felt that it was improper to conduct actual product development within the university. Furthermore, Karlsson and Koskenniemi felt there was potential for language tools on the market. This could be justified with their personal experience of the willingness of companies to finance customized research at the Department. These events lead to the founding of Lingsoft in 1986.

Initially, Lingsoft was set up as a limited partnership company, with Karlsson, Koskenniemi, and Keijo Kaivanto, a lawyer and old friend of Koskenniemi's, as actual partners, and the wives of Karlsson and Koskenniemi as silent partners. Kaivanto's role has mainly been to assist in legal matters, which seldom surface. Thus, his role in the company's development has been minor. In 1989, the company changed its status to that of a limited liability company, with initial assets of 15,000 FIM. The distribution of shares among the five shareholders has remained the same throughout the company's existence.

In addition to separating product development from basic research, there were other motivations for founding Lingsoft. One aim was to remove the supremacy of the English language in software applications by providing Finnish linguistic solutions in areas such as hyphenation and spell-checking - features which had earlier been available only in English. Another aim was to broaden the scope of research in computational linguistics by creating an entity independent and separate from the University of Helsinki which could attract private and public funding - especially such funding that the University of Helsinki could not receive. Thus, employment and research opportunities could be created and maintained for computational linguists. Karlsson and Koskenniemi considered this almost a responsibility, since both had worked hard to get computational linguistics a chair at the university. Even more personal this has been for Koskenniemi, who was appointed Professor of Computational Linguistics in 1992.

As an independent company, Lingsoft started out by doing contracted work in linguistics-based on specific customer demand. It was not until 1986 that Lingsoft came out with an independent software product that was not customized for just one particular software application. This was FINSTEMS, which produced search prefixes from given Finnish words in the base form. FINSTEMS was followed by FINHYP in 1987, which was a hyphenation module for Finnish words. These were followed by a range of products, which will be presented in more detail in section 2.3 and Appendix 1.

The most successful individual contract in the company's history was the licensing of Finnish hyphenation to WordPerfect, which gave Lingsoft a 10 percent royalty on every WordPerfect word processor program sold in Finland. Other major contracts have been the licensing of the spell-checking module to Siemens Nixdorf/Monigraaf for their TOTI publishing system software and the integration of Lingsoft's search prefix generation and base form reduction modules to the article data base system at Helsingin Sanomat, Finland's largest daily newspaper.

Lingsoft and its personnel have also been successful in gaining other recognition on several occasions. In 1988, Karlsson and Koskenniemi received the Vuoden ATK-teko award - the achievement of the year in computing - from Tietotekniikan Liitto - the National Association of Computer Science - as commendation for their work in computational linguistics. In 1994, Lingsoft gained first place in Morpholympics, a competition in modeling the morphology of the German language. What made winning Morpholympics even more significant was that Lingsoft beat seven teams from German universities and research units, being the only foreign team invited to the competition.

In the beginning, Lingsoft employed personnel on a project basis. In the early years, that is the 1980's, this meant a medium of 2-3 employees at any given time. Sometimes there could be as many as 4 employees, at other times none. There was an interchange of people between Lingsoft and the Department of General Linguistics, with people working first on a project at Lingsoft and then continuing at the Department, and vice versa. Usually, projects at Lingsoft lasted 2-3 years at a time. All in all, some six people were involved with Lingsoft projects in the 1980's. Whatever administrative tasks there were, they were handled by Koskenniemi, who was the managing director until 1992.

A shift toward more permanent tenures began with the choice of Krister Lindén as managing director of Lingsoft in late 1992. Since then, the permanent personnel of the company has grown to include six people altogether, with two linguists, two programmers responsible for product development and technical support, and one full-time person responsible for marketing and sales, in addition to the managing director. The managing director has among other tasks been involved in negotiating long-term partnerships and strategic alliances.

As a limited liability company, the annual sales of Lingsoft lingered without much change around 500,000 FIM annually in the early years 1986-1991. The shift towards permanent tenures with a new managing director in 1992 was accompanied by a gradual growth in annual sales and the average number of employees. This development together with the proportion of exports since 1992 is shown in table 2.1. The table also shows the value for sales per employee, which has stayed approximately the same between 200,000-300,000 FIM annually. Compared to the Finnish software industry in general this figure has been below average until last year. The leadership of the company does acknowledge that the company's sales efforts have to be much more effective and productive in the long run.

Table 2.1: Annual sales and proportion of exports of Lingsoft during 1992-1995 compared to industry averages
Year	1992	1993	1994	1995 (estimate)	
Sales in millions FIM	0.4	1.3	1.4	3.5	
Ratio of exports of sales (%)	50%	45%	25%	60%	
Average number of employees	2	5	5.5	11	
Sales per employee in millions FIM	0.20	0.26	0.27	0.32	
Sales per employee on the average in the software industry in millions FIM 	0.31	0.29	-	-	

During its existence, Lingsoft has distributed dividends only once. During all the other years, what profit has been made has been added to the assets of the company. Thus, Lingsoft's assets have grown from the initial 15,000 FIM to circa 200,000 FIM in 1994. Lingsoft has therefore never been a financial bonanza as such for its founders and owners.

2.2	Present business idea

In its early years, Lingsoft did not have an explicit business idea in the traditional sense. In spite of this, Lingsoft was able to function rather painlessly for many years, partly because of good luck. In the last years, however, the need for a clear market-oriented business idea and a determined strategy has been taken seriously in order for the company to survive on the long run. This has become especially evident as the traditional sources of revenue for the company - hyphenation and spell-checking - have begun to mature or even dry out.

According to Lingsoft's business plan for 1995, the company sees itself as an information refinery. Lingsoft's business idea is the following:

Lingsoft's business idea is to provide high-technology software tools and solutions based on established linguistic theories in order to enable and support the management and manipulation of textual information.

The business idea of Lingsoft implies a shift from direct manipulation of individual texts, such as hyphenation and spell-checking in word processing, towards full-scale management of large amounts of texts, such as classification and queries in text data bases.

The subsequent business strategy is to start off with customized solutions for organizations that already themselves realize a need for improvements in the management of information. It is expected that later these experiences can be used to provide generic information management tools for an increasing group of customers. Presently, the scope of Lingsoft's activities in information management is restricted to Finland. In the future, promising opportunities are seen in Scandinavia and Germany.

Lingsoft's business idea could be seen analogous to a tailor - a high-technology tailor in linguistics, to be exact. The basic tools are the same for all customers: Lingsoft's basic technologies are just like a tailor's scissors or needle and thread. Every customer has their specific, individual needs, which must be assessed, just like a tailor takes measurements of his customers. And, just like a coat made by a tailor for one customer does not fit another customer perfectly, so Lingsoft's software that has been customized to meet one customer's requirements cannot be directly used as such by another customer without customization. On the other hand, using the services of a tailor are always more expensive than a factory-made solution. Or in the worst case, the services of a tailor are perceived expensive - even when they are not.

2.3	Product portfolio

Lingsoft's products can basically be characterized as language modules, which perform specific linguistic manipulations, operations, or tasks on given text. As such, they are of little use to others than pure linguists. Unfortunately, linguists are seldom millionaires, and therefore Lingsoft's modules always have to be attached to a more mundane application in order to be of commercial use or interest to the general public. In this role, they are typically perceived as properties of these applications rather than independent software. Such applications are word processors and data base systems, for instance.

A general overview of the composition of Lingsoft's language products is shown in figure 2.1 in the form of a four-leaf clover. Each product can be seen to combine four components: linguistic technology, linguistic operation or task, platform or environment, and language. All of these components have to be taken into account both individually and as fitting together to form a functioning product.

	BETA	String rewriting system
	TWOL	Two-level Morphology
	CG	Constraint Grammar
	FSP	Finite State Parsing

Figure 2.1: The four-leaf clover: the four components of a linguistic product

Technology has been given an extensive variety of different definitions, depending mainly on the context. One definition, which is quite broad in scope, is the following:

"Technology comprises the ability to recognize technical problems, the ability to develop new concepts and tangible solutions to technical problems, the concepts and tangibles developed to solve technical problems, and the ability to produce and use the concepts and tangibles in an efficient way." 

In Lingsoft's case, its core technologies are the linguistic and computational linguistic theories and methodologies to implement these theories, on which the linguistic modules are based. One has to note that much of the basic theory is in the public domain and has been published widely. However, there is much more to the practical implementation than just the theories, namely hard work and experience. In fact, some of Lingsoft's main technological assets are in the rather complex lexicons, morphological rules, and constraint grammar rules that have been produced over the years, and in the acquired knowledge of how to best produce new ones. Quite a portion of these assets can be reproduced, but not without substantial work, much of which would go into the learning process. Lingsoft technological resources are therefore to a great extent of the tacit type. Lingsoft's core technologies starting from the oldest are:

•	String rewriting system (BETA)
•	Two-level Morphology (TWOL)
•	Constraint Grammar (CG)
•	Finite State Parsing (FSP)

These basic technologies have all been developed at the Department of General Linguistics at the University of Helsinki, except for BETA. Comprehensive descriptions are available in scientific publications.    

One could also list under these technologies general software tools and solutions which are used to implement these methodologies. Since they are not a product of Lingsoft's development and are, on the contrary, available to anyone, they are excluded here. Such tools are programming languages and filter commands available in operating systems, for instance. On the other hand, some of Lingsoft's theories and methodologies are available in the public domain, and are therefore part of Lingsoft's intellectual property only as far as their implementation. Lingsoft cannot afford patenting or enforcing product rights. In addition, software patents have so far been fairly unreliable. As knowledge that has been published or is otherwise commonly known cannot be patented, Lingsoft's and its owners' strategy has been to publish the ideas but not their precise implementation. This serves the purpose that no one else either can claim these rights and thus restrict or obstruct Lingsoft's business. However, since they form the integral foundation of Lingsoft's products, it is questionable to omit them here. In any case, it is rather difficult to determine where the line goes between Lingsoft's very own technologies and those available to anyone interested.

The basic linguistic tasks or operations that Lingsoft's products perform are the following:

•	Tokenizing
•	Morphological analysis
•	Morphological generation
•	Disambiguation
•	Syntactical analysis
•	Phrase extraction

These tasks are familiar to any general or computational linguist and are as such of great use for professional linguistic work. With small adaptations, however, these tasks can be turned into more familiar linguistic tools that already exist on the commercial market:

•	Hyphenation
•	Spell-checking 
•	Grammar checking
•	Search prefix generation
•	Word form generation
•	Base form reduction

Appendix 1 contains brief descriptions of these tasks with examples. Each of these linguistic operations and tasks are based on a combination of one or more linguistic technologies. Figure 2.2 shows the present structure and relationships from technologies through operations to tools. As can be seen, some operations can be used directly as such for a linguistic product, such as TWOL-based morphological analysis for spell-checking. The output of these same operations can also be channeled through another operation, which should lead to better results. For example, the precision of search prefix generation, word form generation, and base form reduction in data base queries can be enhanced with the help of syntactic disambiguation.

	BETA	String rewriting system
	TWOL	Two-level Morphology
	CG	Constraint Grammar
	FSP	Finite State Parsing

Figure 2.2: Relationships between linguistic technologies, linguistic operations, and linguistic tools

The aforementioned linguistic operations also form the basis for future, higher-level information management tools. The practical implementations of these future tools are still mostly on the drawing board, and their exact nature is very much dependent on input from potential users. In 1995, however, at least the following uses can be envisioned for linguistic tools in information management (specific descriptions of these tools are presented in Appendix 2):

•	terminology management
•	automated intelligent index generation
•	text classification
•	text filtering
•	natural language database interfaces (NLDBI)

Platforms have to be recognized as an independent factor, as transporting an implementation from one programming environment to another may require some fine-tuning and customizing. This is basically a straight-forward process, but extensive testing is always required to ensure that the implementation really works as it is supposed to in the new environment. Even within the same programming environment there might exist subtle differences between different hardware solutions, but this normally causes no major problems. The generic platform classification in any software development presently is the following:

•	UNIX
•	Windows
•	DOS and extensions
•	OS/2
•	Macintosh

As of 1995, Lingsoft is able to provide all the implementations on more or less all the above platforms except Macintosh.

Language should be an obvious concept - all humans use some language to communicate every day. From the point of view of computational linguistics, however, certain restrictions must be set for the concept of language. Firstly, it is a prerequisite that the (natural) language has comprehensive linguistic descriptions of the phonology, morphology and syntax of the language. In layman's terms, this implies that the language has a written form and a grammar. Secondly, even though there is much research in direct recognition of speech and optical character recognition, most commercial linguistic tools presently are based on processing texts consisting of alpha-numeric characters in electronic form.

Even though the technologies available to Lingsoft - BETA, TWOL, CG, and FSP - have been shown to be language-independent, incorporating a new language is a rather time-consuming task. Therefore, languages can be divided into four groups according to which different tasks have been implemented for them:

•	languages for which all operations have been implemented or are being implemented: Finnish, Swedish, English and German.
•	languages for which the basic lexicon and morphological analysis and generation have been implemented: Danish, Norwegian, Russian and Estonian.
•	languages which would neatly complement the first two groups of languages (from Lingsoft's point of view): Dutch, French, Italian, Spanish.
•	languages with which Lingsoft has done some preliminary work: Swahili, Basque.

These groups of languages can be seen as a combination of levels of decreasing geographical proximity to Finland and Finnish organizations, decreasing economic importance for Finnish trade and Finnish organizations, and even decreasing cultural and social proximity and importance for Finland and Finnish organizations. Altogether, there are some 3000-7000 languages in the world. Serious work in computational linguistics has probably been conducted on more than a hundred languages. In addition, Japanese, Chinese and Arabic are probably the most commercially lucrative languages.

Interrelationships of these dimensions can be represented by a four-dimensional hyper cube. This hyper cube can in turn be projected as two-dimensional diagrams. The relationship between Lingsoft's technologies and the tools developed based on these technologies has already been presented in figure 2.2. The two other important relationships are the implementation of Lingsoft's different technologies on different platforms (table 2.2), and the implementation of different tools for different languages (table 2.3). As can be seen, the product portfolio of Lingsoft is not complete in the sense that all possible combinations of dimensions would already exist. A good analogy is a Swiss cheese, with holes here and there for the missing combinations.

Table 2.2: Implementation of Lingsoft's technologies on different platforms
Technologies/platforms	BETA	TWOL	CG	FSP	
UNIX	***	***	***	***	
Windows	***	***	***	*	
DOS/extensions	***	***	***	-	
OS/2	***	***	***	-	
Macintosh	***	***	*	-	
***	Fully developed and supported
(**	Some versions exist)
*	Under development or know-how exists for immediate development
-	not available at all
BETA	String rewriting system
TWOL	Two-level Morphology
CG	Constraint Grammar
FSP	Finite State Parsing

Table 2.3: Implementation of linguistic tools for different languages

***	Fully developed and supported
**	Some versions exist
*	Under development or know-how exists for immediate development
?	Under negotiation or through partnerships

In examining these relationships it has to be noted that a hierarchy exists among the dimensions, partly depending on the point of view taken. Firstly, it should be obvious that the technologies that Lingsoft has at its disposal are the foundation of all products. Without existing theories and their practical applications, that is technologies, no products could be constructed. Naturally, theories require extensive research and are much the result of intuition and invention, which simply cannot be forced or taken for granted.

Secondly, all the linguistic operations or tasks, or products for that matter, depend on an existing lexicon and morphological rules for each particular language. Constructing a lexicon and morphological rules is therefore the first task to be undertaken if any products are intended for some language. It takes, however, some 2-4 person-years to construct this language-specific foundation. Thus it is time-consuming, and therefore a bottleneck in the product development process.

On the other hand, since the technologies are language independent, all the tasks based on a lexicon are in theory immediately available once a lexicon is completed. This applies to tasks such as hyphenation, spell-checking, base form reduction, search prefix generation and word form generation. Other tasks such as disambiguation and phrase extraction depend to a great extent on the (constraint) grammar of each particular language, and thus require further development of a grammar before they, too, are available. This naturally requires ground work for each particular language.

As of early 1995, Lingsoft's investments in the development of lexica have paid back for Finnish and English. The investments in the lexicon for Swedish have almost paid back. On the contrary, the lexicon for Russian has never generated any revenues. And as the lexicon for German has only lately been finished, it is only starting to create revenues.

2.4	Lingsoft in the light of its technologies and markets

In this study, Lingsoft has been characterized as a small high-technology company. With less than twenty employees, the attribute small can certainly be justified. But what is meant by the concept of high technology? This concept was used frequently in the literature reviewed by the author, but it was typically expected to be understood implicitly. Beginning with a more general concept, a technology-based company has been defined to combine two basic characteristics:

•	high technology intensity
•	high creativity intensity

High technology intensity means that the activities of the organization are based on technical know-how. Furthermore, high technology means that the technical know-how is founded on the basis of radical innovation  that replaces an earlier technology or process. High creativity intensity means that the organization can develop new technical solutions to old technical problems. Based on the presentation in section 2, these characteristics can certainly be attributed to Lingsoft.

But high-technology companies are not all from the same mold. High-technology companies can be classified into four groups according to the novelty of technology and the novelty of the market (figure 2.3). Lingsoft's classification varies according to the point of view. If one takes Lingsoft's presently established products such as hyphenation or spell-checking, these products did present new technology and did create new markets, but that was ten years ago. At the time being, the technology behind these products and their markets are fairly established. On the other hand, if one examines Lingsoft's newest product developments in information management, we are seeing new technological implementations creating new markets. Thus, Lingsoft's cutting edge products have more or less been new at the time of their inception, but they have gradually lost their novelty with the passage of time. In this light, it would be fairly justifiable to place Lingsoft among the paradigm innovators.

Figure 2.3: Taxonomy of the innovation behavior of new, technology-based companies

The paradigm innovators were found to differ in certain interesting respects from organizations in the other three groups. The paradigm innovators were found to be:

•	younger than the companies in the three other groups
•	based on a more extensive research experience
•	more dependent on the incubating organization as a growth base and a contributor of initial technology
•	more active in tapping into external technology sources, particularly those in the public research establishment

These characteristics most certainly apply to Lingsoft. The long-standing relationship between Lingsoft and the Department of General Linguistics at the University of Helsinki seems to fit the picture perfectly.

2.5	Strategic partnerships

Lingsoft has engaged in active cooperation with other organizations from the very beginning. Cooperation is actually inherent for all aspects of Lingsoft's activity due to the very nature the company. A small company such as Lingsoft occupying a small high-technology niche simply cannot account alone for all aspects of its activity. The main foci of cooperation are in research and development, and in marketing.

In research and development, the natural partner has been and probably will be the Department of General Linguistics at the University of Helsinki. The basic technologies that Lingsoft bases its tools on originated at the Department, and are still undergoing substantial development and improvement as a part of ongoing scientific research. In fact, many of the researchers now working for the Department conducted projects in the early years of Lingsoft's existence. In this respect, a clear division of work has naturally arisen between the Department of General Linguistics and Lingsoft. Theoretical linguistic development is conducted at the Department, whereas Lingsoft acts as a channel for the commercialization of subsequent innovations. In this role, Lingsoft is not merely a passive recipient, but can through its hands-on knowledge of market needs direct the emphasis of scientific research in the Department through financial incentives such as royalties for profitable innovations. It is no big secret that the personal contacts between Lingsoft and the Department starting with developments leading to the founding of the company facilitate this cooperation. In addition, one cannot forget geographical proximity to the University of Helsinki as a whole.

Personal contacts are also behind another partnership in both research and development, and in marketing. In developing his Two-level model, Kimmo Koskenniemi engaged in a substantial exchange of ideas with researchers at Xerox Corporation, who were also devising a linguistic model of their own. This model took as long as the 1990's to mature into a practical implementation, but it is capable of 5-10 times greater speeds than Lingsoft's model. Having a feasible technology earlier than Xerox has given Lingsoft time to compile comprehensive lexica for several languages, particularly German, which Lingsoft has arranged to trade for access to Xerox's technology. This arrangement was finalized in early 1995. The intention is to trade the other Lingsoft lexica for access to Xerox's lexica for the Romance languages and Dutch. Lingsoft is also entering into marketing oriented strategic alliances with Filosoft in Estonia and Modus Språkdata in Sweden. The aim with these partnerships has been to generate sales for Lingsoft's existing linguistic resources in Estonian and Swedish through local organizations.

Lingsoft has also participated actively in linguistics-related projects promoted and financed by the Commission of the European Communities, GRAAL (Grammars Re-usable to Automatically Analyze Languages), DELIS (Development of methods for lexical semantic descriptions), and TRANSTERM (enhancing the management of terminology with linguistic methods). The value of these projects has mainly been in establishing contacts to other organizations active in the language industry and keeping up with pan-European developments. Though these projects officially strive for concrete results, the partners typically hold fast to any intellectual property that might have any real commercial potential.

Lingsoft also cooperates with many organizations through providing linguistic modules for integrators of various software applications. The relationship with WordPerfect was a long and a profitable one. These types of relationships do not, however, contain a long-term strategic aspect. The relationship is rather like that of a contractor and a subcontractor than equal partners.

Figure 2.4: Lingsoft's strategic alliances

Lorange and Roos have presented a two-dimensional model to describe generic types of strategic alliances. The two dimensions are the input of the partners' into the relationship and the partners' retrieval of the eventual output. Figure 2.4 shows the positions of Lingsoft's strategic alliances within this model. As can be seen, the alliances do not entail common organizations. There are no real joint ventures; rather the mixing of complementing technological competencies. The level of profit for Lingsoft and its partners depends on how well Lingsoft and its partners can exploit the combination of technologies to their mutual royalty-based benefit.

Another approach in examining strategic alliances is to look at their motivations from Lingsoft's point of view. Lorange and Roos provide a two-dimensional framework for measuring this aspect, too. This time the two dimensions are the strategic importance of the alliance for a partner and the partner's relative market position. Figure 2.5 shows the positions of Lingsoft's strategic alliances within this framework. In this case there is more differentiation. Xerox's linguistic technology as such is superior to Lingsoft's and is an alternative to Lingsoft's core technologies, so the definite motive for Lingsoft is to defend its position. As for Filosoft and Modus Språkdata, Lingsoft's position is more ambivalent, as Lingsoft has not had any real presence on the Estonian and Swedish markets - these markets have been somewhat peripheral. One could say that in some respects Lingsoft's motive has been to defend its linguistics technology leadership in these two countries. On the other hand, the motive has been to invigorate the sales effort and remain on these markets. The European Commission related projects, GRAAL, DELIS and TRANSTERM, on the other hand, deal with activities that are outside Lingsoft's core business. In the emerging markets of advanced information management, however, Lingsoft has state-of-the-art technology at the moment. It is in the interest of Lingsoft to remain in the forefront when the markets start to grow. In theoretical development, Lingsoft cannot match the resources of the Department of General Linguistics at the University of Helsinki, even though it concerns Lingsoft's core competencies. From the point of view of research and development, Lingsoft is in this case a follower. The only opportunity is to try to keep up with the Department.

Figure 2.5: Lingsoft's motives for strategic alliances

In worldwide marketing and overall financing, however, Lingsoft presently lacks a strategic partnership. In the long run, the existence of such a strategic partnership may be necessary to stabilize the company's existence.

3	Market analysis

3.1	Emergence of the language industry

3.1.1	What is the language industry?

The idea of a separate language industry (LI) as a sector of its own is a relatively new and vague concept. The language industry has, however, befittingly a magazine of its own, the Language Industry Monitor, whose editor-in-chief nevertheless calls language industry a "virgin territory". In general, the language industry can be defined as comprising "all technologies, products, and services which handle, process, or communicate information through language." Language engineering (LE) is used to denote the technologies on which the language industry is based. In practice, the language industry has been seen to include or touch on the following activities and application areas: [Lingsoft's fields of expertise have been marked with an asterisk (*).]

•	artificial intelligence and expert systems
•	CD-ROM and CD-interactive
•	computer-aided instruction and language learning
•	textual databases, document storage and retrieval and natural language database interfaces (*)
•	document image processing
•	word processing, text editing, multilingual word processing and electronic publishing (*)
•	electronic monolingual dictionaries, electronic translation dictionaries and electronic thesauri
•	spelling, grammar and style checking (*)
•	hypertext or SGML (Standard General Mark-up Language) tool
•	computer-aided translation and machine translation
•	natural language generation and understanding (*)
•	optical character recognition
•	speech recognition and synthesis
•	terminology data banks and terminology management (*)
•	text content analysis

As can be noticed, the above list is long and rather heterogeneous. Therefore, its present economic impact is difficult to estimate. Clearly, it is very difficult to draw the boundaries of the language industry, since its products can often be integrated into other products such as word processing, or other services such as translation. In fact, in the opinion of Jan Roukens at the Commission of European Communities, the concept of a language industry was coined for political purposes in the late 1980's for promoting language related research and business activities within the European Community. From Lingsoft's point of view, however, the language industry appears to cover the company's business quite adequately and provides a natural frame of reference for the company.

Figure 3.1: Language industry organizations by country or geographical area in 1993

Figure 3.1 shows the countries of operation of the organizations surveyed in the 1993 Language Engineering Directory. It must be said that the organizations included in the Directory were far from a complete set - the language industry in the whole world does include more than 615 organizations. The geographical emphasis in the locations of the organizations does, however, correspond quite well to the present centers of linguistic research activity. Firstly, the number of organizations in English speaking countries is quite dominating, with the United States, the United Kingdom and Canada representing 56 percent of all language industry organizations. This is no wonder considering the position of English as the lingua franca in the modern world. Secondly, the awareness of the importance of national languages in a multinational world can be seen manifested in the number of language industry organizations in countries at the core of the European Union. Altogether, France, Germany, the Netherlands, Belgium, Italy and Denmark account for 32 percent of the language industry worldwide. Thirdly, Japan has for long been the site of incessant research in especially machine translation. As a country it is a major player in the language industry, although it falls behind the combined strength of the European Union. Finally, former EFTA countries lag far behind the leaders. By itself, Finland had only two representatives in the directory. As is shown in section 3.1.2, however, the language industry in Finland is not as meager as the Directory would indicate.

As a field of its own, the language industry and its markets have some general characteristics which have been identified in a study by INK International and Van De Bunt Management Consultants for the Commission of European Communities. These findings hold especially for a multilingual community of countries that form the European Union.

On the supply or technology push side the following characteristics were identified:

•	Products remain undifferentiated, even when the only successes to date have been achieved by customized solutions.
•	The falling cost of information technology and the introduction of open systems within the last decade have lessened the role of a technical infrastructure as a bottleneck for the adoption of language industry products.
•	Success in connecting supply to demand depends to a great extent on the ability of the supplier to "activate and satisfy" realistic expectations on the demand side. The importance of this aspect is further underlined by a general disenchantment in several linguistic projects, EUROTRA for instance, sponsored in the late 1980's and early 1990's sponsored significantly by the former European Community. This situation is to a great extent analogous to that of CAD systems in early 1980's.

On the demand side, on the other hand, the following characteristics were identified:

•	Though the potential need for linguistic processing is immense, organizations are slow to realize the benefits provided by linguistic technology or their need for linguistic technology.
•	Potential customers consider technical limitations as a major inhibitor for the adoption of language technology. This is often a result of a mismatch of knowledge of the possibilities and limitations of language technology on part of the customer.
•	The potential of language technology in providing a competitive edge is little understood, and is not endorsed by the top management of organizations.
•	The importance and value of possessing functioning communication that lives up to both the organization's internal and external quality standards expected by the organization's customers or the negative effects of lacking it are beginning to be understood in organizations.

Another study has expressed the above characteristics in a nutshell:

"Users ... are not generally aware of the advances from which they might benefit. The market is deficient on two counts: research is not inspiring industry to develop commercial products and users are not creating enough demand on them." 

It is therefore no surprise that operating in the language industry is not considered very profitable. One feature behind this low profitability is most certainly the fact that many potential customers have a hard time accepting that linguistic tools are sold at a cost - when language as such has always been considered no one's property. In such a situation, the language industry is not for the impatient:

"Barring exceptions, [linguistic] product developers will have to wait a long time before they see any return on a pioneering venture." 

It became apparent in interviews with Lingsoft's present customers and in the market survey that the characteristics mentioned above are valid also for Finland. Thus, they have to be accounted for in Lingsoft's strategy.

3.1.2	Language industry in Finland

The foundations for a language industry in Finland were laid in the early 1980's when the first projects were started that aimed at creating practical implementations of language technology. To the general public, probably the best known was the ambitious Kielikone-project started by Doctor Harri Arnola in 1982, which aimed at creating a machine translation system, eventually from Finnish to English. At about the same time, the Department of General Linguistics at the University of Helsinki was implementing linguistic solutions for various Finnish and foreign companies, as has been described earlier in section 2.1. The actual birth of the Finnish language industry can be said to have taken place in 1986-1987, when these two research projects spun off two companies: Kielikone and Lingsoft. Initially, these two companies were in quite a fierce competitive situation, as they had (and still have) competing linguistic models and products for Finnish, for instance spell-checking. Lately, the competitive situation has started to mellow down as the two companies have headed in different directions. Kielikone still strives at a marketable machine translation system  , whereas Lingsoft has turned to implementing linguistics in information management.

Though Lingsoft and Kielikone still dominate the language industry in Finland, they are no longer the only companies or organizations on the Finnish market place or conducting research. By 1991, a study identified some twenty organizations in Finland involved in language engineering.  The academic flavor was still strong; six of these organizations were research units at universities or public research institutes; one was a private research center, namely Nokia Research Center. Most of these organizations were, however, engaged in the exploitation of language technology. Only six organizations were conducting some level of product development. In addition to Lingsoft and Kielikone, these organizations were Lanser Data, S-Methods, Probe, and Teknolingva. As of 1995, all of these organizations are still in existence. It is, however, very difficult to determine the status of their activities, as all the companies other than Kielikone and Lingsoft appear to maintain a very low profile. For example, in several articles in Finnish computer magazines regarding linguistic technology, only Kielikone and Lingsoft were known to the authors.  Therefore, it is also difficult to say whether new companies have entered the Finnish language industry market. No Finnish companies other than Kielikone, however, seem to be in any competitive position towards Lingsoft at the moment.

Based on the knowledge about organizations in the Finnish language industry it is practically impossible to give exact figures about the industry, but a rough estimate can be produced. Lingsoft and Kielikone combined employ approximately 20 people and have annual sales of about 10 million FIM. The other companies, added with the commercial activities of the universities and public research institutes, probably double these figures. Thus, the total employment of the language industry in Finland can roughly be estimated at 40 people, generating an annual sales of 20 million FIM. The Finnish language industry appears quite small indeed.

3.1.3	Present trends and potential for growth in the language industry

The breakdown of the Language Engineering Directory by product category should give some insight into the present point of emphasis on the existing market for linguistic products (figure 3.2). As can be seen, computer-aided language learning (CALL) includes twice as many products as the second strongest category, namely word processing. The rest of the categories seem to form a relatively undifferentiated gray mass.

	SGML	Standard Generalized Mark-up Language

Figure 3.2: Products in the 1993 Language Engineering Directory by product category (some 1,100 products included altogether worldwide)

Lingsoft's present products cover or are integrated into many of the product categories in figure 3.2, such as document storage and retrieval, word processing and electronic publishing. But as has been stated earlier, the language industry has not yet quite made full impact on the overall economy, partly due to a mismatch in supply and demand. Where then is the future of the language industry? Seven application areas have been identified from which economic benefit could be derived:

•	real time telecommunications for example with telephones
•	electronic messaging such as facsimile or electronic mail
•	on-line information applications such as videotex
•	office systems applications such as word processing and desktop publishing
•	operational systems applications such as transaction processing
•	translation support
•	computer-aided language learning applications

In these application areas, it has been estimated that the total benefit of using language technology over a five-year period starting in 1993 would be 210,000 new jobs in the then 12 member states of the European Union alone. In addition, the economic output of the same member states during this five-year period was estimated to grow by 26 billion ECU. This represented a 0.55 percent growth to economic output in 1993. The benefits do, however, encompass the whole economy, not just the language industry. Furthermore, these estimates do seem quite optimistic to people acquainted with the language industry.  Table 3.1 shows the breakdown of the projected benefits of using language technology. In these fields, Lingsoft is already active in terminology work for increased translation productivity, localization of office systems, and the improvement of information storage and retrieval with linguistic modules.

Table 3.1: Projected benefits of language technology over a five-year period starting in 1993 in the then member states of the European Union as estimated by Ovum
Benefit	Jobs	Economic output in billions ECU	
Increased translation productivity	36,000	4.0	
Localized office systems	35,000	5.8	
Better telecommunications through voice recognition	30,000	3.3	
More effective document storage/retrieval	29,000	3.2	
Wider use of optical input systems	25,000	4.2	
Increased European use of on-line information	22,000	2.2	
Increased market share for European software suppliers	12,000	1.2	
Wider use of computer-aided language learning	10,800	1.2	
Translation in messaging	9,700	1.0	
Total benefit	209,500	26.1	

3.2	Lingsoft's customers

The structure of the market of the language industry can be seen as a pyramid (figure 3.3). At the top, there is a limited number of very large organizations, which are ready to pay substantial amounts for customized linguistic solutions. Beneath these mammoths there are smaller and smaller organizations, and at the bottom there are individual people. The further down the pyramid one goes, the more numerous the customers are. On the other hand, the linguistic products must become more generic and less expensive the lower one goes down the pyramid. In some larger European countries such as France, organizations in the language industry feel that the lucrative top has nearly been exhausted. In Finland, the language industry has been in existence for a shorter period, so it is premature to say that the same holds here, too. But, it may very well be that Finland altogether lacks organizations of the very largest kind that have fueled the language industry in France, for instance.

Figure 3.3: Customer pyramid of the language industry 

Customers can also be classified according to their role:

•	software integrators
•	end-users
•	trial and research users

By their nature, Lingsoft's linguistic tools are licensed as original equipment manufacturing (OEM) products. From the viewpoint of the general end-users, they attain maximum usefulness only when integrated with other data processing software such as word processors or data base systems. The natural idea in this process of OEM marketing is that a software integrator caters to the general needs of the end-user, including even determining the end-user's needs for linguistic tools (figure 3.4). The software integrator then relays these linguistic needs to an OEM producer such as Lingsoft which provides the appropriate linguistic tools. The software integrator then integrates the linguistic tools into an overall software application, which is finally delivered to the end-user. Thus, Lingsoft's actual customer is the software integrator. In such a case, Lingsoft's main marketing objective is to promote the advantages of linguistic products to the software integrators. The software integrators in turn take care of the marketing effort to the end-users. Typically, Lingsoft receives a royalty for every integrated product sold with such an arrangement.

Figure 3.4: Traditional relationship between Lingsoft, software integrator and end-user

Some software integrators which are Lingsoft's customers are the following:

•	WordPerfect: hyphenation and spell-checking for word processing
•	Siemens Nixdorf/Monigraaf: hyphenation and spell-checking for publishing systems
•	Valtion tietokonekeskus: hyphenation and spell-checking for word processing
•	BRS Software Products: search prefix generation and base form reduction for data base systems
•	New Generation Software: search prefix generation for data base systems

From Lingsoft's point of view, this traditional arrangement gives the benefit of covering all the end-users of a particular integrated software application with only one sales effort. Even a relatively small royalty can lead to substantial revenues with the effects of scale, as was the case with WordPerfect. The problem with such arrangements is, however, that all too often Lingsoft's linguistic tools are considered by the integrators rather as additional costs than additional competitive advantages. For instance, linguistic tools are often made optional, and software integrators have little interest in promoting them.

It has appeared that many software integrators are actually insensitive to the linguistic needs of their end-users. Often this is because of either the integrators' insufficient knowledge or ignorance of the particularities of linguistic solutions, or the end-users' or the integrators' unawareness of or disinterest for existing linguistic solutions. It might seem difficult for Lingsoft to deal directly with customers without having the software integrator as an intermediary. But there are end-users that are very aware of the benefits of linguistic tools. As a result, a different type of relationship can also exist among Lingsoft, the end-users and software integrators (figure 3.5). In this case, either as a result of end-user or Lingsoft initiative, the end-user negotiates the acquisition of particular linguistic tools directly with Lingsoft. The end-user then finds a suitable software integrator to combine the linguistic tools into a software application. Often, some customization of the linguistic tool is involved in this type of arrangement.

Figure 3.5: New relationship between Lingsoft, software integrator and end-user

In the case presented in figure 3.5, the end-user is actually Lingsoft's customer. These arrangements are attractive from Lingsoft's point of view as Lingsoft receives a royalty directly from the end-user without the software integrator as a middle man. The main limit is that the software licensing agreement with the end-user has to be large enough to compensate for the costs, of the sometimes very long sales negotiations and customization process. Presently, the sales effort is estimated to be at least 20,000 FIM for any sizable project. Thus, Lingsoft cannot provide spell-checkers to every individual owner of a word processor, for instance.

Typically, end-user customers of Lingsoft process large amounts of text. Some of these end-user customers are:

•	Helsingin Sanomat: search prefix generation and base form reduction for data base systems
•	Aamulehti Group: search prefix generation and base form reduction for data base systems
•	HarperCollins Publishers: base form reduction

Lately, most of Lingsoft' customers have been of the end-user type. The number of such customers that are willing to pay for a customized linguistic solution is unfortunately limited, especially in a small country such as Finland. An ideal situation would be that these pioneering end-users would convince software integrators to include the same linguistic tools as standard components of their software applications.

In addition, Lingsoft provides organizations an opportunity to try out linguistic products for a limited amount of time. Lingsoft also provides linguistic tools for academic institutions strictly for research purposes. Firstly, this promotes the visibility and credibility of Lingsoft's products. Secondly, these trials might eventually lead to commercial products, from which Lingsoft could then benefit.

Some of these trial or research customers are the following:

•	Apple Computer
•	Microsoft
•	Novell Development
•	AT&T
•	University of Stuttgart
•	University of Basel
•	University of Tampere

In negotiating with its customers, Lingsoft is involved in the fine art of selling intellectual property rights. This has lead to relatively long and tedious negotiations where one year is not a long time. It appears that deals in the language industry take a long time to mature because of the relatively small revenues available. For instance, it took three years to negotiate the strategic partnership with Xerox.

3.3	Lingsoft's present competitive environment 

As was shown in section 3.1, there are quite a few organizations operating in the language industry both in Finland and in other countries. One could expect a relatively competitive environment, but the situation is not simply so. Not so much as against each other, organizations in the language industry must literally compete for their existence against a general atmosphere of latent demand paired with slow adoption. Thus, one could say that software applications outside the sphere of linguistics, and their providers are in fact major competitors for organizations in the language industry.

The first key competitive factor in the language industry is the assortment of languages in which an organization is able to do linguistic work, and for which it is able to provide linguistic tools. On the one hand, the language factor determines the national markets where an organization in the language industry can operate in general. On the other hand, software integrators operating on the international markets typically favor multilingual solutions for their software applications, so the languages a linguistic subcontractor can cover becomes an essential factor. In catering to software integrators, Lingsoft has hitherto stuck to the Finnish market. In the case of large end-users, Lingsoft has had activity both in Finland and in Western European countries, and to some extent in the United States. In this respect, Lingsoft has much more maneuvering room than Kielikone, which is committed only to Finnish, and is therefore restricted to the Finnish markets.

The second key competitive factor in today's language industry, which may even surpass language in some cases, is the versatility and flexibility of an organization. Especially in a situation where there is imperfect market demand, the ability of an organization to answer and adapt to a wide range of different linguistic tasks becomes a competitive advantage. An organization in the language industry that can provide only a narrow range of solutions is in deep trouble. Here, Lingsoft benefits from the theoretical soundness and generality of its core technologies.

In integrated software applications, Lingsoft had a firm foothold in the hyphenation and spell-checking in the Finnish markets with its deal with WordPerfect. However, as WordPerfect has been giving in to Microsoft Word during the last few years, Lingsoft's market position has deteriorated considerably in Finland. Furthermore, the hyphenation and spell-checking of Finnish for Microsoft Word was grabbed by Infosoft as part of a package deal for a number of languages. With its palette of 12 major European and Scandinavian languages, Infosoft, based in the United States, is presently the global market leader. Infosoft has a 10-person strong marketing staff, compared to Lingsoft's one. However, the low quality of Infosoft's solution for Finnish has left ample room for marketing stand-alone hyphenation and spell-checking tools directly to end-users. Here, Lingsoft faces strong domestic competition from Kielikone, which has recently introduced a new, application-independent hyphenation and spell-checking tool on the Finnish markets. Kielikone markets its tools via subcontractors. Presently, Lingsoft does not yet have a fully functioning stand-alone hyphenation and spell-checking tool of its own.

Abroad, Lingsoft has little presence in the hyphenation and spell-checking of languages other than Finnish, as Infosoft dominates the market with its "full" palette. Other competition in member countries of the European Union comes from numerous former partners in the EUROTRA project, which now have to support themselves on the commercial market. Lingsoft does, however, have a market niche in small integrators that want to differentiate themselves. Regarding search prefix generation and base form reduction, Lingsoft faces presently virtually no competition in Finland. Outside Finland, Infosoft is again the main competitor.

Porter has presented a general model for examining the structure of the competitive environment of an organization. In this model, Porter identifies four key forces:

•	potential entrants
•	substitutes
•	suppliers
•	buyers

From Lingsoft's point of view, the threat of entrants, especially to the Finnish market, is quite low. Presently, the most efficient tools are based on a linguistic model including a lexicon and a set of morphological rules, which takes several years to develop. This barrier can be circumvented fast only by exchanging linguistic models, which is, however, quite uncertain. As regards to potential substitutes, statistical methods, in which some schools of linguistics have placed high hopes, have not been nearly as effective yet. Though advances in neural networks coupled with ever more efficient computer technology could theoretically develop into a substitute, this is still years in the future.

Since Lingsoft possesses the basic technologies and linguistic models all by itself, it has no real suppliers. Lingsoft does benefit, however, from the work of external researchers, namely at the University of Helsinki. If Lingsoft fails on the long run to deliver economic benefits to these "suppliers", it risks seeing these people found competing enterprises or even selling the results of their work to competitors. The bargaining power of the buyers varies. In the case of traditional linguistic tools such as hyphenation and spell-checking, competing products exist and buyers can "shop around" and squeeze the best price. In the case of more sophisticated linguistic solutions, Lingsoft is presently practically the only company on the Finnish market that has the flexibility to accomplish varying tasks. And, most important of all, Lingsoft has references to show in this respect.

3.4	Market diffusion of linguistic tools

The basic linguistic tools - hyphenation, spell-checking and search prefix generation - have been adopted at different paces on the markets where Lingsoft has any interests (figure 3.6). Hyphenation can be and has been implemented for practically any software application where any need exists. Some version of spell-checking exists in almost all word processors and publishing systems. On the other hand, search prefix generation, along with base form reduction, is only now beginning to be considered an integral part of text data base systems.

In the case of hyphenation and spell-checking, this saturation does not mean an end to the markets. As new versions of software applications and new software applications altogether appear on the market, the hyphenation and spell-checking modules must be updated and integrated all over again along with any other modules accompanying the applications. Any major change in this cycle will be caused by the inception of new technological solutions to replace the old ones.

Figure 3.6: Market diffusion of linguistic tools
(S-curve according to Rogers )

New solutions are being developed, indeed. In hyphenation, shifting from algorithm-based solutions to lexicon-based solutions is finally becoming possible with faster processors and larger memories in personal computers. In spell-checking, the integration of neural network based recognition of misspelled words is coming up within the following few years. As for search prefix generation and base form reduction, these linguistic tasks are still undergoing a phase of growing adoption. They could be augmented or replaced by concept hierarchies which are undergoing intense research activity, but practical implementations still lie in the unforeseeable future.

3.5	SWOT analysis of Lingsoft's present situation

Probably the most general method of analyzing how an organization can cope with its environment is the SWOT analysis. SWOT comes from the words Strengths, Weaknesses, Opportunities and Threats. It is important to notice that a SWOT analysis is not done on absolute terms but relative to an organization's external factors. On the one hand, strengths and weaknesses represent forces affecting the organization internally. Opportunities and threats, on the other hand, represent external forces affecting the organization. Also, it is possible for some factors to appear both as strengths and weaknesses, or as opportunities and threats. This usually implies that the meaning of the factor depends greatly on the aspect that is taken. The emphasis of the following SWOT analysis is on Lingsoft's position on the information management market.

This SWOT analysis was based on interviews with two major customers of Lingsoft and on the author's own observations. These initial results were afterwards discussed and augmented in two internal brainstorm meetings with Lingsoft's employees and Lingsoft's owners. The final analysis presented here was compiled by the author.

3.5.1	Strengths

The following strengths have been identified:

•	Lingsoft has strong and active contacts with relevant national and international scientific communities in computational linguistics. The ties are especially strong locally with the Department of General Linguistics at the University of Helsinki. These contacts come both through the founders of the company and through its own research.
•	Victory in Morpholympics gives own credibility separate from the credibility of the founders, since the work was completed solely at Lingsoft.
•	Lingsoft is strong both in linguistics and computer science. This originates from the company's background, with Fred Karlsson contributing to the linguistic knowledge and Kimmo Koskenniemi to knowledge in computer science.
•	Technologies available to Lingsoft are theoretically sound, robust and efficient.
•	Technologies available to Lingsoft are language independent in the sense that they can be used for any language.
•	Lingsoft's organization is small and has virtually no hierarchy. Therefore the company can be very flexible when needed.
•	Lingsoft's personnel are highly competent in research and development due to long-time experience. In addition, Lingsoft's good ties with the Department of General Linguistics at the University of Helsinki make it possible to recruit new personnel.
•	Lingsoft has been risk averse, so the company is not burdened by debt. On the contrary, Lingsoft is in a position to take in outside risk capital to finance the development of new products in information management, if the decision is made.

3.5.2	Weaknesses

The following weaknesses were identified:

•	The owners and main backers of Lingsoft are also professors at the University of Helsinki. At least superficially, this might seem like a conflict of interest to outsiders, especially since the issue of professors' side activities has been in the spotlight recently. Furthermore, the owners would be unable to assist the company full-time if the company were to embark on a project that would profit from the assistance of the owners.
•	Lingsoft's reputation and contacts, especially on the international level, still rest to a great extent on those of its founders. Lingsoft would have a hard time operating without its founders.
•	Lingsoft is a very small company and does not yet have a big-name strategic partner, which may lead to low credibility. This is a generic problem in the language industry.
•	Lingsoft's organization is small and therefore extra resources are scarce; most significant new developments require new employees. Hiring new personnel, however, is a long and risky process. Since Lingsoft's personnel gain their competence mainly due to experience it takes a long time to train new personnel to the same level of competence as old employees. This applies for both research and development personnel and marketing and sales personnel. Although Lingsoft has good contacts with the University of Helsinki, it is difficult to find people that have a good knowledge mix of linguistics, computer science and marketing. This, too, is a generic problem in the language industry.
•	Lingsoft's technological competence resides to a great extent in its personnel. Should any single employee leave this would diminish the company's competence. Furthermore, it would be difficult for other personnel to compensate as they are already fully involved in other projects and tasks.
•	Lingsoft's managing director is burdened with numerous responsibilities. As is typical for small companies, money is often tight and the company is not able to afford support personnel such as a secretary or book-keeper. In addition, a few years back the managing director had to divert much time into tutoring fresh personnel in their tasks as he was the only one with the necessary knowledge. Furthermore, as the resources of the managing director are limited, sometimes major projects have involved the managing director to the extent that other projects have been stalled.
•	There is still some public research unit mentality in the company. Some employees are mainly involved in their own projects, of which other employees know little. In addition, individual employees are not fully aware of the company's activities and strategic goals. Lingsoft would benefit from a more organized dialogue between the research and development staff and the marketing and sales staff. In addition, individual employees should be prompted to take a more active interest in the overall activities of Lingsoft and their promotion.
•	Lingsoft's operations have hitherto been rather technology-push oriented than market-pull oriented. Therefore, products have not been created according to market demand. Lingsoft has been weak in turning its innovations into products. The company is seen to be obsessed with perfection, not with addressing customers' problems. Furthermore, Lingsoft has not developed practical, long-term experience in marketing. As a consequence, Lingsoft's marketing, at least in Finland, is more passive and less aggressive than that of its competitors In addition, Lingsoft has had an overtly amateurish air in its marketing.
•	Lingsoft's marketing activity is still in a state of flux and disarray. The company's external contacts sometimes go uncoordinated despite its small size. In addition, Lingsoft has practically no after-sales service. After a product or service has been delivered, Lingsoft has had virtually no contact with its customers.
•	Lingsoft has neglected its public image. For instance, it has not exploited its successes to the fullest. Compared at least to Kielikone in Finland, Lingsoft and its products are relatively unknown to the general public and to the business community.
•	Lingsoft's activities spread out to many different directions, which drains the company's resources. Maintaining and updating the company's various linguistic resources requires a great deal of attention from the personnel. In addition, Lingsoft is involved in three European Union sponsored projects, and is conducting a major project for Microsoft. Considering the amount of negotiations associated with the sale of any individual product, Lingsoft has a relatively high number of different products compared to other small high-technology companies known to the author. All these factors together may lead to a loss of focus in Lingsoft's activities.
•	Many of Lingsoft's products are not independent but have to be integrated into other software applications. Lingsoft is therefore dependent on the sales efforts of its contractors and has little leverage on the sales of its traditional products such as hyphenation and spell-checking.
•	Lingsoft does not have a steady flow of income, since its revenues come from the sales of products integrated into software applications, and from individual linguistic projects. This may result in liquidity shortages.

3.5.3	Opportunities

The following opportunities were identified:

•	International developments are favorable to the development of information management tools. The amount of international communication is growing exponentially, and the amount of information is growing exponentially. Furthermore, electronic media of information production and exchange are steadily replacing old manual media.
•	Finland provides a fertile environment for the development of information management tools. Firstly, Finland's information networks are among the world's most advanced, and the Finnish people are relatively computer literate. Secondly, Finland depends greatly on foreign trade and cooperation. Thirdly, Finland's joining the European Union reinforces multinational communication, especially on official levels, but also among different industries.
•	Active research is being conducted in the field of information management. As a result, plausible theories exist for implementing information management tools based on linguistics.
•	General technological development is both adding to the need for information management tools and making information management tools easier to implement. Computer performance, such as memory size and processor speed, is still growing. As a result, more and more hardware platforms and software applications will be able to run Lingsoft modules.
•	The market is new. Therefore, there is room for different approaches and solutions. Furthermore, potential competitors have not been able to fix the market by standards or benchmarks.

•	Lingsoft occupies a small, specialized niche, namely linguistics. This being the case, there are good opportunities for forming strategic alliances with large companies operating in information management in need of Lingsoft's know how.

3.5.4	Threats

The following threats were identified:

•	Lingsoft's old sources of revenue can dry out before new sources have been established. On the one hand, hyphenation and spell-checking are no longer the gold mines they used to be. On the other hand, the implementation of theories of information management requires substantial amount of work resources. In any case, there will not be a marketable information management product available for 1-2 years.
•	The information management market is at an infant stage. There is little information on pricing for information management tools. Furthermore, there are few standards or benchmarks. The concepts of information management are new and have not been proven competent in practice. Therefore, it can be difficult to convince potential customers. Excessive expectations may exist from the very beginning, or they may be easily created. For instance, publicly funded research programs can dump and distort the market with under-priced, half-finished sort-of products. And finally, there is a great deal of speculation about a lucrative market for information management, but there is no real information on actual customer needs, or estimates on market potential.
•	Lingsoft can be too early on the market. In such a situation organizations might not yet be mature for Lingsoft's advanced solutions.
•	Financial resources are still scarce in organizations after the recession. Information management competes with many different software applications. Information management might yet have a low priority in organizations.

3.5.5	Implications of the SWOT analysis

Based on the SWOT analysis, Lingsoft is in a situation which is probably quite identical to that of any small organization facing entry to emerging high-technology markets. On the one hand, the organization's resources are small and limited, be it personnel, financing or other resources. On the other hand, opportunities on the emerging markets are at the outset numerous, but there is typically no certainty of which - probably few - opportunities will eventually prove to be actually financially rewarding. Thus, a small high-technology company such as Lingsoft must somehow manage to keep as many options open as possible without overextending the company's resources. Therefore, such a small high-technology company has to address the following issues:

•	how the company can set up and undertake the development process of new product innovations in the most efficient manner?
•	how the company can focus its development process of new product innovations based on market information?

Finding solutions to these questions will be dealt with in the following sections.

4	Literature survey

4.1	Purpose and topics

The central question for any organization planning to embark on the development and marketing of a new product innovation or technology is what factors will influence this process and its success or failure. Equally important for any organization is how to set up the new product development process in order to maximize the potential for success. As the objective of this thesis is to examine the strategic opportunities of new innovative products developed by Lingsoft for the emerging markets of information management, these questions are very pertinent to this thesis, too. Thus, the purpose of the literature survey is to present an operational framework for the successful development of new, linguistics-based information management tools.

The concept of innovation is very central to the issues at hand, so it will be the defined first:

"An innovation is an idea, practice or object perceived as new by an individual...An item classified as an innovation might be intrinsically new or it might only be new to the setting in which we find it." 

Lingsoft's products are generally aimed at organizations rather than individual consumers. The aspects of business-to-business marketing of innovations are incorporated in the definition of firm or technological innovations, which are defined as follows:

"Firm or technological innovations are new production inputs, machines, processes, and techniques adopted by firms or entrepreneurs for their own use." 

Fortunately, the issues pertaining to the marketing of new product innovations have been explored quite extensively under the headings of (market) diffusion and (product) adoption. Diffusion is defined as follows:

"Diffusion is the process by which an innovation is communicated [and adopted] through certain channels over time among the members of a social system." 

Adoption, on the other hand, is defined as follows:

"Adoption is the decision to make full use of an innovation as the best course of action available." 

Rejection is used for the opposite decision not to adopt an innovation. In a larger context, adoption is seen as a part of a process in which an "individual or other decision-maker unit passes from first knowledge of an innovation, to forming an attitude toward the innovation, to a decision to adopt or reject, to implementation of the new idea, and to confirmation of this decision." This is known as the innovation-decision process (Figure 4.1).

Figure 4.1: Phases of the innovation-decision process

Diffusion and adoption can easily be seen as the opposite aspects of the same process. There is a small distinction, however. Whereas diffusion analysis considers the overall impact and significance of an innovation, adoption analysis considers the decision processes of individual agents or organizations to incorporate new technology into their activities. Thus, diffusion can be presented as a macroeconomic process, incorporating numerous microeconomic processes of adoption (figure 4.2).

Figure 4.2: The relationship between diffusion and adoption
4.2	Integrated framework of organizational adoption and diffusion of innovations

In traditional research, the diffusion of technology has been viewed as a process where the innovation spreads through the active action of adopters. The role of the source of the innovation has been neglected or viewed as a passive one. Research has shown, however, that the source of an innovation can directly influence the success and rate of the diffusion of the innovation through marketing strategy. Furthermore, classical diffusion research has traditionally concentrated on adoption by individual consumers rather than by organizations. Business-to-business marketing has, however, received ever increasing interest, starting in the 1960's. Frambach has presented a general framework of organizational adoption and diffusion of innovations, in which the active role of the originating supplier organization has been integrated (figure 4.3). Frambach's framework aims at bringing together the entire range of diffusion and adoption research and innovation management research.

Figure 4.3: An integrated framework of organizational diffusion and adoption of innovations

In Frambach's model, the diffusion and adoption processes are divided into the following subprocesses:

•	development process of the innovation, including the interaction between supplier and adopter of the innovation
•	marketing launch strategy of the innovation
•	adoption behavior of the adopting organizations, including the competitive environment on the adopter side

These subprocesses are examined in further detail in the following sections.

4.2.1	Development process of a new product innovation

Rogers has defined the development process of an innovation as "all the decisions, activities and their impacts that occur from the recognition of a need or problem, through research, commercialization of an innovation, through diffusion and adoption of the innovation by users, to its consequences." More precisely, Cooper has developed a normative process model consisting of seven stages which lays out the activities an organization should undertake to develop a successful new industrial product. Throughout all the stages, Cooper stresses the importance of interaction between the marketing functions and the technical research and development functions of organizations. The model also entails incremental commitment. The involvement of the organization in the project increases gradually with each stage, and each stage ends with evaluation determining the continuance of the project. Furthermore, the model is very market-oriented: information is gathered from the market throughout the entire model. Cooper divides the development process into two parts:

•	predevelopment or up-front stages
•	commercialization or back-end stages

4.2.1.1	Predevelopment phase

According to Cooper's findings, the predevelopment phase plays a crucial role in determining the eventual success or failure of an innovation. However, these early stages often receive the least attention by management, and are sometimes even found lacking. The three predevelopment stages of the development process are presented in figure 4.4. These stages are:

•	idea
•	preliminary assessment
•	concept

Figure 4.4: The three predevelopment phases of new product development

The first stage involves the generation and screening of new ideas. According to Cooper, idea generation can firstly be improved by listening to customers through periodic surveys on customer needs and problems, customer panels, or customer focus groups. Secondly, sales and service groups within the supplier organization have regular contact with customers and their problems. Therefore, salesforce personnel can be encouraged to submit new ideas based on their interaction with the customers. Thirdly, Cooper suggests creativity sessions, contests and suggestion schemes. The following step, initial idea screening, aims at roughly weeding out the obvious misfits. This means ensuring that the idea includes the essential characteristics which every project must meet in order to earn further consideration. The new idea should also include additional factors that make the project desirable in addition to fulfilling the essential criteria. Rigorous financial analysis is not usually necessary at this stage.

In the second stage, preliminary assessment, limited resources are spent to gather information on the feasibility of the project. This includes both preliminary market assessment and preliminary technical assessment. The preliminary market assessment involves a small-scale, non-scientific market appraisal, that can be based on contacts with a handful of key customers, meetings with knowledgeable experts both within and without the organization, and accessing public statistical material and industry reports. The preliminary technical assessment concerns the overall technical viability of the project, which can be done by the technical staff of the organization. After these activities have been completed, the project is again subjected to evaluation.

The main purpose of the third stage, concept definition, is to define exactly the new product's concept and strategy. This involves devising an organization-internal product protocol, which is an all-party agreement on the definition of the target market, the product's concept, the benefits the product will deliver, the product's positioning on the market, and the product's features, attributes, design specifications and requirement. This can be achieved through concept identification, concept development and concept test. Concept identification aims at determining the ideal product in the eye of the customer, which involves also competitive analysis. In concept development, the requirements gathered from the market are translated into an operational concept. This concept must be both technically and economically feasible, and involves the cooperation of both marketing and technical personnel. The purpose of the concept test is to ensure that the product will indeed meet customer needs and wants better than competitive products. This can be accomplished with a market survey, in which the reactions of potential customers to the technically feasible concept are measured. The final point of the predevelopment phase is the evaluation of the concept, in which the results of concept identification, concept development and concept test are integrated with a thorough financial analysis. If the new product concept passes this critical step, the project can proceed to full-fledged product development. 

4.2.1.2	Commercialization phase

The four stages of the commercialization phase of new product development are presented in figure 4.5. These stages are:

•	development
•	testing
•	trial
•	launch

Figure 4.5: The four stages of the commercialization phase of new product development

The development stage includes the development of a prototype or product sample, and the development of a formal and complete marketing plan. In addition to target market selection, product strategy and product positioning based on the results of the concept stage, the marketing plan includes such supporting elements as pricing, distribution, advertising, salesforce strategy and after-sales service. The development stage is followed by a testing stage. The prototypes of the product are tested both in-house within the organization and by potential customers for rooting out technical flaws and for finding out possible modifications to improve customer acceptance. In the trial stage, pilot production of the new product is initiated to find out and correct possible problems before full-scale production. As a result of the pilot production, the accuracy of the estimates of production times, throughputs and production costs can be improved. At the same time, test marketing of the new product on a limited scale will help to identify adjustments to the marketing plan and establish final estimates of market share and expected sales. The final stage is the product launch, which involves the startup of full commercial production and the implementation of the revised marketing plan in the full market area. Different strategies for launch are explored in section 4.2.2.

Several other studies highlight some particular aspects of Cooper's model. Urban and von Hippel have explored the incorporation of so-called lead users for the development of new industrial products. Identifying lead users is useful in choosing those potential customer organizations that will be most fruitful in providing market information in the up-front phases of the new product development process. Dolan has presented a framework for integrating beta-testing into the overall development process and marketing strategy of high-priced new industrial products. The beta-testing process will be useful in the back-end stages of the new product development process.

4.2.1.3	Lead user analysis

Lead users of a novel or enhanced product, process or service are defined as those that display the following two characteristics:

•	lead users face a need that will be general in a marketplace - but face them months or years before the bulk of the marketplace encounters these needs.
•	lead users are positioned to benefit significantly by obtaining a solution to those needs.

When new product needs are evolving rapidly, as is the case with many high-technology product categories, users at the front of the trend will presently have the real-world experience needed for new product development. Furthermore, users that expect high benefit from a solution to a particular need are most probably the ones that can provide the richest information to market researchers inquiring on the needs the users have and the solutions users expect. Moreover, the greater the benefit a user expects from a new product, the more the user is willing to invest in obtaining a solution.

Urban and von Hippel present two steps in specifying indicators that identify lead users. Firstly, the underlying market or technological trend has to be found that identifies the leading edge of development. Furthermore, reliable measures of this trend must be determined. In the case of information management, this could be the growth of information processed in electronic form. Secondly, measures of potential benefit have to be defined. Urban and von Hippel have discovered three types of proxy measures. Product development or product modifications by users can serve as a proxy for user benefit. User dissatisfaction with existing products is another proxy for expected benefit. Finally, speed in the adoption of innovations may also serve as a surrogate for high expected benefits. With the help of these indicators and statistical methods of cluster analysis, a lead user group can then be identified. This group can prove useful especially in the predevelopment phase of the new product development process. One must be aware, however, that the needs of today's lead users are typically not necessarily precisely the same as the needs of the users that make up the major share of tomorrow's predicted market. Therefore, careful testing of the new product concepts developed with the help of a lead user group is in place.

4.2.1.4	Beta testing

In Dolan's opinion, the basic paradigm of new product development, which works well for basic consumer products, needs modifications in the case of much more expensive products or systems intended for industrial-scale use. Reasons for this include the following:

•	the possible adopters of industrial-scale products, or lead users as defined in the previous section, are few in number and difficult to find.
•	these adopters vary in the intended application of the system.
•	the decision-making process involves broad participation by individuals throughout the adopting organization.
•	the decision-making process has a long gestation time.
•	the adopters take a long time in deciding how well the product fits their needs.

In the light of the development and sales processes of many of Lingsoft's large-scale linguistic solutions, these characteristics seem very familiar. The same characteristics would seem to be applicable for the development of the new linguistics-based information management tools as well. It is clear that large-scale marketing surveys, for instance, are not suitable for the evaluation of these new tools. As a solution to addressing these issues, Dolan prescribes the use of beta testing at a limited number of sites. This procedure can be incorporated into the general process of new product development introduced above.

The definition of a beta test is the following:

"A beta test is a real world test of a system after it has passed all its laboratory tests" 

This definition implies that the beta test precedes the general availability of the product. When used to the fullest, the beta testing procedure can serve three major purposes, which are presented in figure 4.6. Firstly, beta testing provides knowledge of the basic functioning of the product in its eventual environment of use. In addition, beta testing may lead to the redefinition of the core product design, or the addition of features desired at the test sites in the core product. Secondly, beta testing will help to identify and assess the support features necessary for the successful adoption of the new products. These support features are training and documentation, for instance. In addition, different aspects of the marketing mix of the product can be fixed, such as the positioning and the pricing of the product through the evaluation of the economic value to the customer. Thirdly, beta testing can be used as a device for sales promotion of the new product. In many cases, beta test sites have eventually turned into the first real customers of the product. For the general market, a successful beta testing program has a positive impact through reducing uncertainty about the new product. In practice, this can be achieved by using the beta test sites as references or demonstration sites for new potential adopters. Having a prestigious organization as a beta test site is one way of creating legitimacy for the new product. Furthermore, beta testing can initiate general awareness of the new product.

Figure 4.6: Three sets of purposes for beta testing

The eventual worth of a beta test program depends on carefully addressing four major issues:

•	selecting the proper sites
•	timing the test at the right stage of the product development cycle
•	managing relationships with the test site
•	managing information flow from the sites

Firstly, beta test sites should be representative of the key target markets. In addition, the beta test sites should be organizations which will push the product to its useful limits in the test. Thus, there should always be several beta test sites instead of only one. Secondly, the supplier organization should explicitly define and communicate the goals of the beta test, since they will affect timing the test correctly. Thirdly, the supplier organization should be aware that a customer relationship can as easily be destroyed as built during the course of the beta test. This can be controlled by planning the management of the beta test program and setting its goals in cooperation with the beta test sites. Finally, the supplier organization must also be aware that the general publicity and information to competitors can flow from the beta test sites.

A central issue in managing a beta test program is understanding the motivations of the test sites to participate. These motivations can also be used actively by the supplier organization to recruit beta test sites. Organizations consider or sometimes even compete to be part of a beta test program for a variety of reasons. These organizations may want to get experience with the newest technology before their competitors. They may also expect an opportunity to influence product design in order for the product to fit better with their particular needs. Or, they may expect added attention from the supplier organization in learning how to use the new technology. In the long run, they may anticipate preferential treatment such as price discounts at the eventual launch of the new product. Or, they may simply want to create or enhance their reputation as a pioneer at the forefront of new technology. The supplier organization should also be aware that sometimes these beta test site interests can lead to significant problems. Firstly, a test site may insist on prolonging a test period in order to keep the product from general availability to competitors. Secondly, the test sites do expect customization, which can substantially drain the resources of the supplier. Furthermore, the supplier has to consider whether the wishes of a beta test site are in alignment with the wishes of the general market. Finally, the beta test site should be aware that participating in a beta test program does involve a commitment to allocate time and resources on their side, too.

4.2.2	Launch strategies of new products

At some point in the development process of a new innovation, the developing organization has to face two fundamental choices:

•	when to enter the market?
•	how to enter the market?

Aiming at being first on the market, that is the market pioneer, brings with it the risk of being too early on the market. What is worse, the long introductory periods of major new technologies when the sales are slow can lead to new technologies leapfrogging the old and cause pioneer "burnout". Being a follower, on the other hand, can lead to missed opportunities. In any case, mistiming the introduction of new technology may be associated with significant penalties. A strong link exists between having a separate, identifiable stage of product launch, handling it well, and project success. The uncertainties and risks involved in entering the market with launching a new product can, however, be controlled or countermanded with various strategies.

Easingwood and Beard present four main groups of strategies for coping with launch of high-technology products:

•	cooperation with other producers
•	positioning the product
•	reducing the risk of adoption
•	winning market support

The strategy groupings are presented in a chronological order in which they may be considered during the overall development process of a new product. As has been pointed out in section 4.2.1, interaction with potential customers is essential throughout the whole process. Actually, from the point of view of the supplier, each of these interactions is a launch of some version of the eventual new product either as a concept or a more concrete prototype.

Cooperating with other producers can take place at the very beginning of the development of a new product. This cooperation can have two forms: the basic technology can be shared or there can be a joint education program of the potential customers. Through sharing the technology with a licensing agreement, for instance, the eventual total demand can be increased. This can be expected as result of the greater impact that several producers can make. A radical new technology can also attain greater credibility when it is promoted by more than one organization. A second impetus for sharing technology can be to prevent users from being confronted with competing or incompatible technologies, by setting a technology standard, for instance. A heterogeneous offering of technologies can often retard the development of the entire market. In Lingsoft, this strategy has already been pursued through the licensing of Lingsoft's technologies for research use. The other strategy of cooperation, market education, makes the technology the subject of attention. By embarking on an education program, the producer can spread the awareness of the technology in general to both potential customers and other producers. Furthermore, it establishes a degree of technological leadership for the educating organization. Education is often incorporated into a more specific promotional campaign. For Lingsoft, this could be accomplished through presentations at conferences and through small-scale seminars arranged for potential users on the present state of linguistics-based information management.

The second group of strategies involves positioning the new product on the market. This involves identifying the early adopters of the product. Three groups of early adopters have been uncovered: innovative adopters, heavy users of the product category, and heavy users of the preceding technology. Innovative adopters are users that are undeterred by the risks of early adoption. These organizations rely on their own ability to assess new products, without the reassurance of seeing the product in use elsewhere. Identifying these innovators is often the most difficult task, and it can be that there are too few of them. In such a case, marketing efforts can be directed towards the heavy users of the same product category as the new product or of a technology replaced by the new product. Early adoption is often preceded by high usage of the product category of the new product. Accomplishing the adoption of a new product by early adopters is especially important in generating a contamination effect with which the diffusion process takes off. In Lingsoft's case, following this strategy would mean identifying and exploiting those customers who have made the earliest or largest purchases of linguistic products.

The third group of strategies aims at directly reducing the risks of early adoption for the potential customers. For this there are several alternatives. Firstly, the new product can be given to a selected group of potential customers for trial for a certain period of time. Early adopters are primarily looking for superior performance, not the lowest price. Thus, these customers will appreciate if they can evaluate the product on their own, most preferably in its expected working environment. Another approach is leasing the new product. With leasing, the overall cost of the adoption is spread over a longer period of time. In addition, leasing lowers the overall costs for the buying organization, if it wants to acquire the latest versions of the new technology immediately when they become available. A third strategy also exists in which the supplier totally absorbs the risk. According to research by Easingwood and Beard, however, this strategy is as radical as it is uncommon. At Lingsoft, these strategies have already been pursued in the form of trial licenses for a limited period of time.

Ultimately, the success of a new product innovation depends crucially on its reputation on the market and winning market support. Communications directly from the supplier are more or less futile. Of far more credibility is the endorsement of independent users or market experts. Three approaches have been identified. The first approach is to win the endorsement of opinion leaders. These are participants in the market that wield high influence, which can be both within the potential customer organization or outside it. Within the customer organization, these people are key people involved in the decision-making process. In order to identify these people, the supplier must assess who will benefit from the product, and who will assess the value of the benefits and make the final decision. Outside the customer organizations, opinion leaders are members of the business and trade press, financial analysts, and consultants. The second approach is to establish a "winner" image by creating instant success. This is mainly accomplished by investing substantial resources into the launch of the new product. This strategy has been found generally successful, but very expensive. The final approach was to create an aura of legitimacy for the new product. This can be accomplished through building market support by publicizing the names of the organizations who have already adopted the product. These organizations should be perceived as prestigious or enlightened for this strategy to have the intended effect. Ideally, the sales of the new product would be promoted through direct communication between the adopter and potential adopters. In Lingsoft's case, the implementation of this group of strategies would require maximizing press coverage for the company's successes, such as victory in the Morpholympics or major sales to prestigious organizations such as Aamulehti Group or Kone Elevators.

4.2.3	Adoption behavior

According to Frambach, adoption behavior in business-to-business diffusion of a new product innovation will depend on a number of different factors:

•	characteristics of the innovation
•	characteristics of the adopting organization
•	information flow between the supplier and adopter of the innovation
•	information processing characteristics of the adopting organization
•	competitive environment of the adopting organization

Rogers has identified five characteristics of an innovation. How the members of a social system, such as an organization, perceive these characteristics is predictive of the rate of adoption:

•	relative advantage
•	compatibility
•	complexity
•	trialability
•	observability

Relative advantage is defined as the "degree to which an innovation is perceived as better than the idea it supersedes." In business-to-business marketing, the relative advantage often has to be translated into a tangible effect for the adopting organization. This effect can be improved profitability, decrease in discomfort, savings of time and effort, and the immediacy of the benefit, for instance. Relative advantage has been found in numerous studies as one of the best predictors of innovation adoption. Compatibility is the "degree to which an innovation is perceived as consistent with the existing values, past experiences, and needs of potential adopters." Compatibility is connected with the uncertainties and costs of switching to the new innovation in case of a possible adoption. Compatibility can often be applied to a whole technology cluster which is defined as one or more distinct elements of technology which are perceived as being closely interrelated. In such a case, the adoption of one innovation may trigger the adoption of several others.

Complexity is the "degree to which an innovation is perceived as relatively difficult to understand and use". Complexity is closely connected with the clarity of the innovation to the adopter. The trialability is the "degree to which an innovation may be experimented with on a limited basis". Trialability is especially important for early adopters, since they have no precedents to observe. And finally, observability is the "degree to which the results of an innovation is visible to others". Typically, software aspects, which form the information base for an innovation, are in general less observable. The relative advantage, compatibility, trialability and observability of an innovation are positively related to its rate of adoption, whereas the complexity of an innovation is negatively related to its rate of adoption.

Frambach has supplemented Rogers' list of characteristics with considerations for uncertainty and expectations for fast development of technologies. Firstly, the extent of the relative advantage of an innovation can be known for sure only after adoption. Secondly, the adopting organization may have to undertake unexpected efforts to make the innovation work in the organization at the expected level of performance. Such uncertainties surrounding any innovation can postpone the decision to adopt an innovation or even lead to its rejection. Furthermore, potential adopters of an innovation may be unacquainted with the technology behind the innovation. This may lead potential adopters to expect a faster rate of technological development than is actually the case, which may lead to a "wait-and-see" strategy of adoption.

For Lingsoft and its products, these characteristics or attributes of innovations present a clear challenge. As has been discussed earlier in section 2, Lingsoft's products and technologies are relatively complex and require substantial knowledge of the basics of linguistics to comprehend. Therefore, there are few people who can actually determine the compatibility of Lingsoft's products. Furthermore, it is rather difficult to observe the workings of Lingsoft's products, as they are often integrated into larger software systems. Thus, it is in many cases difficult to truly assess the relative advantage created by Lingsoft's products. In addition, doing a trial run with the bare linguistic product would not necessarily be very informative. As for expectations of fast technological development, the accelerated rate of software and hardware introductions to the market in general may lead some adopters to expect the same for linguistic software.

Regarding the characteristics of potential adopting organizations that influence the adoption-decision, Frambach gives a summary on research on the subject. These characteristics are:

•	size of the organization
•	level of complexity of the organization
•	degree of specialization in the organization
•	participation of members of the organization in informal networks
•	degree of formalization in the organization
•	degree of centralization in the organization

It should be obvious that these characteristics are interconnected to some extent. It is justifiable to expect that the level of complexity and the degrees of specialization, formalization and centralization will increase with the growth of the size of the organizations. Nevertheless, certain observations can be made. Regarding the size of organizations, there may exist for some innovations a critical mass which must be exceeded in order for an innovation to be adopted. However, in some organizations this critical mass may be lower than generally is due to the complexity of the organization and its activities. In addition, complexity may lead to specialization accompanied by the diversity of background of the members of the organization. Firstly, this can lower the technical threshold to adopt an innovation. Secondly, this may increase the number of sources of information and the participation of members of the organization in informal networks through which the organization can become aware of useful innovations. On the other hand, organizational bureaucracy in the form of formalization of procedures and centralization of decision making will typically inhibit organizational adoption of innovations. In conclusion, the size, the level of complexity and the level of specialization of an organization, and the level of individual participation in informal networks is related positively with the rate of adoption. On the contrary, the degrees of formalization and centralization are related negatively with the rate of adoption.

In addition to the aforementioned internal characteristics of an organization, the rate of adoption can also be affected by the external environment of the organization. Unambiguous support has been found for a connection between the competitiveness of a market and the rate of diffusion in that market. A high level of competition among organizations in a particular industry may lead to a need for organizations to look for any ways to increase competitive advantage. This may increase the pressure on individual firms to adopt a technological innovation sooner rather than later. One could make the conclusion that Lingsoft might have the best success in marketing its products to relatively large organizations in highly competitive industries, such as telecommunications and biotechnology.

Finally, information and information processing characteristics play an important role in how a potential adopter organization passes through the different stages from initial awareness to possible adoption. Central features of the information for a potential adopter organization are the quantity, quality and value of the information available. The existence of information is a necessary precondition for awareness of an innovation in the first place. It is self-evident that the supplier of the innovation plays a major role in making information sufficiently available, though third parties such as consultants or the press certainly have an effect of their own. Information as such, however, is of little worth, unless it is of such quality that it can reduce the uncertainty of the potential adopter of an innovation. Furthermore, the value of the information is in the relative advantage that the information offers to a potential adopter. The potential adopter also has a role in the processing of information. The more willing the potential adopter is to receive information on an innovation and the greater the absorption capacity of the potential adopter to process this information, the higher the possibility of the innovation being adopted. Consequently, Lingsoft should pay attention to conveying effectively the competitive advantages of its products to potential customers. In addition, Lingsoft will benefit from identifying those individuals in potential customer organizations that appreciate and understand linguistics-based solutions in information management.

4.2.4	Success factors of new products

The factors leading to the success or failure of innovations have been the subject of innumerable studies. This is no wonder, however, as research has continuously shown failure rates as high as over 30 percent.  One reason for this is the narrow definition of success. Traditionally, success has been measured only in financial terms, comprising of relative profits and sales, meeting profit and sales objectives, profitability level, and payback period. But a new product can be successful also in terms of opening up new opportunities for an organization in new product categories or new market areas. Or a new product can be successful in terms of market impact through grabbing a substantial share of both domestic and foreign markets.

In whatever way the success of a product innovation is measured, the same success factors are repeated from one study to another. Typical factors which separate successes from failures are the following:

•	a strong marketing orientation leading to in-depth understanding of users' needs and wants
•	a unique superior product that has a high performance-to-cost ratio
•	a strong market launch, backed by significant resources devoted to the selling and promotional efforts
•	an attractive market, combining a high need level with substantial growth and little competition
•	synergy throughout the organization, including research and development and marketing activities
•	strategic focus: products that build upon the organization's existing technological, marketing and organizational competencies.  
•	top management support and commitment
•	good internal and external communications
•	a well-planned and well-coordinated new product development process

It is interesting to note that some factors were found to have no impact on success, though conventional wisdom would indicate otherwise:

•	low-priced products were no more or less successful than other products. In other words, it always pays to ask the real price.
•	synergy in terms of financial resources of the organization was not correlated with success.
•	new products aimed at large markets were no more successful than those aimed at smaller markets in the long run.
•	the size or frequency of purchases had nothing to do with the success of new products.
•	industrial design such as ergonomics or aesthetics did not affect the success of a new product in any direction

4.2.5	Overview of the framework

In conclusion, a general overview of the different factors influencing the organizational adoption and diffusion of innovations is presented in table 4.1. Three observations can be made. Firstly, the supplier of an innovation can play an important and active role in the diffusion-adoption process. Secondly, success in the marketplace is dependent on a large number of varying factors. And thirdly, attention is drawn to the fact that non-adoption can sometimes be attributable to the actions or non-actions of the supplier.

Table 4.1: Factors influencing the organizational diffusion and adoption of innovations

Factor	Relation to diffusion	
Factor	Relation to diffusion	
Adopter characteristics		Innovation development		
Size	+	Management support	+	
Complexity	+	Incorporation in strategic posture	+	
Specialization	+	Innovative organizational climate	+	
Interpersonal relations	+	Superior product	+	
Formalization	-	Experience and synergy effects	+	
Centralization	-	Organization and execution of development	+	
				
Information		Network participation		
Availability	+	Level of interaction	+	
Quality	+			
Value	+	Marketing strategy		
		Cooperation with other suppliers	+	
Information processing characteristics		Positioning innovation in the market	+	
Absorption capacity	+	Reducing the risk of adoption	+	
		Winning market support	+	
Innovation characteristics				
Relative advantage	+			
Compatibility	+			
Complexity	-			
Trialability	+			
Observability	+			
Uncertainty	-			
Fast technology expectations	-			
				
Competitive environment				
Competitiveness industry	+			

4.3	Basic scenarios for new products

Recent research in organizational theory has indicated that managers could benefit from synthesis analysis, such as scenarios, in new product evaluation in addition to mere lists indicating reasons for failure or success. Calantone and Cooper have constructed nine different scenarios for new product launches. Of these scenarios, three could be applicable to Lingsoft based on the analysis of the company's background, technologies, and products and the language industry in general:

•	Scenario 1: The Better Mousetrap with No Marketing
•	Scenario 4: Innovative High-technology Product
•	Scenario 9: The Synergistic "Close to Home" Product

The first scenario is a good example of what could go wrong in the development and introduction of new linguistics-based information management tools. These products are particularly new to the organization, taking the organization to new technologies and new product categories. The product is an innovative product to the market offering unique features to the customer and meeting the customer needs better than competing products. The product is targeted at a large and growing market which is also highly competitive. The Achilles' heal in this scenario is the total lack of marketing and managerial synergy. The organization embarks in a project that is out of fit with the organization's marketing research skills, salesforce resources, and financial resources. This results in a weak and poorly targeted launch effort. These products fare the second worst of all groups, with a success ratio of 0.69. In a nutshell, "the organization develops a unique and better mousetrap, but the world does not beat a path to its door, largely because the marketing effort is missing."

The fourth and ninth scenarios are more promising. In the fourth scenario of a innovative high-technology product, the product is first on the market and provides unique and superior features as compared to competing products. This product is typically technically complex and inclined towards customization. The product is also quite new to the firm and it involved new processes and new technology. However, the organization has a sound understanding of customer needs and buying behavior. The organization has fairly strong marketing knowledge and proficiency. Products in this scenario fare better than most, with a success ratio of 1.23.

The ninth scenario of the synergistic "close to home" product seems most suitable for Lingsoft. The most notable feature for products in this scenario is that they are similar to the organization's existing products and markets. The product consists of high technology, but it tends to be a defensive introduction. The product has unique features, meeting the customers' needs better and reducing costs more than competing products. The product also has high degrees of synergy. The launch effort along with other activities are adequate but not exceptional. The market is a growing but competitive one, in which the government plays a key role. These products are typically located in organizations with a strong research orientation. This type of product is most successful, with a success ratio of 1.39. This strategy can be summed up as "doing many little things well and not just a few major items in a spectacular way".

A final observation is that whatever the scenario, there are no absolute guarantees for success. Even at its highest, the success ratio is only 1.39, which means that 28 percent of products still fail. Thus, an organization must always bear in mind that even though some products turn out to be successful, many others fail despite all efforts to avoid such an outcome.

5	Market survey

5.1	Purpose

There is inherently little concrete, up-to-date data about the language industry as such, since it is relatively new and in a constant state of growth and change. The situation is even more so with new developments in the language industry, such as the use of linguistic tools in information management. Despite this situation, there are quite a few assumptions and expectations about the future directions of the language industry and information management technology. These are typically based on visions presented by futurologists and politicians,  rather than on concrete evidence from the actual market. The main purpose of the survey was to form a valid picture of the potential demand and needs on the market. The importance of conducting a market survey has been established in numerous studies. Thus, the main goals of the survey were to answer the following questions:

•	what is the state of information management in Finnish organizations?
•	what is the market demand for information management tools based on linguistic methods in Finland?
•	what strategic opportunities there are for Lingsoft in information management based on linguistic methods?
•	what are the profiles of potential customers for information management tools based on linguistic methods? who are the lead users?

The survey was based on several hypotheses which can be divided into two groups: environmental and structural. These hypotheses were also examined in the survey. The environmental hypotheses are assumptions about the present state of information management:

•	the amount of information that organizations have to manage has grown significantly within the last few years causing an "information explosion".
•	information is more and more predominantly produced, received, and stored in electronic form.
•	the core medium of information is still text. This hypothesis entails that text is the basic form of reference to any form of information. This hypothesis challenges the idea of documents as entities comprised at an equal level of significance of any combination of image, text, voice and video.

The latter two hypotheses are important in the respect that Lingsoft's natural opportunities lie in the linguistic manipulation of text in electronic form. The structural hypotheses are assumptions about the behavior of organizations with regards to information management tools:

•	there exists a hierarchy in linguistics-based information management tools.
•	organizations proceed through this hierarchy one stage at a time.
•	organizations can be grouped according to the role information plays in their activities, called information intensity in this study.
•	the different information intensity groups of organizations are on the average at different stages of the hierarchy of information management tools.
•	thus the information intensity of an organization predicts on the average at what stage the organization is on the hierarchy of information management tools, and what tools the organization probably needs next.

Figure 5.1: Hierarchy of linguistics-based information management tools

The hypothesis of hierarchy in information management tools is based on the common sense wisdom that the satisfaction of one need eventually leads to a new need (figure 5.1). This hierarchy can be divided into two dimensions: standardization of information and access to information. Standardization deals with the format of information. Thus, in order for an organization to develop a need for spell-checking, it is expected to use a word processor first. Access, on the other hand, deals with the organization, storage, and retrieval of information. Thus, in order for an organization to develop a need for search prefix generation, it should have used text data base systems first. Furthermore, these two dimensions of the hierarchy, standardization and access tools, can be seen as two technology clusters as defined in the literature.

The concept of information intensity is based on the idea that information plays a different role in organizations. Traditionally, organizations have been divided in this respect into the information sector and production sector. As this dichotomy is quite coarse, both these groups were split further in two in order to form a finer division. Therefore, it was assumed in the survey that organizations could be divided into four groups according to their decreasing information intensity, or diminishing role of information in their activities:

I	Organizations that produce relatively neutral information based on the processing of information
II	Organizations that produce a service which is based on the processing of (large amounts of) information
III	Organizations that produce a product or service which is accompanied by relatively large amounts of information
IV	Organizations that produce a product or service which is accompanied by relatively small amounts of information

A crucial point of this classification is that it is based on the point of view of the organization's customer of what the organization produces - not the organization's own, internal point of view. Though an insurance company, for instance, processes large amounts of information, it is security that its customers expect. It is a justifiable assumption that a major driving force of improved information management is often customer demand and generally expected practice, not simply internal forces.

The concept of information intensity has earlier also been used as a static characterization of the present macroeconomic industrial system meaning, firstly, that the industrial system as a whole is capable of creating and dealing with increasing amounts of information, and, secondly, that this system becomes more and more able to adjust itself to a growing and changing variety of signals generated by the economic environment. In this thesis, however, the concept of information intensity is used in a slightly less grandiose manner, as an organization-specific discrete variable.

5.2	Target group

Linguistics-based information management tools were not expected to be familiar to a general selection of Finnish organizations. For this reason, the upper estimate approach of choosing the most potential organizations was used in the survey. Thus, organizations were selected for the survey according to the following criteria:

•	the organizations were expected to process large amounts of information, especially textual in nature
•	the organizations represented the largest of their kind in Finland
•	the organizations represented a wide range of activities - not only industrial organizations
•	at least two organizations in the same field were included if possible

Since organizations do not publish figures about their information flows, the potential candidate organizations according to the first criterion (on processing large amounts of information) were selected based on interviews with people familiar with information management both inside and outside Lingsoft.   This group of organizations was further extended in an internal brain storm meeting of all the employees of Lingsoft. Several ad hoc criteria became evident as indicative of processing large amounts of information:

•	processing information is inherent in the organization's field of activity: public organizations, banking, insurance, and consulting companies, newspapers and publishing houses, and sales organizations, for instance.

•	extensive documentation is inherent in an organization's activity because of the advanced technology and/or customization of the product or service: organizations engaged in telecommunications or biotechnology, for instance.

The final group of 39 organizations included in the survey is presented in Appendix 3 along with some basic facts. A summary of Appendix 3 is presented in table 5.1. As can be seen, public organizations are relatively well represented. This mix, however, is analogous with a recent study, in which large companies accounted for 60 percent and public administration for 25 percent of present penetration of information networks. It is also in line with another study showing the impact of information explosion being divided quite evenly among the administrative, industrial, and banking and insurance sectors and other services (figure 5.2).

Figure 5.2: Sectors affected by information explosion

Table 5.1: Summary of basic facts on target organizations in the survey
Type of organization (number)	Budget in millions
FIM	Employees	
Public or government agencies (14)			
Average	860	1490	
Range	6-4400	15-8000	
Banking, insurance and consulting companies (4)			
Average	9450	2900	
Range	6400-12500	100-9500	
Newspapers, media and publishing houses (8)			
Average	700	1230	
Range	160-1800	380-4550	
Industrial organizations (10)			
Average	4530	5500	
Range	260-10050	250-21550	
Sales organizations (3)			
Average	11070	4170	
Range	1700-27000	1550-5700	
All organizations (39)			
Average	3110	2820	
Range	6-27000	15-21550	

5.3	Structure and conduct

The final survey was preceded by a preliminary survey consisting of a questionnaire and interview. The preliminary survey attempted to obtain exact knowledge about information flows and information management within organizations. Based on the experiences from testing the preliminary survey in six different organizations, it became apparent that only a very few organizations possessed such detailed knowledge about their information management. For instance, organizations used very different measures for processed information, which would have been difficult to compare: pages, messages, bytes, just to mention a few. It also became apparent that whatever exact knowledge there existed within the organization was dispersed among different sources. Therefore, the questions of the actual survey were shifted towards more subjective evaluations.

The survey consisted of interviews based on a questionnaire. This questionnaire was divided into five sections. The first and fifth section of the survey dealt with the structural dimension of information management. The second, third and fourth section of the survey dealt with the environmental dimension of information flow and information management. All in all, the survey consisted of 70 questions grouped under 25 headings. Of these, 32 were multiple choice questions. 35 questions asked for a specific year or name of a product. Finally, there were three open questions. The questionnaire was in Finnish and it is presented in Appendix 4. A translation of the questionnaire to English is presented in Appendix 5.

The interviewees in the selected organizations were employees responsible for or knowledgeable about the development of information management in the organizations - typically information system managers or informaticians. Most of the interviewees were of managerial rank in the organizations. The interviews took place during a two-month period in the beginning of 1995. The interviews lasted from 60 minutes to well over 200 minutes. The average length of an interview was about 120 minutes, which was also the estimated length. The interviews were conducted in Finnish.

5.4	Immediate results

Of the 39 organizations included in the target group of the survey, 34 organizations (87 percent) responded to the questionnaire and participated fully in the interviews. This included three of the organizations which had participated already in the preliminary survey. Of the five organizations (13 percent) that did not participate fully in the survey, four had participated in the interviews of the preliminary survey but did not respond to the final questionnaire. Only the results of the organizations that have participated fully in the survey are, however, included in the final results.

5.4.1	State of information management in surveyed Finnish organizations

The organizations chosen as the target group were expected to handle large amounts of information, so results based solely on them cannot be considered representative of all Finnish organizations. They should, however, be a representative sample of the organizations on the cutting edge of information management. That is, the group of organizations that would at least superficially seem most potential from Lingsoft's point of view.

I	Organizations that produce relatively neutral information based on the processing of information
II	Organizations that produce a service which is based on the processing of (large amounts of) information
III	Organizations that produce a product or service which is accompanied by relatively large amounts of information
IV	Organizations that produce a product or service which is accompanied by relatively small amounts of information

Figure 5.3: Division of surveyed organizations on the information intensity scale

Figure 5.3 shows how the organizations regarded themselves as processors of information according to the information intensity scale presented earlier. As can be seen, all of the organizations are divided rather evenly among the first three groups. Furthermore, figure 5.4 shows how the organizations viewed the makeup of their service or product within the different groups. Apparently, all the organizations considered information an important part of their products and services. None considered information a minor part of their product or service, or belonging to group IV. Consequently, results for group IV will be missing from all subsequent results, tables, and figures. Groups I and III appear internally rather homogenous as to the makeup of their product. Group I provides pure information, whereas group III provides a tangible product or service. Group II, on the other hand is evenly divided into two. It could be justifiable to divide group II among groups I and III according to their view of their products. Dependency analysis presented in section 5.5.1 shows, however, that information intensity is a stronger indicator of interest in linguistics-based information management tools than the information content of the product. Furthermore, the analysis in section 5.5.1 will show that group II is independent of groups I and III in its adoption behavior of linguistics-based information management tools.

Figure 5.4: Role of information as part of the product or service in different information intensity groups

It has to be noted that in some cases an organization would have fallen under several categories, depending on the point of emphasis or the section of the organization studied. It was a conscious choice to limit the scope of study to sections of organizations that were most relevant from the point of view of the study. That is, those sections that processed most information. An overall observation was that information and its management seemed an important topic in organizations presently. This clearly made some organizations overestimate their position on the information intensity scale. This probably explains the absence of group IV and organizations that view information as only a minor part of their product.

Figure 5.5: Responses of surveyed organizations to information explosion

In this survey, the effect of the so-called information explosion was measured in the terms of whether organizations have had to respond to the growth of processed information in some respect. Figure 5.5 shows the responses of the organizations in the survey. As can be seen, all except one organization had seen need for some measures or changes in information management. In fact, this solitary organization claimed lack of relevant information instead, which is one way of expressing the growth of useless information. The influence and extent of the information explosion was cross-checked with further questions. Table 5.2 shows the organizations' responses to these questions according to groups on the information intensity scale. Though the percentages might indicate otherwise, dependency analysis showed that the correlation between information intensity and information explosion was statistically insignificant (Appendix 6). This can partly be explained by the relatively small size of the groups (around ten organizations each).

Table 5.2: Manifestations of information explosion
Is the organization capable of handling information with its resources?	
	I	II	III	All	
Yes	50%	38%	67%	50%	
No	50%	62%	33%	50%	
Has the organization employed new people for the handling
of information in the last few years?	
	I	II	III	All	
Yes	42%	31%	67%	44%	
No	58%	69%	33%	56%	
Has the organization purchased software for the handling of information in the last few years?	
	I	II	III	All	
Yes	100%	100%	100%	100%	
No	0%	0%	0%	0%	
Are there underutilized information channels or
information sources in the organization?	
	I	II	III	All	
Yes	92%	69%	67%	76%	
No	8%	31%	33%	24%	
Are the organization's information flow or telecommunica-
tions connections going to be changed in the near future?	
	I	II	III	All	
Yes	83%	92%	89%	88%	
No	17%	8%	11%	12%	

Organizations were asked to name the channels or sources that were presently underutilized. The most often mentioned were external data banks, the Internet, and internal electronic communication channels (all in over 20 percent of the organizations). Also mentioned was so-called gray literature, information which does not exist in any public reference or data banks. The organizations were also asked to describe how their information flow or telecommunications channels were going to be changed. The most current issue was - unsurprisingly - connecting to the Internet either for information gathering, information dissemination or communication purposes (44 percent of the organizations). Other upcoming changes were the installment of new telecommunications or data networks (26 percent) and implementing integrated document management or work flow processes (18 percent).

Table 5.3: Emphasis of information explosion in surveyed organizations
Produced information	
	I	II	III	All	
very much	33%	38%	11%	29%	
somewhat	17%	54%	89%	50%	
unimportant	50%	8%	0%	21%	
Received information				
	I	II	III	All	
very much	50%	54%	44%	50%	
somewhat	33%	46%	33%	38%	
unimportant	17%	0%	22%	12%	
Stored information					
	I	II	III	All	
very much	42%	31%	22%	32%	
somewhat	50%	38%	67%	50%	
unimportant	8%	31%	11%	18%	

One could expect that the emphasis of the growth of information processed would vary according to the activities of the organization. Table 5.3 shows how the growth of information has been experienced in different phases of the information management process, grouped according to the information intensity scale. As the groups are relatively small, it is difficult to discover statistically significant differences, which is again corroborated by dependency analysis (Appendix 6). The main observation that can be made is that information explosion has been experienced mostly in received information regardless of the information intensity group (about one half of all the organizations).

Finally, all the organizations were asked to elaborate on the reasons for the information explosion within their organizations. Here, if anywhere, not one organization was exactly alike, though the same trends were present everywhere. The reason cited most often was that organizations must increasingly take into consideration international developments in their activities (26 percent). This is accompanied by the general trend that issues and activities are more complex and have more connections and dimensions than previously, such as environmental issues in consulting. New fields of knowledge are born at an increasing pace, not to speak of the exponential growth of information in some fields. The globalization of both business and research leads to the fact that more and more information is relevant and has to be accessed and processed if an organization wants to keep up with the competition. For instance, complying with more stringent national requirements requires growing amounts of documentation.

More mundane reasons for the information explosion were the growth in old activities or business, or the internationalization of an organization. Even changes in the surrounding society have had their effect. For example, recession has caused cutbacks especially in public organizations, which have to cope with the growing amount of information with less people. And finally, improvements in technology make it possible to access more and more information with more and more precision. On the other hand, increasing automation leads to growing amounts of documentation. But the saddest of all, unsatisfactory accessibility of information leads to the repetition of information production.

Table 5.4: Is information in the organization in electronic form?
Produced information				Average	
	I	II	III	All	 year	
Yes	83%	100%	100%	94%	1988	
No	17%	0%	0%	6%	2000	
Received information				Average 	
	I	II	III	All	year	
Yes	33%	38%	44%	38%	1991	
No	67%	62%	56%	62%	1999	
Internally processed information			Average	
	I	II	III	All	year	
Yes	67%	62%	56%	62%	1989	
No	33%	38%	44%	38%	1999	
Stored information				Average	
	I	II	III	All	year	
Yes	67%	62%	78%	68%	1987	
No	33%	38%	22%	32%	1999	

The coming of the electronic office, where information is processed in electronic form in all its phases, has been augured for years. Table 5.4 shows the situation in the surveyed sample of organizations. The same table also indicates the average year since when information has been mainly processed in electronic form. For those organizations that do not yet process information in electronic form, the average year estimated by these organizations is given. There does not appear to be any overall major differences between the three information intensity groups. The main difference exists between the different phases of the information flow process - production, reception, internal processing, or storage of information. Whereas almost all information is already produced in electronic form, and a majority of information is stored in electronic form, information is still received by and large in non-electronic form.

Table 5.5: Is free text the core medium of information?
Produced information				
	I	II	III	All	
Yes	83%	77%	44%	71%	
No	17%	23%	56%	29%	
Received information				
	I	II	III	All	
Yes	83%	77%	44%	71%	
No	17%	23%	56%	29%	
Stored information				
	I	II	III	All	
Yes	75%	69%	44%	65%	
No	25%	31%	56%	35%	

As was stated earlier, it is of great importance from Lingsoft's point of view to what extent text still forms the core of information. Table 5.5 shows the results in this respect, grouped again according to the information intensity scale. Whereas the situation within groups is the same regardless of the phase of the information flow process, there seem to be significant differences between the groups. For group I, the most information intensive group, the core of information is text for an overwhelming majority of the organizations in the group. On the other hand, in group III, the core of information is text for only a slim majority of the organizations within the group. This could be explained by the fact that industrial organizations, which mostly fall under group III, process a substantial amount of diagrams and pictures.

Figure 5.6: Languages used in the surveyed organizations

Finally, it is worthwhile observing what languages are used by the surveyed organizations. The situation for the Lingsoft's four main languages Finnish, English, Swedish and German, and for French are shown in Figure 5.6. Finnish is rather unsurprisingly used by all organizations in all the phases of information flow. Finnish is followed by English and Swedish, which are fairly equal. It is interesting to note that in the processing of received information the percentage of English is higher than otherwise. Finally, German and French seem rather marginal languages, at least for the organizations in the sample.

5.4.2	Demand for existing linguistics-based information management tools in surveyed Finnish organizations

As a starting point for estimating the future it is good to take a look at the present situation in existing linguistics-related information tools. Table 5.7 shows to what extent organizations in the different information intensity groups use this software presently. The same table also gives the average year of the adoption of each software for the entire surveyed group. Table 5.8 shows to what extent organizations in the different information intensity groups plan to buy new software in the near future. The same table shows as well the averages of the estimated years of purchase.

Table 5.7: Presently purchased linguistics-related software
Software	I	II	III	All	When?	
Word processor	92%	92%	100%	94%	1987	
Office system	42%	77%	89%	68%	1992	
Publishing system	58%	38%	33%	44%	1990	
Hyphenation	100%	85%	78%	88%	1989	
Spell-checking	83%	85%	89%	85%	1989	
Grammar checking	8%	8%	33%	15%	1992	
Translation memory	0%	0%	11%	3%	1994	
Computer aided translation	0%	0%	11%	3%	1987	
Reference data base	50%	46%	44%	44%	1988	
Text data base	92%	69%	78%	76%	1988	
Search prefix generation	17%	15%	0%	12%	1990	
Base form reduction	8%	0%	0%	3%	1987	
Other	25%	8%	22%	18%	1993	

Table 5.8: Anticipated purchases of linguistics-related software
Software	I	II	III	All	When?	
Word processor	8%	0%	0%	3%	1995	
Office system	17%	15%	22%	18%	1995	
Publishing system	8%	8%	11%	9%	1995	
Hyphenation	8%	0%	0%	3%	?	
Spell-checking	17%	8%	22%	15%	1996	
Grammar checking	17%	15%	11%	15%	1996	
Translation memory	8%	0%	11%	6%	?	
Computer aided translation	0%	0%	11%	3%	1995	
Reference data base	0%	15%	0%	6%	1995	
Text data base	8%	23%	22%	18%	1995	
Search prefix generation	50%	31%	33%	38%	1996	
Base form reduction	33%	23%	44%	32%	1995	
Other	8%	23%	11%	15%	1995	

Figure 5.6: Proportion of usage of linguistics-related information management tools in surveyed organizations

The facts of tables 5.7 and 5.8 are combined in Figure 5.6. As can be seen with the major text standardization tools, the situation is rather saturated in the case of word processors, hyphenation and spell-checking modules. Exceptions are the higher end tools, such as grammar checkers, translation memories, and computer aided translation systems, which do not seem to have broken through yet. This does not rule out the possibility for updating old hyphenation and spell-checking modules, for which a need was indeed explicitly stated in a substantial number of organizations. More growth potential seems to exist in the text accessing tools, for which the survey indicates significant growth in both search prefix generation and base form reduction modules, as indicated by the arrow in figure 5.8.

5.4.3	Demand for future linguistics-based information management tools

The major concrete purpose of the survey was to evaluate whether there existed demand for linguistics-based information management tools still on the drawing board. These tools, or rather processes or tasks, were presented earlier in conjunction with the product portfolio of Lingsoft and the information management tool hierarchy:

•	terminology management
•	automated index generation
•	text classification
•	text filtering
•	natural language data base interface (NLDBI)

The first two tools belong to text standardization; the latter three to text accessing. Figure 5.7 shows the need in organizations for the above tools. Noteworthy need - existing and anticipated - would seem to exist for terminology management and text classification. Nevertheless, if we examine only existing need in all the organizations, we are left with 20 percent of the organizations at the most. For filtering of text, there is no existing need. Either organizations are cautious about new tools, or the real needs have not yet materialized.

Figure 5.7: Need for new information management tools

In order to scrutinize the organizations' statements about their needs for the new information management tools, the organizations were also asked to state their willingness to participate in the process of developing the new tools. This was a way of analyzing the organizations' commitment to their statements on the need for a new tool. Figure 5.8 shows tool by tool how organizations with either existing or anticipated needs for the tool in question were ready to participate. Figure 5.8 speaks in harsh, clear language. Only a handful of organizations are ready to finance the development of the new tools. In the case of text classification, however, a significant number of organizations are ready to participate in the development. Unfortunately for Lingsoft's case, however, organizations mostly want to wait until the testing phase or expect a finished product.

Figure 5.8: Involvement of organizations in new information management tools

5.5	Analysis of the results

Figure 5.6 indicated a shift of emphasis in existing linguistics-based information management tools from text standardization towards text accessing. This is only indicative of the existence of a hierarchy in the acquisition of information management tools, as it does not take into account development over time. Nor do the immediate results connect the future linguistics-related information management tools into the hierarchy of present tools. In addition, figure 5.6 does not differentiate between the three information intensity groups. Further analysis is therefore needed.

5.5.1	Information management tool hierarchy and information intensity scale

In order to evaluate the information management tool hierarchy and information intensity scale, the average years of existing or estimated purchases of different information management tools are presented in figure 5.9 by information intensity groups. Firstly, figure 5.9 seems to validate the existence of a hierarchy in the acquisition of information management tools on the overall level. Word processors are followed by hyphenation, spell-checking, and finally grammar checking. The trend appears to be the same for all information intensity groups. By excluding grammar checking, there actually would appear to be a cleaner shift from information standardization tools to information access tools. Grammar checking seems to be the odd man out among the linguistics-based information management tools, since it also changes the order of the information intensity groups. This could be attributed to the relatively small need expressed for grammar checking when compared to the other tools.

Figure 5.9: Evolution of adoption of linguistics-related information management tools according to information intensity groups

Secondly, there appears to exist small but visible lapses between the different information intensity groups in the acquisition of individual information management tools. This order of succession can more pronouncedly be seen in figure 5.10. Here again, grammar checking is the rogue. As can be seen, Group I is the first to adopt new linguistic tools. It is on the average followed by 12 months by group II, which is again on the average followed by 6 months by group III. A subsequent deduction would be that group III would eventually be followed by organizations belonging to Group IV. In addition, figure 5.10 supports the information management tool hierarchy quite vividly.

Figure 5.10: Average year of adoption of different linguistics-based tools according to information intensity group

Figures 5.9 and 5.10 do indeed seem to support the hypotheses about a product hierarchy in linguistics-related software. Since the values represent mere averages of years of purchase, however, they give only a partial answer. By examining individual histories of the purchases of text standardization and text access tools, a reliable picture can be formed. These case histories are represented in table 5.9. The calculations are based on either existing or estimated purchases of linguistic tools.

Table 5.9: Evolution in linguistics-related information management tools
Step	Average years	Number of cases	
From word processor to hyphenation	2.1	27	
From hyphenation to spell-checking	0.3	26	
From spell-checking to grammar checking	3.7	9	
From data base to search prefix generation	6.8	15	
From search prefix generation to base form reduction	2.4	8	
From word processor to text data base	2.3	27	
From spell-checking to text data base	-1.3	22	

It is interesting to note that there is practically no lapse between the purchase of a hyphenation and a spell-checking module. This would indicate that both modules are acquired together. At the same time, there appears to be a relatively long lapse from spell-checking to grammar checking. This may naturally be due to the novelty of grammar checking, as the number of cases point out. It might also indicate that grammar checking is not suitable for all organizations, which might lead to its omission from the information standardization tool hierarchy. As for the text access tools, the calculations would support the assumption that search prefix generation is acquired prior to base form reduction. It would also seem that organizations are rather slow to catch on linguistic tools intended at improving text data base performance. Finally, it is interesting to note that even though text data bases are clearly acquired after word processors, it does not follow that spell-checking would precede text data bases. It is probably so that the hierarchy is strong within the standardization and access tools but not between the two.

In examining the acquisition of information management tools it should not be forgotten that especially the linguistic tools have been truly available to everyone only from the beginning of the 1990's. This could distort the overall picture on lapses between the purchases of different tools, especially if the basic tool, a word processor or a text data base system, has been acquired long before the existence of linguistic tools. Table 5.10 shows that this is indeed the case. Whereas earlier clear lapses existed between acquisitions according to the tool hierarchy, since the beginning of the 1990's many tools are acquired simultaneously, typically as a package. A further observation from the data was that in three cases out of five, the acquisition of a search prefix module was accompanied by the purchase of a new text data base system to replace the older one.

As a result of these observations, there appear to be two technology clusters in information management tools. In linguistics-based information tools, the first of these clusters would include word processing, hyphenation and spell-checking. The second cluster would include text data base systems, search prefix generation and base form reduction. This would be in line with the hypothesis of a hierarchy for information management tools.

Table 5.10: Evolution of information management tools before and after 1990 (time difference calculated between first purchase of any tool)
Step	Average years before 1990 (cases)	Average years after 1990 (cases)	
From word processor to spell-checking	3.0 (19)	0.0 (5)	
From text data base to search prefix generation	6.0 (5)	0.1 (8)	

Finally, evaluation was done on how the future linguistics-based information management tools would fit into the hierarchy of present tools. The hypothesis was that the pinnacles of the present tool hierarchy would act as thresholds to the future tools. Search prefix generation was chosen as the general reference point instead of base form reduction as it already has established use. Search prefix generation was also chosen as a specific reference point for access tools. In addition, grammar checking was chosen as a specific reference point for standardization tools. Dependency was evaluated between usage of these presently existing tools and the willingness of organizations to participate in the development of the appropriate new tools. The results are presented in table 5.11. As can be seen, an almost significant dependency exists between the present use of search prefix generation and the willingness to participate in the development of new text accessing tools. Otherwise, no significant dependencies existed. This may be due to the relative novelty of even the present linguistics-based information management tools. In any case, the position of an organization in the tool hierarchy would only appear to give a partial estimate of interest in future tools - namely access tools. In this respect, the extension of the tool hierarchy into future tools cannot be statistically fully corroborated.

Table 5.11: Dependency between present tools and willingness to participate in future tools (full results in Appendix 7)
Tool hierarchy (prerequisites)	All new tools	Standardization tools	Access tools	
Search prefixes acquired	0	0	*	
Grammar checker acquired	-	0	-	
***	very significant	P > 0,999
**	significant	P > 0,99
*	almost significant	P > 0,95
+	maybe significant	P > 0,90
?	noteworthy	P < 0,90
0	not significant	P << 0,90
-	not calculated

5.5.2	Profile of a potential lead user customer

Further dependency analyses were performed in order to construct the profile of potential lead user customers of future linguistics-based information management tools. The potential of an organization was connected with an organization's willingness and interest to participate in the development of future tools. Organizations that were willing to finance or cooperate with other resources in the development of any future tool were considered significantly potential. Organizations that were interested merely in testing or not interested at all in participating in the development of any future tool were considered not potential. As a result of this division, 13 organizations were deemed potential (38 percent), and 21 organizations not potential (62 percent). In addition, the new tools were divided into two groups - standardization and access tools - and similar analysis was performed. Standardization tools included terminology management and automatic index generation. Access tools included text classification, filtering and natural language database interfaces.

First, dependencies within the structural dimensions were examined. The aim was to evaluate whether the information content of an organization's product or service or the information intensity classification of an organization had any connection with the potential of an organization. As table 5.12 shows, no significant dependencies were found.

Table 5.12: Dependencies within the structural dimensions of organizations and interest in participating in the development of new linguistics-based information management tools (full results in Appendix 7)
Feature	All new tools	Standardization tools	Access tools	
Information content of product or service	0	0	0	
Information intensity group	0	?	0	
***	very significant	P > 0,999
**	significant	P > 0,99
*	almost significant	P > 0,95
+	maybe significant	P > 0,90
?	noteworthy	P < 0,90
0	not significant	P << 0,90
-	not calculated

Second, dependencies arising from the environmental features were examined. The aim was to establish different aspects of the handling of information flow had any effect on the potential of an organization for future tools. Some features, such as the acquisition of new software for the management of information, were left out of the analysis since they were predominantly the same for all the organizations in the survey. In this case, some dependencies were indeed discovered (table 5.13), though they are not surprising.

Table 5.13: Dependencies between various environmental features of surveyed organizations and interest in participating in the development of new linguistics-based information management tools (full results in Appendix 7)
Feature	All new tools	Standardization tools	Access tools	
Organizational effects
Satisfaction in information management resources	
0	
-	
-	
Increases in information management personnel	0	-	-	
Separate organization for the development of information management	0	-	-	
Information explosion				
Produced information	?	+	0	
Received information	**	0	**	
Stored information	0	0	?	
Information in electronic form				
Produced information	+	?	*	
Received information	0	0	0	
Internally processed information	0	0	0	
Stored information	0	0	0	
Information as text				
Produced information	0	0	0	
Received information	0	0	0	
Stored information	0	0	?	
***	very significant	P > 0,999
**	significant	P > 0,99
*	almost significant	P > 0,95
+	maybe significant	P > 0,90
?	noteworthy	P < 0,90
0	not significant	P << 0,90
-	not calculated

Experiencing information explosion very much in received information was a significant indication of potential for interest in any new tool. In addition, producing information predominantly in electronic form was an almost significant indication of potential in interest for information access tools. It would also seem that experiencing information explosion very much in produced information is maybe significant for interest in standardization tools. However, the sample of organizations considered to have potential in standardization tools (only four organizations) is too small to fully verify the latter dependency statistically. Other features, such as the organizational effects of information explosion and whether the core of information was text or not were not found to have any significant effect on the potential of an organization. Finally, the resultant profile of an organization with potential interest in future linguistics-based information management tools is summarized in table 5.14.

Table 5.14: Profile of an organization with potential interest in future linguistics-based information management tools

	I	The organization has experienced information explosion very much in received information (all future tools)
	IIA	The organization produces information predominantly in electronic form (information access tools)
	IIB	The organization has acquired search prefix generation (information access tools)
	IIC	The organization has experienced information explosion very much in produced information (information standardization tools)

5.5.3	Case studies

What we have now is a profile of a potential organization based on one relatively strong indicator (table 5.14: I). In addition, we have two weaker indicators respectively for the two different types of information management tools (table 5.14: IIA, IIB and IIC). The profile is unfortunately quite subjective, as its indicators mainly pertain to how an organization has perceived information explosion (except IIB). Furthermore, it has been established that there is some basis for a hierarchy for information management tools and a division of organizations on an information intensity scale.

In contrast to an initial hypothesis, however, the information intensity scale gives no indication of an organization's future need for - or especially interest in - information management tools. On the contrary, it seems that the information intensity groups are much more heterogeneous than was anticipated initially. Organizations can have almost exactly the same external characteristics, but their interest in the future information management tools can be totally opposite. As the survey was conducted as on-the-spot interviews, issues outside the scope of the questionnaire were also encountered which could explain what other influential factors exist. These factors are explored in case examples from each of the three observed information intensity groups, each with organizations representing opposite interests in information management tools.

Table 5.15: Two organizations representing information intensity group I with opposite interests in information management tools (Aamulehti Group and Painatuskeskus)
Both	
Publishing business	
Approximately the same size	
Information processed predominantly in electronic form	
Information consists of approximately the same portions of text and pictures	
Substantial annual growth of information (200 MB and 1 GB respectively)	
Potential	Unpotential	
Aamulehti Group	Painatuskeskus	
Databases consisting of multitudes of short documents	Databases consisting of large structured documents	
Emphasis on dynamic, linguistics-based information retrieval	Emphasis on fixed, hypertext based information retrieval using links	
Internal need for full, efficient access to all databases	Databases developed for external use	
Information mainly produced internally	Approximately half of the information produced externally	
Internal forces value and have interest and drive for linguistics-based information access	External forces value and pressure for linguistics-based information access	
Active cooperation with external research institutions on information access	No cooperation with external research institutions on information access	

The two organizations in table 5.15 - Aamulehti Group and Painatuskeskus - both represented information intensity group I and had other similarities, too. Both were publishing companies and were approximately of the same size. Both processed similar amounts of similar information, predominantly in electronic form - amounts that were growing substantially each year. But when it came to interest in future linguistics-based information management tools, the companies were greatly different as table 5.15 shows. The basic difference was a question of how the organizations wanted to improve access to their data bases. Aamulehti Group believed in solutions based on linguistics and had internal knowledge of the opportunities where linguistics could serve information management. Painatuskeskus, on the other hand, was more inclined to use solutions based on computer science such as hypertext links, with which the organization seemed more familiar. Solutions based on linguistics were considered not worth their price, and had been incorporated in an application only at the insistence of a customer. Thus, knowledge and appreciation of the potential of linguistics-based methods in information management appeared to be a significant factor.

Table 5.16: Two organizations representing information intensity group II with opposite interests in information management tools (Confederation of Finnish Industries and Employers, and Jaakko Pöyry Consulting)
Both	
Specialist organizations	
Approximately the same number of employees
Information processed in electronic form	
Similar operational environment	
Increasing need for a widening variety of information directly and faster from internal and external sources such as electronic databases	
Potential	Unpotential	
Confederation of Finnish Industries and Employers	Jaakko Pöyry Consulting	
Special people with informatics background in charge of development of information retrieval
Organization-wide access being implemented to organization's text databases	One person with information systems background involved in development of information retrieval
No need seen for organization-wide text databases in the foreseeable future	
Several text databases in common use and centralized development	Information storage decentralized to project and individual level	
Information retrieval based on natural language interface	Information retrieval based on document title, type and folder hierarchy	

The two organizations in table 5.16 - the Confederation of Finnish Industries and Employers, and Jaakko Pöyry Consulting - both represented information intensity group II. Again, similarities could be found. Both were specialist organizations of approximately the same size in a similar operational environment, where gathering all the relevant information is paramount. The differences surfaced once more in the management and development of access to information in the organizations. The Confederation of Finnish Industries and Employers considered equal access of all employees to all information a main goal in information management, leading to centralized data bases. At Jaakko Pöyry Consulting, on the other hand, all information was arranged in a hierarchic fashion, with no need seen for organization-wide access to specific information. In this case, the openness versus closedness of access to information surfaced as a significant factor.

Table 5.17: Two organizations representing information intensity group III with opposite interests in information management tools (Nokia Telecommunications and ABB Industry)
Both	
Metal industry	
Large organizations	
High level of products exported	
Substantial portion of operations outside Finland	
High-technology products (switching centers and electric power drives)	
Each individual product accompanied with substantial amounts of customized information
Information processed in electronic form
Information consists of approximately the same portions of text and diagrams	
Potential	Unpotential	
Nokia Telecommunications	ABB Industry	
Centralized unit for customer documentation and development of terminology	No unit or individual responsible for development of terminology	
Active development of multilingual terminology	Passive development of terminology	
Internal term banks at the use of every employee	No internal term bank; terminology learned with experience	
Centralized translation of all outgoing documents	Outsourced translation of outgoing documents	
Centralized proofreading of all foreign language documents	Outsourced proofreading of some foreign language documents	
Integrated sales organization	Separate sales organization	
International organization	Multidomestic organization	

Perhaps the clearest case are the two organizations represented in table 5.17 - Nokia Telecommunications and ABB industry. Both organizations appear similar in all the features that would typically be used to describe their activities. Their products are alike, even in the amounts of documentation accompanying each product. The differences surface again in the management of information. At Nokia Telecommunications, coordinating the document process is of paramount importance - one could almost say it is considered a competitive advantage. At ABB Industry, on the other hand, information management does not appear to be the actual responsibility of any individual or unit. In addition, information management at ABB Industry seems to be quite production driven; there is little evidence of customer influence. Thus, it could be said that internal emphasis on the quality and conformity of documentation throughout the organization was a differentiating factor between these two organizations. It may well be that this is a result of different levels of competition in different fields. Maybe tougher competition leads to higher customer expectations in product documentation.

On the basis of the case examples it would appear that superficial analysis of organizations - their field of business, type of product, organizational size, or proportion of international contacts and operations - will not give enough useful clues about their interest in linguistics-based information management. The key factor that appears significant is how the organization as a whole relates to the management of information and linguistic methods in information management. In other words, what priority the organization on a strategic level gives to the management of information as compared to other operations, and what the organization values in information management. For example, does the organization consider linguistics-based methods useful in information management.

These are factors of organizational culture, which are always more difficult to assess than superficial information. However, they are manifested for instance in how many people are involved in information management, how independent these people are from short-term trouble-shooting, and the existence of long-term strategy and resources in the development of information management. Based on the above case examples, these factors of organizational values cross the barriers of information intensity groups and fields of business when it comes to information management. In addition, whatever personal preferences a past or future interviewee would have, they would certainly be greatly affected, if not surpassed, by the organizational values. Table 5.18 presents along the line of thought presented above some concrete manifestations of interest in linguistics-based information management tools. Naturally, the existence of the necessary infrastructures - internal and/or external networks - is a physical prerequisite for the information management tools.

Table 5.18: Value-based manifestations of linguistics-based information management tools
Value/Priority	Manifestations	Emphases of interest	
Organization-wide standardization of terminology	In-house documentation department
In-house terminologists
In-house term banks	Terminology management
Automatic index generation	
Organization-wide access to existing text databases	In-house information service
In-house informaticians
Centralized text databases
Centralized storage of documents
Promoted use of official key words in storage of information	Text classification
Natural language database interface	
Organization-wide access to incoming information	In-house information service
Steady, automatic information flow from external databases
Customer contacts via electronic mail
Customer feedback via electronic mail	Text filtering	

These observations are supported in literature and are known as selective exposure and selective perception. Firstly, individuals (in organizations) tend to expose themselves only to ideas that are in accordance with their needs, interests or existing attitudes. Secondly, information about innovations that the individual is exposed to in general will have little effect unless the individual perceives the innovation as relevant to his needs and as consistent with existing attitudes or beliefs. These tendencies can easily be generalized to apply to organizations, as they consist of individuals. Furthermore, this implies a necessity for knowledge of basic linguistic principles, their implementations and limitations, which lessens the relative complexity of the information management tools. Though it is possible to adopt an innovation without knowledge about the underlying principles, this could create excessive expectations leading to dissatisfaction and discontinuance of adoption.

Finally, it could be suggested that the manifestations presented in figure 5.18 could be generalized to apply to any organizational value or priority. Thus, the following indicators could be suggested to correlate positively with the importance of a given organizational value:

•	existence of employees dedicated to a value-related task
•	existence of a separate organizational entity dedicated to a value-related task
•	existence of organization-wide guidelines regarding a value-related task
•	undertaking value-related tasks in-house rather than outsourcing them

6	Conclusions

6.1	Conclusions from the literature survey

The literature survey indicates that organizational diffusion of new product innovations, which linguistics-based information tools most certainly are, is associated with several components occurring more or less at the same time, which are interdependent of each other (Figure 6.1). Conscious effort should be placed on the integration of the innovation adoption decision processes of individual potential customers, that are occurring at different times and speeds, with the product development and active processes of marketing. The identification of lead users and cooperating with them through beta-test programs, for instance, should also be incorporated into the new product development process. Furthermore, the importance of general publicity for creating a favorable atmosphere for both product development and marketing should not be neglected. Most important of all, there should be a continuous interaction and exchange of information between Lingsoft and the potential customers on the market throughout the entire process, and even afterwards.

Figure 6.1: Components of the diffusion process

In other words, monitoring the markets should not be restricted to one-time surveys every once in a while. Furthermore, information from the market should be circulated and discussed on a steady basis with personnel in research and development.

6.2	Conclusions from the market analysis and market survey

The analysis of the language industry would indicate the following general characteristics of the market situation for any linguistics-based tools:

•	markets for the products of the language industry are yet imperfect: potential demand for linguistics-based tools is great, but it is still to a great extent latent in the potential customer base.
•	organizations producing new linguistics-based products cannot expect much immediate financial reward for their products and efforts for at least a few years to come.

Based on the market survey, the market situation for existing and future linguistics-based information management tools can be summarized as follows:

•	markets for the existing linguistics-based standardization tools (hyphenation and spell-checking) show no opportunities for significant new growth, but worthwhile potential remains in adapting these tools to new versions of word processors, publishing systems and office systems.
•	market potential for significant growth has shifted to existing linguistics-based access tools (search prefix generation and base form reduction) which are only now starting to break through, often as organizations are modernizing their data base systems.
•	market base for future linguistics-based information tools is still rather narrow, and will probably only break through after 2-3 years when markets for the existing linguistics-based access tools start to saturate as organizations learn the limits of existing access tools.
•	experiencing information explosion very much in received information in an organization is a significant indicator of need for and interest in the development of future linguistics-based information management tools. The number of such organizations is, however, quite limited in Finland, as most organizations prefer to wait for finished or almost-finished products.
•	organizations high on the information intensity scale have been in the forefront of adopting linguistics-based information management tools and are prone to be among the first to embrace the future tools.
•	organizations with interest for future linguistics-based information management tools are typically high on the information management tool hierarchy.
•	organizational values in standardization and accessibility of information seem to be important in determining whether an organization is truly interested in future linguistics-based information management tools.

Thus, the prospects of future linguistics-based information management tools do not seem very promising at the time being. However, the words that Jorma Ollila, Chief Executive Officer of Nokia used to describe the development of the mobile phone industry probably apply to the language industry as well:

"the prospects of a new technology are typically overestimated in the short run, but underestimated in the long run." 

Though the economic impact of the language industry does not presently appear to be as momentous as Ovum's study would indicate, the ever growing burden of information management will not fade away with wishful thinking or existing solutions. The crucial task for Lingsoft is to survive until the markets for linguistics-based information management tools really start to grow. In the meantime, Lingsoft should gather information on what the market really wants and develop prototypes of these products with eager lead user organizations.

6.3	Recommendations

As a result of the literature and market surveys, strategic recommendations for Lingsoft can be given as answers to the initial questions presented in the introduction of this thesis.

6.3.1	What should Lingsoft do?

In its new product development process, Lingsoft should aim at the following goals:

I	Stick to the basic competency: linguistics

Lingsoft should stick to its basic competency, which is linguistics-based information management tools and solutions. All activities of Lingsoft should in some manner support the development of this basic competency. In 1995, there does not appear to exist a clear new niche for Lingsoft for some time to come, though there are signs of emerging opportunities in information management. In the meantime, Lingsoft will be able to maintain a strong position as a possible strategic partner, for instance, if it keeps to consolidating and developing further what is knows better than other organizations, rather than risking limited, valuable resources in areas the company is not familiar with. Mastering several different areas sufficiently is difficult even for large organizations.

II	Identify and cooperate with lead users

Lingsoft should identify lead users of linguistics-based information management tools. In this, Lingsoft can use the criteria of potential customers presented earlier in this thesis. Consequently, Lingsoft should cooperate with these lead user organizations in order to determine the real needs on the market and to develop feasible solutions to satisfy these needs. This can be accomplished through beta-testing programs for the most promising future information management tools. Lead users can also be useful for Lingsoft in demonstrating to public and private research development organizations that concrete needs exist for particular new information management tools and that they are worth financing.

III	Aim at finished products for the general market

Lingsoft should in the long run aim at creating finished products for a more general market, even though customized versions are a natural by-product of beta-testing programs. For these finished products, Lingsoft should have convincing data on their benefits from the beta-test sites. Sales of products on the general market could especially help generate a steady cash flow for Lingsoft.

6.3.2	How should Lingsoft do it?

In order to succeed in its new product development process, Lingsoft should act as follows:

I	Maximize the reuse of technology

Lingsoft's activities should be planned so as to maximize the reuse of the present technologies and products. Furthermore, any new product development plans should be devised so as to maximize the reusability of the resulting technologies and products. It should be obvious that duplicating work in whole or in part which has been already done earlier is a waste of limited resources. Furthermore, aiming at reusability will most probably improve the consistency of Lingsoft's technologies and products, which will in turn make their maintenance and updating more expedient.

II	Divide new product development projects into subprojects

In accordance with the aforementioned goals such as reusability, Lingsoft should divide new product development projects in information management into smaller, clearly-defined, sequential subprojects that build upon each other. Each subproject should produce a tangible result in the end. These smaller parcels should be easier to market to potential customers in the present skeptical market situation as they would involve smaller, gradually accumulating amounts of financing and commitment of resources on the part of the customers. Furthermore, the financial and organizational effects and requirements of the new projects and their subdivisions for Lingsoft should be carefully estimated. This will enable the management of Lingsoft to make preparations beforehand for any recruitment of new personnel or financial arrangements, which may or may not be needed later.

III	Evaluate and communicate tangible benefits to end users

In planning and marketing new product development projects, major emphasis should be put on the evaluation of benefits from the usage of the resultant products of the projects to justify the costs to potential customers. Furthermore, these benefits should be effectively communicated to key decision-makers in potential customer organizations through sales material and general publicity. Similar evaluation of tangible benefits should be done for existing products as well, where appropriate. Theoretically impressive results of world records in precision and recall, a legacy of the academic background of Lingsoft, is suited to boosting internally the company's self-image, but the company's message to the outside must emphasize what a customer has to gain from a Lingsoft product or solution. Consequently, marketing aimed at business organizations should be differentiated from marketing aimed at academic organizations.

IV	Use old and present customers for publicity

Lingsoft should use old and present customers for publicity in appropriate media in order to gain general credibility and recognizability, to create general awareness of the possibilities of information management tools based on linguistics, and to attract new customers and beta-testing sites. The choice of the medium should depend on the purpose of the publicity. General awareness can be created through general newspapers, whereas attracting the interest of potential beta-test sites can better be accomplished through specialized trade magazines. Most important of all, research has shown that potential customers value information from the actual users of a product much more than information from the supplier.

V	Develop a comprehensive after-sales program

Lingsoft should cultivate old and present customer relationships through developing a comprehensive after-sales program in order to gain useful insights on customer needs. In addition, keeping old customers up-to-date on new developments may also lead to new sales. Furthermore, responding to customer problems and needs even after the sales of a product is crucial to building and maintaining a credible reputation as a company that can deliver what it promises.

VI	Strive at strategic alliances in marketing

Lingsoft should strive at generating long-term strategic alliances in marketing to boost sales and guarantee a steady cash-flow; technological alliances are not enough. Lingsoft could try allying itself with a major software integrator in order to attain such ends. Furthermore, Lingsoft does not have the resources to create a world-wide marketing presence. Thus, Lingsoft has more to gain than lose from having other organizations do the foot work in countries or areas where they are better established than Lingsoft.

VII	Create and participate actively in an informal network

Lingsoft should strive at creating and participating in a network of organizations which have both complementary competencies and joint interests in the information management market. This network should serve a variety of objectives, ranging from creating an established presence in the software business through corporate "socializing", through creating a channel for exchanging worthwhile information through a corporate "grapevine", to actually embarking on joint ventures with members of the network.

7	Evaluation of the results and their reliability and general applicability

This thesis has presented a general overview of the information management market and developed a framework for entering these markets. Thus, the following tasks have been undertaken:

•	a general theoretical framework has been presented for the development and marketing of new products
•	a general overview has been presented of the language industry and its trends and characteristics.
•	market needs for linguistics-based information management tools in Finland have been roughly estimated, as well as the interest of Finnish organizations to participate in the development of these tools.
•	criteria have been presented for identifying the most potential customers, or lead users.
•	recommendations for a development strategy for Lingsoft's products have been presented as well as practical steps needed to implement this strategy.

If these tasks are observed from within the model for new product development presented by Cooper, they roughly correspond to the marketing activities of stage II, namely preliminary market assessment.

The aim of this thesis has not been to present exact product specifications nor exact estimates of their market potential, as these tasks would have been quite futile at this stage in the development of the market in question. Neither was the aim of this thesis to evaluate the activities of Lingsoft in general. Therefore, the following tasks have not been undertaken:

•	no comprehensive market studies have been done of individual products.
•	no analysis has been done of the financial and organizational effects and requirements of embarking on new product development. These tasks are certainly among the first to be undertaken if Lingsoft is to embark on any product development in information management.
•	no analysis has been done of the financial, organizational and ownership structure of Lingsoft in general.

All in all, this thesis presents a general picture for the prospects of linguistics-based information management tools and the language industry in general, but a lot of down-to-earth work remains to be done.

Regarding the reliability and general applicability of the results, the following observations can be made. The theoretical framework of market diffusion and product adoption should rest on relatively firm ground: according to Rogers, there has been extensive research in the field, amounting to over 3,000 publications already in 1983. In the opinion of the author, the surveyed literature appeared very convergent and reliable: the authors of the reviewed books and articles are prominent researchers in the field. As for the literature on the language industry, it can be seen that the industry is relatively new and still very difficult to assess. There appears to be some pro-innovation bias in the literature on the language industry, emphasizing the virtues of the available technologies instead of actual market needs. Consequently, the conclusions on the language industry should be considered indicative but not absolutely reliable.

The market survey undertaken in this thesis was quite extensive for this stage of product and market development. As the field was relatively new territory to many of the respondents, face-to-face interviews were done to ensure that the respondents perceived the questions of the survey roughly in the same manner. The respondents were responsible for information management in their organizations, so, in theory, they should reflect the views of their organizations. However, the respondents have different backgrounds and personal priorities which certainly affect the results. In any case, the respondents do to a great extent represent the people in the surveyed organizations who have the major influence on information management. Thus, the market survey should be considered indicative and reasonably reliable.

The synthesis of the literature survey on market diffusion, product adoption and new product development should apply for any organization operating with new product innovations irrespective of the field of business. On the other hand, the information on the status and characteristics of the language industry is quite particular to the industry, and is quite naturally valid only for other organizations operating within the language industry. The same applies for the results of the market survey. As Hölttä has pointed out in his review of innovation diffusion literature, factors found to be important for an innovation and innovation diffusion in one study can be found considerably less important, totally insignificant, or even of inverse significance in another study. As for the strategic recommendations, they are a synthesis of Lingsoft's competencies, market needs and theoretical literature. Thus, they are valid only for Lingsoft. Their reliability, however, can only be observed with the passage of time. A major aspect of the reliability of this thesis that can, however, be presently reflected is how well the analysis of Lingsoft as a company and its strategy, and the market analysis have remained neutral and avoided the subjective prejudices of the managing director and the chairman of the board.

Finally, suggestions for future research and work can be presented. As this thesis did not delve into the specifics of the possible future linguistics-based information management tools, developing the concepts and specifications of these future tools with select groups of lead user customers will be a natural next step to take. As for general empirical study, the language industry as such would seem to need a comprehensive and realistic evaluation. In the academic sphere, the organizational diffusion and adoption of high-technology, high-priced innovations did not seem to be hitherto sufficiently explored. Lingsoft would certainly benefit from academic research in this area, not to mention any other small high-technology companies.

References

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Interviews or personal communications

Brace, Colin, Editor-in-chief. Language Industry Monitor. 1995-03-22 (personal communication by electronic mail)
Favorin, Martti, Deputy Director General / Information and Documentation. Finnish Ministry of Foreign Affairs. 1994-12-28
Frilander, Jouni, Systems Analyst. Finnish Broadcasting Company. 1995-01-20
Heino, Arja, Information Service Manager. National Research and Development Centre for Welfare and Health. 1995-03-13
Hirvensalo, Ulla, Head of Information Resources Department. Orion. 1995-02-20
Hoffman, Antero, Assistant Director. MTV Group. 1995-02-23
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Presentations

Ollila, Jorma, Chief Executive Officer. Nokia. Presentation for Pyöreän Tornin Kilta at Spektri, Espoo. 1995-03-27

Appendix 1

Descriptions of Lingsoft's present linguistics-based tools

1	Hyphenation
	A function typically attached to word processors which takes a word and returns it with indicators for syllable borders so that the word can be hyphenated correctly.
	For example. the Finnish equivalent for word processor,

		tekstinkäsittelyjärjestelmä

	is returned as

		teks-tin-kä-sit-te-ly-jär-jes-tel-mä

2	Spell-checking
	A function typically attached to word processors that checks the spelling of individual words. Spell-checking is usually based on a basic lexicon of several tens of thousands of base forms, for which all possible inflected forms are recognized. Spell-checkers often have a possibility of adding new words to the lexicon. Sometimes spell-checkers propose correct word forms for the word forms they do not recognize.

3	Grammar checking
	A function typically attached to word processors that not only checks the spelling of individual words but also looks for basic grammatical errors such as sentences missing a verb or incorrect agreement between a noun and an adjective modifying it. Grammar checkers often also give overall evaluation of a text, typically based on the lengths of sentences and grammatical constructions used. In this respect, grammar checkers are often fixed to one view of good, standard use of the language.

4	Search prefix generation
	A function typically attached to data base systems which permits a full text query to find all the inflected word forms of a given word in base form. The full text query is based on a limited number of search prefixes, which makes greater variation possible than simply cutting the word to be queried before its maybe variant ending. Search prefix generation is best suited for languages such as Finnish with an extensive inflection system, in which the generation of all inflected word forms of a given base form would overgenerate. A single Finnish noun, for instance, has approximately 2,000 different inflected forms.

	For example, for the Finnish noun for store

		kauppa

	the following search prefixes are generated

		kauppa
		kaupa
		kauppoi
		kauppoj
		kaupoi

5	Word form generation
	A function typically attached to data base systems which permits a full text query to find all the inflected word forms of a given word in base form. The full text query is based on the generation of all the inflected forms of a given word in base form. Word form generation is best suited for languages such as English which have only a limited amount of inflections. Normally, either search prefix or word form generation is method of choice for a particular language. For example, for the English noun

		mouse

	the following word forms are generated

		mouse
		mouse's
		mice
		mice's

6	Base form reduction
	Base form reduction gives the base form of a given (inflected) word, if it is included in the lexicon. Base form reduction is typically used with large text data bases, for which separate indexes are created with all the base forms combined with pointers to their inflected word forms in the actual text data base. This indexing speeds the actual query process, but cannot fully replace search prefix or word form generation as some base forms are not included in the lexicon.

Appendix 2

Descriptions of Lingsoft's future linguistics-based tools

According to the knowledge of the author, there are very few of the following tools successfully implemented in commercial form by 1995. There is, however, quite an amount of research going on presently in the scientific problematics of these tools.

1	Terminology tool
	A terminology tool would assist in terminology management work, which supports, for instance, translation activities in organizations. A terminology tool would use existing texts to extract potential term candidates for the terminologist. A terminology tool could be used for the building of terminology banks from scratch or for updating existing terminology banks.

2	Automatic intelligent index generation
	Automatic index generation would assist in creating back-of-the-book indices with page number references for given texts. The index generation would combine methods of both computer science and linguistics. The user could set criteria for the choice and filtering of index words.

3	Text classification
	Automated text classification would assist in the management of large document databases. This automation could vary in precision from crudely classifying documents into a limited number of predetermined groups, to the individual classification of each individual document. This would be accomplished by the automated or semi-automated creation of key words for given texts. These key words could be based on a conceptual hierarchy, so the key words would not actually have to exist in a given document.

4	Text filtering
	The methods of text classification could also be used for the filtering of documents with or without desired criteria set beforehand. This could be used for routing the incoming electronic mail of an organization, for instance.

5	Natural language database interface (NLDBI)
	Natural language database interfaces would transform a question written in normal English into a format that the database query language would understand. Using natural language interfaces could be used to lower the barriers in the usage of data bases.

Appendix 3

Target organizations of the market survey

Organizations in italics did not to participate fully in the market survey. If two figures are presented (X/Y), the smaller figure (Y) refers to the part of the organization included in the market survey, and the larger figure (X) refers to the entire enveloping organization

Type of organization (quantity)

Public or government agencies (14)	Budget in
millions FIM	Employees	
City of Helsinki/City Hall	16000/110	36500/350	
City of Helsinki/Information Center	16000/23	36500/70	
City of Espoo/City Hall	4400	300/8000	
Finnish Ministry of Foreign Affairs	2700	700	
Helsinki University Central Hospital	2000	7500	
Finnish Board of Customs	460	2200	
Parliament of Finland	250	600	
Finnish Ministry of Justice	120	380	
National Board of Patents and Registration (PRH)	100	450	
National Research and Development Centre for Welfare and Health (STAKES)	90	230	
Prime Minister's Office	65	220	
Confederation of Finnish Industries and Employers	-	170	
Helsinki School of Economics and Business Administration/library	6	30	
Helsinki University of Technology/library	-	15	
Banking, insurance and consulting companies (4)			
Kansallis-Osake-Pankki	12500	9500	
Tapiola	6400	1650	
Jaakko Pöyry Consulting	-	350	
Andersen & Co Consulting	-	100	
Newspapers, media and publishing houses (8)			
Finnish Broadcasting Company	1800	4550	
WSOY/Encyclopedias	1000/-	1800/18	
MTV Group	810	600	
Aamulehti Group	800	800	
Yhtyneet Kuvalehdet	450	380	
Painatuskeskus	250	600	
Otava	330	550	
Keskisuomalainen	160	550	
Industrial organizations (10)			
Alko/Information Services	10050/-	3300/15	
Kone Elevators	8800	21550	
Nokia Telecommunications	6900	8100	
Cultor	6400	4850	
Telecom Finland	5000	6200	
Orion/Research and Development	3600	5500/650	
Helsinki Telephone Company	1700	3100	
IVO International EA	1550	1400	
ABB Industry	1000	700	
VTKK Government Systems	260	250	
Sales organizations (3)			
ICL Data	1700	1550	
Stockmann	4500	5250	
Kesko	27000	5700	

Appendix 4

Market survey questionnaire (original in Finnish)

INFORMAATIOTULVA, SEN RAKENNE JA HALLINTA

0	Informaation merkitys organisaatiolle

Tässä informaatiolla tarkoitetaan jalostettua tietoa.

0.1 Mitä organisaatio pääasiassa tuottaa? Mistä organisaation asiakkaat tai sidosryhmät ensisijassa maksavat?
q	informaatio on organisaation päätuote tai -palvelu
q	informaatio on merkittävä, vaikkei keskeinen osa tuotetta tai palvelua
q	organisaation tuottaa vähän tai ei ollenkaan informaatiota

0.2 Mikä on informaation rooli organisaation toiminnassa ja tuotannossa?
q	informaation käsittelyllä on keskeinen rooli; informaatio on tärkein raaka-aine
q	informaation käsittelyllä on vähäinen rooli; informaatio ei ole tärkeä raaka-aine

0.3 Minkätyyppinen informaation tuottaja organisaatio on seuraavalla asteikolla? (perässä esimerkkejä)
q	1: tuote on informaatiota ja perustuu informaation käsittelyyn: uutispalvelu
q	2: tuote on palvelu, joka nojaa informaation käsittelyyn: konsulttitoimisto, pankki
q	3: varsinaisen tuotteen ohella toimitetaan myös informaatiota: ohjelmistotalo, 	hissitehdas
q	4: varsinaisen tuotteen ohella ei toimiteta paljoakaan informaatiota: saha, kauppa

1	Informaatiotulva - tarua vai totta?

1.1 Onko organisaatiossa koettu informaatiotulvaa tai informaatiopainetta: organisaation käsittelemän informaation määrän kasvua tai kasvupainetta - itse tuotetun, vastaanotetun tai arkistoidun - niin, että sen johdosta on pitänyt tai pitäisi ryhtyä toimenpiteisiin tai muutoksiin?
q	on pitänyt ryhtyä toimenpiteisiin
q	pitää ryhtyä toimenpiteisiin
q	ei ole havaittu tarvetta

1.2 Pystyykö organisaatio nykyisillä resursseillaan käsittelemään informaatiota niin (hyvin) kuin se haluaisi?
q	kyllä
q	ei

1.3 Onko organisaatioon palkattu lisää henkilökuntaa informaation käsittelyyn viime vuosina?
q	kyllä
q	ei

1.4 Onko organisaatio hankkinut informaation hallinnan ohjelmistoja viime vuosina?
q	kyllä (kohta 4.1)
q	ei

1.5 Onko organisaatiolla informaatiokanavia tai informaatiolähteitä, joita ei ole käytetty täysipainoisesti?
q	kyllä, mitä kanavia/lähteitä: 	
q	ei

1.6 Miten organisaation informaationhallinnan kehitys on järjestetty?
q	erillinen informaationhallinnan palveluyksikkö
q	muuten, miten: 	

1.7 Ollaanko organisaation sisäistä tai ulkoista tiedonkulkua tai tietoliikenneyhteyksiä muuttamassa? Miten? Milloin?

1.8 Missä informaatiotulvaa tai -painetta on koettu?
	hyvin paljon	jossain määrin	ei juurikaan
itse tuotettu	q	q	q
vastaanotettu	q	q	q
säilytetty	q	q	q

1.9 Mistä syistä informaatiotulva organisaation kohdalla johtuu?

2.	Informaatio on elektronisessa muodossa?

2.1 Tuottaako organisaatio informaatiota pääasiassa elektronisessa muodossa?
- onko määrällisesti suurin osa informaatiosta elektronisessa muodossa?
- onko sisällöllisesti merkittävin osa informaatiota elektronisessa muodossa?
- onko informaatio olemassa aina ainakin elektronisessa muodossa?
q	kyllä, mistä lähtien: 	
q	ei, milloin arvioidaan olevan: 	

2.2 Vastaanottaako organisaatio informaatiota pääasiassa elektronisessa muodossa?
q	kyllä, mistä lähtien: 	
q	ei, milloin arvioidaan olevan: 	

2.3 Käsitteleekö organisaatio informaatiota pääasiassa elektronisessa muodossa (organisaation sisällä)?
q	kyllä, mistä lähtien: 	
q	ei, milloin arvioidaan olevan: 	

2.4 Säilyttääkö organisaatio informaatiota pääasiassa elektronisessa muodossa?
q	kyllä, mistä lähtien: 	
q	ei, milloin arvioidaan olevan: 	

3	Informaation ydin on tekstiä?

3.1 Onko organisaation tuottama informaatio pääasiassa vapaata tekstiä - eli ei määrämuotoista?
- onko määrällisesti suurin osa elektronisesta informaatiosta vapaata tekstiä?
- onko sisällöllisesti merkittävin osa elektronisesta informaatiosta vapaata tekstiä?
q	kyllä
q	ei, vaan pääasiassa mitä: 	

3.2 Onko organisaation vastaanottama informaatio pääasiassa vapaata tekstiä - eli ei määrämuotoista?
q	kyllä
q	ei, vaan pääasiassa mitä: 	

3.3 Onko organisaation säilyttämä informaatio pääasiassa vapaata tekstiä - eli ei määrämuotoista?
q	kyllä
q	ei, vaan pääasiassa mitä: 	

3.4 Minkä kielistä organisaation käsittelemä teksti-informaatio on?
Prosenttiosuus tai tärkeysjärjestys (1,2,3...)
	itse tuotettu		vastaanotettu		säilytetty
suomi						
englanti						
ruotsi						
saksa						
muu, mitä: 							

4 	Informaation hallinta?

4.1 Mitä kielenkäsittelyohjelmistoja organisaatio on jo hankkinut teksti-informaation hallintaan? Milloin (viimeisimmät)?
		tekstinkäsittelyohjelma, mikä: 	
		toimistojärjestelmä, mikä: 	
		toimitusjärjestelmä, mikä: 	
		tavutus (erikseen tai liitettynä toiseen sovellukseen), mikä: 	
		oikoluku (erikseen tai liitettynä toiseen sovellukseen), mikä: 	
		kieliasun tarkastaja, mikä: 	
		viitetietokantaohjelmisto, mikä: 	
		(teksti) tietokantaohjelmisto, mikä: 	
		hakuvartaloiden generointi tietokantaohjelmistoa varten, mikä: 	
		perusmuotoon palautus tietokantaohjelmistoa varten, mikä: 	
		käännösmuisti, mikä: 	
		konekäännösjärjestelmä, mikä: 	
		muu, mikä: 	

4.2 Mitä kielenkäsittelyohjelmistoja organisaatio aikoo seuraavaksi hankkia teksti-informaation hallintaan? Milloin tai missä järjestyksessä?
		tekstinkäsittelyohjelma, mikä: 	
		toimistojärjestelmä, mikä: 	
		toimitusjärjestelmä, mikä: 	
		tavutus (erikseen tai liitettynä toiseen sovellukseen), mikä: 	
		oikoluku (erikseen tai liitettynä toiseen sovellukseen), mikä: 	
		kieliasun tarkastaja, mikä: 	
		viitetietokantaohjelmisto, mikä: 	
		(teksti)tietokantaohjelmisto, mikä: 	
		hakuvartaloiden generointi tietokantaohjelmistoa varten, mikä: 	
		perusmuotoon palautus tietokantaohjelmistoa varten, mikä: 	
		käännösmuisti, mikä: 	
		konekäännösjärjestelmä, mikä: 	
		muu, mikä: 	

4.3 Minkälaista tarvetta organisaatiolla olisi seuraavantyyppisiä teksti-informaation hallintaa ja käsittelyä helpottavia ohjelmistotyökaluja kohtaan? (Oletetaan että kyseisiin ongelmiin on olemassa ratkaisu, joka vaatii lähinnä implementointia)
	olemassaoleva	odotettavissa	ei ennakoitavaa
	tarve	oleva tarve	tarvetta
terminologiatyön apuväline	q	q	q
automatisoitu hakemiston generointi	q	q	q
tekstin luokittelun apuväline	q	q	q
tekstin karsinnan apuväline	q	q	q
luonnollisen kielen liittymä
tietokantaan (NLDBI)		q	q	q
muu, mikä: 		q	q	q

4.4 Miten organisaatio olisi valmis olemaan mukana seuraavien teksti-informaation hallintaa ja käsittelyä helpottavien ohjelmistotyökalujen kehittämisessä?
	osallistuminen	osallistuminen	osallistuminen
	rahoitukseen	kehitystyöhön	testaukseen
terminologiatyön apuväline	q	q	q
automatisoitu hakemiston generointi	q	q	q
tekstin luokittelun apuväline	q	q	q
tekstin karsinnan apuväline	q	q	q
NLDBI (ks. yllä)		q	q	q
muu, mikä: 		q	q	q

4.5 Lähdetään olettamuksesta että organisaation (elektronisen) teksti-informaation käsittelyn tarpeet ja ongelmat olisivat ratkaistavissa jo nyt.
• Mitkä olisivat tärkeimmät tarpeet teksti-informaation käsittelyssä?
• Mitkä olisivat ensimmäiseksi ratkaistavat ongelmat?
• Milloin ja missä järjestyksessä?

Appendix 5

Market survey questionnaire (translation to English)

INFORMATION EXPLOSION, ITS STRUCTURE AND MANAGEMENT

0	The importance of information for the organization

Information is understood in this query as refined knowledge.

0.1	What is the main product of the organization? What do the customers of the organization pay for?
q	information is the main product or service provided by the organization
q	information is an important, but not central part of the product or service provided by the organization
q	information is a minor or negligible part of the product or service provided by the organization

0.2	What is the role of information in the internal production and processes of the organization?
q	the management of information has a central role; information is a major component
q	the management of information does not have a central role; information is a minor component

0.3	What type of producer of information is the organization on the following scale? (followed by examples)
q	1: the organization produces relatively neutral information based on the processing of information: news agency
q	2: the organization provides a service which is based on the processing of (large amounts of) information: consulting agency, bank
q	3: the organization produces a product or service which is accompanied by relatively large amounts of information: software company, elevator factory
q	4: the organization produces a products or service which is accompanied by relatively small amounts of information: saw mill, store

1	Information explosion - fact or fiction?

1.1	Has the organization experienced information explosion: the growth of or growth pressures in the amounts of information processed by the organization - produced, received or stored - so that the organization has had to take specific measures or make specific changes?
q	measures have been taken
q	measures have to be taken
q	no need has been experienced

1.2	Is the organization able to process information with its present resources as (well as) it would want to?
q	yes
q	no

1.3	Has the organization employed more people for the management of information in the last few years?
q	yes
q	no

1.4	Has the organization purchased software for the management of information in the last few years?
q	yes
q	no

1.5	Does the organization have information channels or information sources, that are not presently used fully?
q	yes, what channels?
q	no

1.6	How is the development of information management organized within the organization?
q	separate internal service unit for information management
q	otherwise, how?

1.7	Is the organization changing its internal or external information flows in the near future? When? How?

1.8	Where has the organization experienced information explosion?
		very much	somewhat	negligible
produced	q	q	q
received	q	q	q
stored		q	q	q

1.9	What are the reasons behind the information explosion in the organization's case?

2	The electronic office?

2.1	Does the organization produce outgoing information mainly in electronic form
	- is the major quantity of information in electronic form?
	- are the main contents of the information in electronic form?
	- is information always at least in electronic form?
q	yes, since when?
q	no, but estimated when?

2.2	Does the organization receive information mainly in electronic form
q	yes, since when?
q	no, but estimated when?

2.3	Does the organization process internally information mainly in electronic form
q	yes, since when?
q	no, but estimated when?

2.4	Does the organization store information mainly in electronic form
q	yes, since when?
q	no, but estimated when?

3	Information is text in its core?

3.1	Is the outgoing information produced by the organization mainly free text - not structured?
	- is the major quantity of information free text?
	- are the main contents of the information free text?
q	yes
q	no, but mainly what?

3.2	Is the outgoing information received by the organization mainly free text - not structured?
q	yes
q	no, but mainly what?

3.3	Is the outgoing information stored by the organization mainly free text - not structured?
q	yes
q	no, but mainly what?

4	What are the languages in which the organization produces textual information? Percentages or order of importance (1/2/3...)
		produced		received		stored
Finnish							
English							
Swedish						
German						
Other, what?						

4	Management of information?

4.1	What linguistics-related information management software has the organization already purchased for the management of textual information? When?
		word processor, what? 	
		office system, what? 	
		publishing system, what? 	
		hyphenation (separately or in combination with another application), what? 	
		spell-checking (separately or in combination with another application), what? 	
		grammar checking, what? 	
		reference data base system, what? 	
		(text) data base system, what? 	
		search prefix generation for data base system, what? 	
		base form reduction for data base system, what? 	
		translation memory, what? 	
		machine translation system, what? 	

4.2	What linguistics-related information management software does the organization intend to purchase for the management of textual information? When or in what order?
		word processor, what? 	
		office system, what? 	
		publishing system, what? 	
		hyphenation (separately or in combination with another application), what? 	
		spell-checking (separately or in combination with another application), what? 	
		grammar checking, what? 	
		reference data base system, what? 	
		(text) data base system, what? 	
		search prefix generation for data base system, what? 	
		base form reduction for data base system, what? 	
		translation memory, what? 	
		machine translation system, what? 	

4.3	What need does the organization have for the following tools that would facilitate the management and processing of textual information? (Assuming that the solutions already exist, and only practical implementation is needed)
		existing	anticipated	no anticipated 
		need	need	need
terminology tool	q	q	q
automated index generation	q	q	q
text classification tool	q	q	q
text filtering tool	q	q	q
natural language database
interface (NLDBI)	q	q	q
other, what? 		q	q	q

4.4	How would the organization be willing to participate in the development of the following tools that would facilitate the processing and management of textual information
		participation in	participation in	participation in
		financing	development	testing
terminology tool	q	q	q
automated index generation	q	q	q
text classification tool	q	q	q
text filtering tool	q	q	q
NLDBI (see above)	q	q	q
other, what? 		q	q	q

4.5	Let us assume that the needs and problems of the organization in the management of textual information (in electronic form) could be solved now.
•	What would be the most important needs in the management of information?
•	What would be the problems to solved first?
•	When or in what order?

Appendix 6

Results of testing dependencies according to the chi-squared method between information intensity and various features of surveyed organizations

Feature	X2	P	
Satisfaction in information management resources	1.69	< 0.75	
Increases in information management personnel	2.82	< 0.90	
New purchases of information management software
Introduction of new information channels or information sources
Recent or anticipated changes in information flow	0

2.40
0.49	0

< 0.75
< 0.25	
Information explosion			
Produced information	14.82 ***	0.995 *	
Received information	3.05	< 0.50 *	
Stored information	3.54	< 0.75 *	
Information in electronic form			
Produced information	3.90	< 0.90	
Received information	0.27	< 0.25	
Internally processed information	0.27	< 0.50	
Stored information	0.65	< 0.25	
Information as text			
Produced information	4.15	< 0.90	
Received information	4.15	< 0.90	
Stored information	2.29	< 0.75	
Sample size: 34
Degrees of freedom = 2, if unmarked
Degrees of freedom = 4, if marked (*)
Calculation of X2 value statistically invalid, if marked (***)

Appendix 7

Results of testing dependencies according to the chi-squared method between structural and environmental features of surveyed organizations and their interest in participating in the development of new linguistics-based information management tools.

Organizations were divided into two groups: significantly interested and not interested. Organizations that were interested in financing or development of new tools were considered significantly interested. Organizations interested only in testing or not interested at all in participating in the development of new tools were considered not interested.

Feature	All new tools	Standardization tools	Access tools	
	X2	P	X2	P	X2	P	
Information content of product or service	0.12	< 0.5	0	0	0.13	< 0.50	
Information intensity group	1.97	<0.75 *	2.96	<0.90 *	2.64	<0.75 *	
Satisfaction in information management resources	0.12	< 0.50	-	-	-	-	
Increases in information management personnel	0.04	< 0.25	-	-	-	-	
Separate organization for the development of information management	0.04	< 0.25	-	-	-	-	
Information explosion							
Produced information	1.99	< 0.90	4.53	0.90 *	0.99	< 0.25	
Received information	6.1	< 0.99	0.88	< 0.50	6.58	0.99	
Stored information	0.83	< 0.75	0.21	0.10	1.49	< 0.90	
Information in electronic form							
Produced information	3.43	0.925	2.99	< 0.90	4.44	< 0.975	
Received information	0.0005	< 0.025	0.34	< 0.50	0.024	< 0.25	
Internally processed information	0.0005	< 0.025	0.27	< 0.50	0.24	< 0.50	
Stored information	0.024	< 0.25	0.11	< 0.50	0.19	< 0.50	
Information as text							
Produced information	0.41	< 0.50	0.04	< 0.25	0.99	< 0.75	
Received information	0.41	< 0.50	0.04	< 0.25	0.99	< 0.75	
Stored information	1.38	0.75	0.21	< 0.25	2.1	< 0.90	
Tool hierarchy (prerequisites)							
Search prefixes acquired	2.59	< 0.75	0.005	< 0.1	3.77	0.95	
Grammar checker acquired	-	-	0.77	< 0.77	-	-	
Sample size: 34
Degrees of freedom = 1, if unmarked
Degrees of freedom = 2, if marked (*)