Contributed by Tim Bowman & Nick Buckley.
For any company moving to a subscription model, you need to deliver ongoing value to the customer and also create new sources of value that didn’t exist…you have to take a fresh look at your products — and be willing to “burn the boats”…imagine that you have a clean slate, and you are launching the company fresh today. What would the offering be? What do you need to do to get there?
-Dan Cohen, VP Corp Strategy Adobe
It’s not every day that a revolution in business comes along like the cloud – a change so profound that it requires companies to not only vastly transform their products but also their corporate structure and culture.
Adobe’s story of their transition to the cloud is one of the most impressive cases out there today; it may seem almost like a no-brainer in retrospect but it surely didn’t feel that way for the executives at the time. This was uncharted territory.
Within the company there were serious concerns that supporting both the perpetual on-premises Adobe software alongside the cloud software during the transition was doubling costs, while revenue was also experiencing a sharp drop as customers suddenly stopped paying up front for the next several years of service via license.
And finance wasn’t the only department that has to undergo a sea-change. It was a whole new world for sales and marketing, accounting, product and support, to mention just a few.
Transforming the culture internally to match the external transition of the business is critical. At the time it can seem like a difficult choice to make. In the end though it’s not really anyone’s choice – the market will go to the cloud regardless. Smaller choices do still need to be made, like what to do with those boats…are they life rafts? millstones?…or a 3-alarm fire?
- How transparent are you with your employees and owners? Transparency is key, both internally and with existing customers. Be willing to solicit feedback and adjust strategy accordingly.
- How forward thinking are you as a company? Successful execution demands you think strategically not only of your customers and employees today but also your customers and employees of tomorrow
- How prepared are you financially for the transition? The double-whammy of short-term revenue loss and added costs can be a tough period. Moreover, typical metrics such as earnings and revenue may no longer guide market perceptions as subscriptions and cloud growth become all important – get in front of these metrics early and use them as your bellwether.