IRVINE, Calif. — Adobe CEO Shantanu Narayen this week described how advancements in mobile technology, cloud computing, and software enabled his company to transform from one that used to ship software in boxes to a software-as-a-service (SaaS) provider delivering software on a continuous basis.
Adobe’s software is used by millions of creative professionals, marketers, data scientists, publishers, and others. Photoshop and PDF are Adobe’s flagships — effectively two verbs that represent the company, as Narayen put it at the Road to Reinvention conference.
A decade ago, Adobe had very little recurring revenue. High upfront costs, 12-to-18 month product cycles, and one-time revenues placed the entire company in an environment predicated on not talking to its customers, Narayen said. “We were not attracting new customers to the platform. The cost of software was an impediment to people using it.”
The ascent of cloud computing and mobility changed the fundamental structure of Adobe’s business, and it came just as the recession hit and revenues dropped 25 percent, Narayen said. “We weren’t mission critical to where the world was going.”
“If we artificially limit our aspirations to only be on the desktop, we get what we deserve,” he said, reflecting on the beginnings of Adobe’s digital transformation. “We certainly believe software has changed the world.”
Since then, Adobe has made multiple acquisitions to bolster its reach in advertising, data, search, analytics, and e-commerce. “Anything that you need to engage with customers digitally, we want to do it,” Narayen said.
“We think the imperative for every company in this digital era is you start with the customer and build in,” he added. “Every business has an S-curve,” and by that he means if organizations don’t disrupt themselves, someone else will do it.
Three Foundational Changes
Among the pivots that are necessary to transform a business for the digital era, there are three foundational changes that lend themselves to broad application across all business functions, according to a recent survey and report by Deloitte Insights. “These are flexible, secure infrastructure; data mastery; and digitally savvy, open talent networks,” the firm wrote.
When Adobe made the transition from shipping boxes to shipping software continuously, it quickly learned the importance of data in enabling it to deliver better products. “It doesn’t matter what business you’re in, people want to buy an experience,” and companies should harness insights from users that are probably motivated to help them to achieve that goal, Narayen said.
“If you can connect all the dots from where you are today and where you want to go, you’re probably not being aspirational enough,” he said. Narayen encouraged organizations to embrace openness, a willingness to change quickly, and getting comfortable with differing points of view. “Competitive dynamics don’t come from being a closed system,” he said. “Innovation is not restricted to the four walls of your enterprise.”
Indeed, Adobe recently partnered with Microsoft and SAP to found the Open Data Initiative in September 2018. The organization, manipulation, and security of data lies at the heart of the effort. “While these applications move to the cloud, the data has not yet moved. The data is still in these silos” around customers, corporate information, and many other divisions, Narayen explained.
“You need to be able to tie all those data together with trust and privacy,” he said, reiterating that all of the data collected by Adobe, Microsoft, and SAP is owned by and collected on behalf of customers. “The ability to connect all those data silos we think is an unsolved problem in the cloud.”
The group is working on agreements to define the taxonomy for the data and how it interoperates in the cloud, Narayen said. The predominant goal is to limit the amount of IT resources that enterprises need to use to make all of that data work separately within each business, he said, adding that the Open Data Initiative will eventually lead to standards and products that enterprises can build into their own applications.