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Summary

Experience Cloud took center stage at the Adobe Summit in London at the beginning of May, and keeping faith with the enormous following of marketing managers and CMOs, it was positioned as a unified platform to enable marketers to increase the relevance of their activities. This sells it short.

Magento Commerce acquisition signals a much broader strategic intent for Adobe Experience Cloud

The planned acquisition of Magento Commerce, announced on May 21, 2018, signals a strategic intent by Adobe to create what Ovum refers to as a customer engagement platform (CEP) – a platform that enables an enterprise to coordinate and orchestrate all customer engagement activities across its value chain in a way that delivers a symbiotic set of outcomes

  • for customers, providing a consistently positive customer experience (across all journeys and irrespective of channels used)

  • for businesses, resulting in revenue growth.

Delivering these outcomes for all customer engagement activity across the value chain and any channel demands a level of intelligent orchestration, drawing on both historical transactional data, often locked away in CRM and finance systems, and real-time interaction data from commerce applications, among others.

Adobe has entered into a definitive agreement to acquire Magento Commerce, a leading commerce platform provider for both B2C and B2B customers, for $1.68bn. This is a bold move and signals Adobe's strategic intent to break beyond the confines of the marketing department and turn Experience Cloud into a CEP with a much broader remit.

Adobe has covered much ground during its own transformation, which was announced to Wall Street in November 2011 (see Ovum's case study Adobe's Business Transformation: A Lesson for Those with Digital Service Provider Aspirations). Over the last two years, annual revenue has grown substantially, from just under $4.8bn in 2015 to more than $5.8bn in 2016 and $7.3bn in 2017.

If Adobe had stuck with its mastery of marketing automation, over the longer term it might have been boxed in, especially by the more advanced CRM vendors, which are also eyeing the emerging CEP category. As it is, Adobe has entered the high-growth CEP opportunity, where there is much to go at and where the battle for the leadership position is up for grabs.

It now needs to position itself more forcefully and broadly. It must communicate the wider transformational story to CTOs, COOs, and CEOs, who are playing an increasingly prominent role in their organizations' own digital transformations. It also needs to let its many marketing customers realize that, with Experience Cloud and as illustrated by the Magento Commerce acquisition, Adobe can also play a more strategic and transformational role beyond the confines of the marketing department.

Appendix

Further reading

Adobe's Business Transformation: A Lesson for Those with Digital Service Provider Aspirations, IT0020-000279 (May 2017)

Author

Jeremy Cox, Principal Analyst, Customer Engagement Practice

jeremy.cox@ovum.com

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