Adobe pinning its growth hopes on the Enterprise

(By Philip Carnelley, 10 Nov 09, 20:00) Last week we attended an analyst event addressing “Adobe in the Enterprise.” Adobe is, in a sense, one of the industry’s better-kept secrets. Despite the ubiquity of its pdf reader and Flash website software, few appreciate that it is one of the top dozen software vendors globally, with over $3b in revenue. Even fewer probably appreciate that around 30% of that is its "Enterprise" business. But sharp-eyed TechMarketView subscribers will have seen in our CompanyViews report earlier this year that we ranked Adobe the 11th biggest software supplier to the UK market, with an estimated £115m in software revenue. The proportion of Enterprise sales is lower in Europe than the US, but the UK is one of Adobe’s ‘tier 1’ countries, and we estimate "Enterprise" is north of 25%. However Adobe has struggled to maintain revenues of late and indeed they're down 18% in the first nine-months. Today, it announced layoffs of 680 jobs, around 9% of its workforce.

Adobe is anticipating that "enterprise business" will be the main source of revenue growth for the next couple of years. That said, its traditional desktop publishing business should receive a fillip next year when the new version of its Creative Suite is launched.

For Adobe "enterprise business" means automating business processes using a range of products. Its USP (this is our assessment, not Adobe’s) is that it has a holistic approach to process automation that can encompass fully-paper through to fully-electronic versions of the same process. It talks a lot about the ‘user-centric’ approach. For example, a pdf form can be filled in online; or it can be printed off, filled in manually, then scanned and reinserted into the process. We had an interesting presentation from the CIO of HMCS (Her Majesty’s Courts Service) who explained that – among many other considerations – young judges work prodominantly electronically, while elder ones never use technology newer than a fountain pen. Their needs must all be met.

Adobe is finding most traction for its approach in heavily regulated sectors, particularly government and banking. Key customers in the UK – in addition to HMCS – include HMRC and the FSA. Enterprise business is driven at least in part by its SI partners including majors like Accenture and Capgemini, and other resellers.

Despite the undoubted pressure on government spending, the drive to put government processes online both for better citizen engagement as well as greater internal efficiencies makes us think Adobe is right to look to its enterprise business for growth. One supportive statistic: Kumar Vora, VP and GM of Adobe’s ‘Livecycle’ product line (a large chunk of the Enterprise business) said that official US government estimates are that in 2005, its citizens spent ten times as much time filling in government forms (a mere 10 billion hours p.a.!) as they did in 1981.