7 Lessons from Adobe’s Successful Transition to SaaS

Bigfoot Capital
May 28, 2019 · 5 min read

Graphic designers everywhere love to hate on Adobe.

To be fair, a lot of it is due to the fact that they can’t live or work without products like Photoshop, InDesign and Acrobat, which helped Adobe cement its reputation as one of the anchor providers of digital design software.

But its products are complex, leading to high prices for users. On top of this, they’re constantly being updated to keep up with the latest trends in the industry, leading to endless upgrade cycles that cost users even more.

But Adobe did something big in 2012 — it transitioned from a provider of one-time purchase products (aka Creative Suite) to a true Software as a Service (SaaS) model. Overnight, users’ upgrade concerns were put to bed. Now, with its subscription service, Creative Cloud, designers can access all of the software tools that they need, without having to worry about future updates, and pay a flat monthly or annual fee for all of it (or just the platforms that they need).

But this transition didn’t happen overnight. Adobe had nearly 30 years of customer expectations to live up to, and a lot of users to convince that this was the right move.

As a result, Adobe’s evolution was carefully paced and comprehensive, effectively reshaping its core business model. Since then, however, it has become a “leader in the subscription economy.”

Here’s what every business can learn from Adobe’s successful transition to SaaS.

1. Don’t rush a transition or surprise your customers.

Adobe Creative Cloud SaaS platform was originally released in April 2012. At the time of its first subscription release, it offered its cloud services alongside its traditional software for purchase, an option that was only retired in January 2017. During this overlap period, the subscription-based service was available in different iterations of testing for five years before becoming the single option for users. And, the company made sure that nothing about its transition was a surprise. It announced its intentions to its stakeholders as early as November 2011. Adobe began priming users for the retirement of its Creative Suite soon after, formally announcing that it would no longer be developing its Creative Suite product line in May 2013 (although it would continue to support it).

2. Communicate with users and shareholders (a lot).

Early in the transition to the subscription model, Adobe published an open letter to users opening up a dialogue about the coming changes. Its leadership knew that without buy-in from its existing and loyal customers, it wouldn’t be able to move efficiently to the new subscription-based product. As a public company, it also recognized that in addition to its user base, its stakeholders needed careful explanation and continuous, proactive communication along the way.

3. Stand firm.

Adobe’s transition to SaaS was not met with a big, warm hug. Instead, 30,000 Adobe customers signed a petition on Change.org asking Adobe to abandon the SaaS transition. This is pretty extreme as Change.org is a platform for petitions for social causes. Shame on you designers! However, the company’s leadership knew that the transition to SaaS would allow it to deliver a better product that would be more easily updated, more secure, and more quickly improved upon on an ongoing basis. More so, it saw the SaaS model as an avenue to grow its customer base (and recurring cash flow). So, Adobe made its decision and stuck to it. It never wavered from that commitment.

4. Set goals and meet them.

Adobe created a new set of metrics for its subscription service, educated stakeholders about them, and kept its promises along the way. These goals included “markers” such as 4 million subscribers by 2015 and increased annualized recurring revenue (ARR). According to the company’s chief financial officer, Mark Garrett, in an interview with McKinsey, these markers sparked interest from investors about the company’s longer-term objectives. They helped make clear that SaaS was Adobe’s future.

5. Consider every aspect of change.

Adobe saw its new service as an entirely new product, or what it called the “digital experience” of its products. According to Garrett: “Moving to the cloud affected how we engineered the products, our operations, and our go-to-market and business models.” Adobe understood its products and their functions as a lifecycle, including marketing, analytics, advertising and commerce processes. In other words, Adobe did not cling to the status quo and try to change as little as possible. Instead, it took the opposite approach: it saw the transition to SaaS as a way to reinvent and reintroduce its products and offerings.

6. Expect challenges, but continue to create value.

Adobe took the challenges from its users and turned them into opportunities to add value. According to Garrett: “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 with the old model. You can’t just sell the same offering in a different way.” Adobe’s newly reinvented cloud products were able to appeal to new consumers, as well as transition many of the old.

7. Be willing and prepared to continuously adjust.

While the Creative Cloud was meant to provide services for a range of clients, from individuals to large companies, freelancers and hobbyists specifically were unhappy with the pricing structure early on. “Adobe is robbing small business, freelancers, and the average consumer. They do not seem to understand that every company is a not multi-national, multi-billion dollar corporation that has an infinite amount of resources,” they wrote in the Change.org petition.

This didn’t fall on deaf ears. The company listened to the complaints of this subgroup of users and in response introduced a cheaper, photography-only plan which included variations of Photoshop and Lightroom. It proved hugely popular.

In short, Adobe approached its transition to SaaS as a full-scale business transformation. And, like most successful business transformations, it took time, incorporated stakeholder feedback, and came to fruition in a steady progression toward its goals.

Bigfoot Capital

Bigfoot Capital’s thoughts on SaaS, capital and business building

Bigfoot Capital

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Helping #SaaS Founders grow their companies on their terms. We want you to manage your business, not a Board of Directors.

Bigfoot Capital

Bigfoot Capital’s thoughts on SaaS, capital and business building

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