CASE STUDY: ADOBE CLOUD’S TRANSFORMATION *Introduction: Adobe is a famous company which has been on earth for a long time that is why it’s hard to imagine the world without photoshop but in the 2008 recession hit Adobe hard because they didn’t notice that hackers stole info of 2.9 million users including encrypted credit card data along with source code for Adobe software product in the August As a result their revenue drop more than 20% In December of 2008, the company annouced it would be laying off around 600 employees, even worse it can be 8% of its workforce “It was awful” Mark Garett CFO of Adobe said Both Mark and Shatanu CEO of Adobe agreed that it was their fault because of bad managing However, after four and a half years later Narayen stepped on the stage of annual user conference to annouce to the world that they had just completed one of the world largest cloud transformation in history which is a product launch with a full-blown strategic pivot for the company At first it sound crazy and bold because at the moment, the company was publicly traded, had a $11+B market cap, dozen of products, and 7000 employees And yet, here they were preparing to make a 5-year bet on brand new technology, distribution channels, products, GTM motions, and more *Finding ínpriration and laying the foundation: After analyzing their microenvironment, they found out a role model to look up to and follow which was Saleforce whose revenue hadn’t shrunk in the recession In fact, they’d continued beating Wall Street estimates On the Salesforce balance sheet, it was like the downturn had never happened Adobe had offered many successful products that customers loved But their business model at the time while the leadership team’s own admission was just only innovative And, as a result, they’d suffered the consequences Salesforce had proven cloud was possible, but cloud was in the company’s DNA from day one For Adobe, this was an entirely new landscape that would require a 180 degree shift from the "box software model" of distribution that had grown and sustained the company for 30+ years Besides the swath of internal changes it would require to their organizational structure, operational processes, workforce, core culture and technology across the board, Adobe had thousands of customers across the world Companies with workflows, contracts, budgets, and IT departments all built around the way their products were currently delivered Furthermore, there were partners, investors, and employees whose entire understanding of Adobe's business was built around this more traditional, perpetual license sales and distribution model *Igniting the base and confronting skeptics: There were a lot of discussions among Adobe’s management, finance, and strategy teams and among business-unit leaders They spent many hours talking about risk Lot of customers didn’t interested in the idea at the beginning The company knew that their revenues, earnings, and stock price were almost certain to drop during the transition Furthurmore, it was going to be a long, hard road It really takes guts to make this sort of change and that was what they had to come to terms with Just how risky is it? will really pull it off? What happens if the stock goes down? What will customers, employees, investors, and board members think? They spent hours knee-deep in Excel spreadsheets modeling this out The company literally covered the boardroom with pricing and unit models, predictions for how quickly perpetual licenses would fall off, and how quickly online subscriptions would ramp up This helped them come up with the idea of making the change and how much time it will take, here’s what it will look like at the end After a year of discusing about their microinvironment, They saw that they can manage through it, their shareholders and their customer will come out on the other side much better off * Release their product: With Shatanu’s vision to disrupt the status quo at Adobe and build out more digital media and marketing services to aggresively expand usage in order to satisfy their customers’re creative demands In 2008, Adobe released a webtop version of Photoshop called Photoshop Express This was designed as a consumer product to be really easy to learn and use, allowing users to make edits to photos, create albums, and share them with others This demonstrated that Adobe was taking a big step towards embracing the internet by creating a consumer-facing web product that took advantage of the web’s social network capabilities Just after a year, Adobe acquired the top enterprise analytics company Omniture This was important because it allowed Adobe to offer web analytics, measurement, and optimization technologies to Adobe product users directly in their workflow It opened up a new category of products—analytics—and introduced new customers—marketers The analytics and marketing segment was conveniently adjacent to their existing creative design market Now, new types of users who needed to evaluate the performance of designs on the web could have easy access to analytics tools This helped them measure the effectiveness of creative campaigns built with Adobe’s other tools Then in 2010, Adobe released eSignatures, a cloud-based signature tool that demonstrated the company was taking more steps toward building for the cloud When they released the tool, they said that the mission behind it was to build “something that was easy to use, fast, accessible to anyone with an internet connection and a browser, and that wasn’t overloaded with complicated features” Espcially, in 2013This was the biggest turning point in Adobe’s history Adobe released Creative Cloud (CC) to take the place of the Creative Suite They announced that all future versions of their Creative Suite apps would only be available for purchase through a subscription-based service, and only available on the cloud Their service went from a one-time purchase of $1800 to $50/mo for the entire CC (or $19/mo for a single app) Adobe’s move to the cloud has since been called the textbook example of how companies should make the transition They were ultimately successful *Theories can apply to expain it success: Top managers set a good and specific mission, objectives, broad strategies, and policies Marketing managers make decisions within these broader strategies and plans They also made lots of good decision and helped encourage the employees to overcome the impossible task in the weakening phase As a public company, their top managers regcognized that in addition to it’s user base it’s stakeholders needed careful explantaion and continuous, proactive communication along the way Adobe provide greater customer value and satisfaction than its competitors with it’s new product which the Creative Cloud The company made sure to offer valuable use cases for the many different types of users and projects they supported (like designers, photographers, videographers) and add new features to the cloud-based tools for their customers to keep their interest in their product Over on Twitter, Adobe’s social team responded rapidly to questions and feedback, and delivered the news alongside links to Customer Advocate FAQs and forum discussions with product experts They broadened their target market beyond creatives to sell to more members of the C-Suite Adobe understood its products and their function as a lifecycle, including marketing, analytics, advertising and commerce processes They saw the transition to Saas as a way to reinvent and reintroduce its products and offering *How it’s success influence the whole organization: In the cloud: Adobe had previously charged $700 up front for its flagship product Photoshop Thirteen million customers had purchased the software before Adobe switched to licensing a bundle of titles for only $10 per month Revenue dropped from 2011 through 2014 as the up-front earnings from boxed software ended, but eventually the recurring revenue model began to pay off In 2015, Creative Cloud was a $1.8 billion business, of which $1.1 billion was from recurring annual subscriptions By the end of 2017, Creative Cloud is expected to be a $4.2 billion business, with $4.0 billion in recurring annual subscriptions After the transformation: Adobe has grown recurring annual subscription revenue nearly 4X over four years—an enviable feat This successful transition to a digital service model included market testing, offering a materially different product, simplifying pricing and, most significantly, the fortitude to weather a decline in top-line revenue when switching revenue models Adobe “ripped the Band-Aid off” to avoid customer and revenue delays and their bet has paid off This summer, the company announced the incorporation of artificial intelligence capabilities into Creative Cloud—something that could never be done with their original product model My source: https://www.launchnotes.com/blog/how-they-launched-it-adobes-cloud-transformation#findinginspiration-and-laying-the-foundation https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/reborn-in-the-cloud https://producthabits.com/adobe-95-billion-saas-company/ https://consumerist.com/2013/10/04/adobe-didnt-notice-that-hackers-stole-info-for-2-9-million-usersback-in-august/ https://medium.com/bigfootcapital/7-lessons-from-adobes-successful-transition-to-saas-d0f7250ab352 ... purchased the software before Adobe switched to licensing a bundle of titles for only $10 per month Revenue dropped from 2011 through 2014 as the up-front earnings from boxed software ended,... recurring revenue model began to pay off In 2015, Creative Cloud was a $1.8 billion business, of which $1.1 billion was from recurring annual subscriptions By the end of 2017, Creative Cloud is expected... models Adobe “ripped the Band-Aid off” to avoid customer and revenue delays and their bet has paid off This summer, the company announced the incorporation of artificial intelligence capabilities