July 8, 2013

Understanding Adobe Creative Cloud

There's been a lot of controversy around Adobe's move to Creative Cloud as well as their moving to a subscription-only product offering. This is obviously a major shift in approach for both, Adobe and their customers, so I thought I'd write a post to provide an angle at how to look at this move. A few things before I do, however:

- I do not currently work at Adobe. However, I did once work at the company over 10 years ago, when I was the product manager for Illustrator.
- The information I share here is simply my own opinion and my own ideas from my experience having worked at Adobe and from what I know in the industry in general.
- I am not endorsing Adobe's decisions, nor am I defending them.

Many people are of the opinion that Adobe moved to the Creative Cloud model to make more money. It would be hard to argue with that, as Adobe is a public technology company and looks to make a profit. But this stems from a major shift in thinking at the company, and when you say "make more money", there are various ways to look at it. To understand this better, you have to understand Adobe's  software business, and what has changed.

In the past, a major software product -- such as Illustrator, Photoshop, or InDesign -- was built using something we call a PLC, or a Product Life Cycle. At Adobe, the PLC for the average product was usually 18-24 months. The PLC traditionally begins with product managers who draw up a document that contains a list of all the new features that will appear in a new version. This document is a result of much research which includes numerous customer visits, focus groups, surveys, user studies, and discussions with product experts. This document -- basically a detailed roadmap for the new version -- is vetted by upper management, and the team hopes that when the product finally ships, people will purchase or upgrade to the new version -- in hopes that all their planning and research would satisfy what features the public needed.

Once this roadmap is approved, milestones are defined and the engineering teams start to build the features. Major milestones, such as alpha, beta, etc. are created and act as checkins along the way. At some point (usually at beta), Adobe shares the product with external customers to get feedback or to get additional help in testing the software in various environments. After the product is heavily tested, Adobe then ships the product.

In the world of software development, this process is referred to as "waterfall" -- meaning that the development is linear, and each part of the process happens sequentially. There are several issues with this development approach:

- The product team must anticipate what the public will need a full two years in advance.
- The massive investment in this two-year project means once you get started and you decide on a direction, making any kind of change is extremely cost-prohibitive
- By the time a product gets to beta and is tested by the public, it's far too late to implement feature changes, and often only crashing or other major technical issues are dealt with
- Large products with large feature sets require large teams of engineers -- all of whom are tied up on long-term projects. If a problem crops up and you need to move engineers from one project to another, you can jeopardize entire project schedules

The business downside to a waterfall approach is also a major issue. Guess wrong on what features you think the public wants to see in your product and you've not only wasted two years of development time without making money, you now must wait another two years to develop the next version, in hopes that you correct it then. The stakes are very high. And a company like Adobe must then spend millions of marketing dollars by staging a "launch" where all these new features are hyped in hopes that the public will make a purchase. Repeat this every two years, and for each major product that the company offers.

Let's contrast this waterfall method with an approach that's being used more and more in today's modern product development world. Instead of large teams building a large amount of big features across a span of several years, companies have started assembling smaller cross-functional teams that work on specific individual features with short development cycles. This approach is referred to as "agile" development. An agile approach allows a company to focus on specific features which they develop quickly -- even within weeks. This allows product teams to create features that solve customer needs quickly. Perhaps more importantly, it allows a team to take on risk by experimenting with innovative features or the like, without worrying about losing 4 years of work. Feedback from customers can be reacted upon immediately.

In theory, an agile approach would make both a software company like Adobe very happy, as well as its user base of customers. Adobe could build better products faster and that meet its user's needs, and customers can get features they really want and need in a shorter amount of time. But there are challenges on both sides.

On Adobe's side, moving from a waterfall approach to an agile approach for software development is a HUGE undertaking. Traditionally, Adobe would be structured in teams of engineers, quality assurance, product management, and the like. These teams all had their own management structure and hierarchy. An agile approach would mean creating smaller individual teams -- each containing an engineer, a QA person, a product manager, etc. These individual teams would be working on specific features, not entire products. Not only is this a massive logistical shift, it's also a massive cultural shift. Across multiple products.

On the customer side, moving from a mentality of seeing a new version once every two years to potentially seeing a stream of constant updates is also huge. There are standardized workflows at companies that need to be tested with each new version. Teams require training, needing to learn the new features. And perhaps most importantly, IT departments and business owners need to think about budgets differently.

Let's go back to Adobe's perspective for a minute. One could argue that Adobe could have stuck to a waterfall development approach. But moving to agile isn't only good for the product development benefits I outlined below. It's also necessary to make money. No, I don't mean making money by charging customers more. I mean it's necessary to make money in today's competitive market. While there aren't any serious competitors to Adobe's products, there are definitely some interesting products out there that are gaining attention.

Pixelmator and Acorn are examples -- and while they can't compete head to head with Photoshop, there are plenty of folks that are using those products as alternatives for certain kinds of work. A small company can easily add features and make adjustments, while a large company like Adobe moves like molasses only releasing massive complex feature-ridden products every two years. Adobe would never survive. They need to become agile and to react to customer needs quickly in order to maintain their leadership.

But in order for Adobe to move to an agile approach, they need to change their business model. They can't sell potentially new versions of each product every few weeks or months as each new feature is added. The overhead would be enormous. When I left Adobe 10 years ago, there were 13 localized versions for each language of every product. Every product had a Mac and a Windows version. Every product was available as a new full version or an upgrade version, and there were education versions as well. That means that from an accounting perspective, there are over 250 "versions" of every product that Adobe sells. And there are over 20 products. If each of those products were sold as perpetual licenses and updated on a constant basis, the costs Adobe would have to charge would be prohibitive.

So in the end, Adobe needs to move to an agile approach to stay relevant and fresh, and to compete in an ever-changing technology world. And in order to support that, Adobe needs to move to a subscription-based model. It simply cannot work in a perpetual license model.

Now, if you want to argue how much money Adobe is charging for their products, that's totally fine. But hopefully I've been able to provide some background for why Adobe had to go this route in the first place.


Richard L said...

Having followed this debate extensively online, the main complaints about the move to the new approach are not centred upon the 18-24 month releases vs. continual upgrades of CC.

It's about the removal of the option to purchase a permanent license. Simply that!

Anonymous said...

Holding a customer's data hostage with a mandatory subscription is criminal and offensive.

Not being able to open and edit your files when you stop paying a monthly fee is completely unacceptable.

Anyone who accepts these terms is foolish, short sighted and is hurting the entire industry.


Stay with Creative suite until Adobe offers perpetual licensing again.

And if they don't – let them die by their own hand.

I say this as a 20 year veteren in print design, prepress and printing who has used, loved and evangelized Adobe products. I converted hundred from Quark to InDesign when Quark ignored OSX.

Arty Deco said...

So… without perpetual license, customers are supposed to pay monthly for updates they don't want and programs they don't use? Sounds reasonable :/

Then they lose access to files once they end their subscription? Sure, that's just wonderful. :( What a "fresh" idea!

And this is because it's "hard" for Adobe to make software upgrades?

Poor, poor Adobe. The dominant creative software maker wants their lives to be easier - at our expense.

By all means, let's all give up our ability to choose for ourselves which programs and which upgrades we want to pay for.

This is great for today's designers and freelancers! We're rolling in so much excess money, we don't know where to put it!

Who cares about the future of our files accessibility? We trust Adobe completely! I'm sure the rate will never ever go up.

When I'm retired and 80 years old, I won't mind paying $80 to open one of my previous works just to change one word.

I guess the customer is always wrong, right?

Dandalo Gabrielli said...

Mordy, you left the company 10 years ago, but it's hard to believe that even early than that nobody never has argue about subscription model.
Never during a Coffee or talking in parking lot? It is always the logical answer for software.

Larry Ellison said this more than 10 years ago : )

We have broadband internet at lest for 12 years around the world!!! Not just U. S.

In the other side, the current approach of Creative Cloud is very good for a lot of people outside the U. S..
An example: If I want the full version of (or part of) Creative Suite, I need to pay 2x - 3x the price for the original box, not a localized version.

Ps: I don't know if we can say this, but lynda.com follow the same principle. At the beginning they sold their courses in tapes and dvd's, now just by subscription.

Anonymous said...

I understand your point, Adobe needs to make a change. However, what they are focusing on is the wrong target. These days, in my opinion, there isn't a single soul out there saying, "Y'know, Photoshop just doesn't have enough features. Not only do we need more, we need them faster!" (Or Illustrator, etc)

App bloat has become an accepted practice. (Adobe is not the only offender here, obviously) How about some bold thinking for a change: "We are going to focus on making our app leaner, faster, more stable. In order to do that, we may have to cut out some fat [features] that are duplicative or confusing or just not used. We will be posting a poll showing what we can change or eliminate to make those improvements. Your vote will help decide the future of..."

Lastly, I do agree with Richard, the loss of a license that allows me to run my software until I decide when to upgrade is quite disheartening.

Unknown said...

You are all correct in your statements. As I said at the top of my post, it wasn't my intention to defend Adobe's decision -- I was merely presenting an angle that perhaps others hadn't considered.

If you want my own personal opinion, I'll tell you that at the outset, I support Adobe's decision. Only because I understand the benefits we can gain in the long term. But there's a caveat to that -- with a subscription model, you need to keep subscribers happy or they will leave. With an agile development structure, Adobe could easily decide to focus on simplifying their apps instead of piling on new features. If I worked at Adobe, that's what I would do. I'm willing to give Adobe some time to see what they do. But if it will be the same as in the past where I'll get features that aren't useful to me, or apps that make no sense, then I'd have no intention of keeping my subscription current.

Dandalo, I'm glad you brought up lynda.com. Yes, we have subscription model. We see it as a constant reminder that our customers can leave at any time. And that we have to work hard to provide value to keep those customers coming back, month after month. We know that if wo don't provide the kind of training or the quality our members expect, that they will leave. And we don't want that. So we're constantly motivated to keep our subscribers happy.

JELS said...

Your point is made. But still there are business decisions attached that could be questioned:

• Is it too early to abandon the "perpetual licensing" policy? From the point of view of a lot of Adobe customers, seems to be so…

• Are these customers so interested in a shorter upgrade cycle… not really. Many people in this industry tend to prefer software to be "stable" for a while, and stick to a version for more than 3-4 years until upgrading. For them is a complete cliff jump to go to a subscription model with continuous changes.

• Many policies are questionable. For instance, how does Adobe justify its prices of CC in the UE (and other places in the world) to be 20% higher, now that their sofware is really a download and multilanguage, —when there are no distribution costs attached and translation ones aren't really that high? For those of us that live outside US, in places where the economic crisis has hit really hard, that is nothing less than a slap in the face…

Anonymous said...

Following your logic and we get to 'pay per feature' in the future. How long before that happens?

Anonymous said...

Waterfall or boycott.

This aggressive vendor-lock-in attempt will not stand.

There is not one valid reason you can give to explain why they can't take a snapshot of the current version and sell it as a downloadable perpetually licensed version. Just as they have been doing previously.

Don't lie to us, we know better.

Adobe made a big mistake. Customers will walk.

Don't believe me? Ask these 36,000+ people:


Anonymous said...

Mordy, thank you for explaining a tech perspective that I didn't know about.
It makes sense. It makes the CC model more understandable.

OTOH... it doesn't explain the "death" of the alternative, perpetually licensed model.
Adobe, after having implemented and tested enough features in CC mode, could release the crrespondent CS version (in the classic, boxed or downloaded, way).
After all, the software IS the same (it just changes the validation method).

This way, Adobe would make both kind of customer happy (and it would not lose them).

Not doing that, it looks like Adobe wants be a "vampire", continuosly sucking "blood" out of its users.

Anonymous said...

36,000 folks have signed.They don't like Adobe CC licensing.Show @Adobe how you feel. https://www.change.org/petitions/adobe-systems-incorporated-eliminate-the-mandatory-creative-cloud-subscription-model

Another more fiscal way to show @Adobe you dont like the CC licensing scheme.http://adobe2014.tumblr.com #adobe2014

Bret D said...

A question I brought up with an Adobe rep. last year also related to perpetual licensing.

I asked if Adobe is considering any kind licensing agreement that would allow someone to switch from the subscription to a perpetual license down the road.

My exact question was – Let's say you've been a CC subscriber for 3 or 4 years, but then decide you're fine with the version you currently have and are no longer interested in receiving every minor upgrade that comes out.

After paying in for that amount of time, which would be around $1800 to $2400, couldn't a customer build up some sort of equity and at that point opt out of the subscription model and receive a perpetual license?

After that, if you want an upgrade, you pay only for that specific upgrade or go back on the subscription plan.

The rep. told me he didn't think Adobe had thought far ahead, but wouldn't rule it out.

High end retouching said...

As a designer have idea about design, but from your blog i got plenty information and understanding about adobe creative cloud.

Peter Villevoye said...

Only if one would like to update the current and simple Creative Suite bundle (Standard Design) it would cost you less than a first year subscription. Why not try it ? BTW Adobe still sells perpetual CS6 licenses.

Having these bundles and updating them, made sense, 10 years ago, when CS was about 6 or 7 applications. But it's far from effective to have 18 or more apps update simultaneously.

Users only paid attention to the newest features of their applications they used to purchase in a leap-frogging pattern. So they often missed crucial features of the skipped version. Now, they can investigate, consider and update freely to use each feature as soon as it us available.

Critics say "I don't wanna pay for stuff I don't need". Well you did pay for tons of features you also didn't use (but got anyway). Why not see CC as a whole, in stead of its parts ?

And there's the legal issue: there are trade laws that forbid developers and manufacturers of products to add new features to an already paid product. They can improve a product (to correct bugs or flaws), but can't change the feature set. Subscription models allow for that.

As soon as you notice that the world of new media can't be restricted to a few static creative apps in a bundle, you'll start using other parts of the CC buffet. And then the price of CC is a steal...

Chara said...

This is cool!

http://mediafire.blogdetik.com/ said...

followed reading

clipping paths said...

Great and cool sharing! It's simple that perpetual license got it. Amazing news of course like most of these activities and artistic work.

Anonymous said...

I think that we are ignoring the appeal of a stream revenue model. Adobe used to have to "make it's number" every quarter starting with the relatively small revenue it got from software maintenance. If it didn't sell anything, it didn't make anything.

Now they get a guaranteed revenue stream by continuing to milk their customer base every month. This is a common goal for Product Management and few can pull it off successfully. For what it's worth, I doubt Adobe can either...

BTW: Implementing SCRUM or XP or whatever doesn't require that you milk your customers using a subscription model. Lots of companies do it and still sell software licenses, not just rent them by the month...