Wednesday, May 9, 2018

"What Comes After The Cloud?"

The market sure seems to like what ADBE has been doing.
ADBE Adobe Systems Incorporated daily Stock Chart
From NewCo Shift:
As CTO of Adobe, Abhay Parasnis oversees the company’s technology strategy, and he’s betting big on narrow but deep AI.

Now that every business worth its stock price has moved to “the cloud,” creating massive technology winners like Salesforce, Amazon, and Google along the way, the technology industry finds itself searching once more for a metaphor that can drive its seemingly endless cycle of identifying and building the “next big thing.” And while it seems almost too obvious to identify artificial intelligence, or AI, as that next thing, Abhay Parasnis, CTO of Adobe, makes a strong case for why the received wisdom may yet prove true.

Famous for betting the company on the cloud five years ago (and winning big), Adobe is making an even bigger bet on a certain kind of AI — what Parasnis calls “narrow AI.” Adobe’s goal is to leverage narrow AI across its core suite of products in creativity, marketing services, and business services, in the process simplifying them and making them accessible to a magnitude of order more potential customers. Forget Terminator references, where a generalized AI takes over the world, Parasnis told me at the recent NewCo Shift Forum. Think instead of the magical world of Harry Potter (minus Voldemort, of course). Below is the video and full transcript of our conversation, edited for clarity.
John Battelle: It’s time to talk about the future of technology with the CTO of one of the largest technology companies in the world. Adobe has made an extraordinary transition, now a classic Harvard Business Review case, of how you transition from a packaged goods software company that shipped shrink-wrap software to a cloud company.

But we’ll discuss what’s beyond that, not just for that company, but for the entire technology industry. Please join me in welcoming Abhay Parasnis to the Shift Forum stage, CTO of Adobe. [applause]

Abhay Parasnis: Thank you. Great to be here.

I mentioned that transition, it was a remarkable pivot for a very large company. But it’s part of what feels like an ongoing cycle: I started covering technology when mainframes were out, and client-server architecture was the cool thing. Then client server was out because networked PCs were the cool thing. Then networked PCs became the Internet, and that was the cool thing. Then mobile, then the cloud.

It seems like we’ve been in the cloud long enough to say, “OK, what’s next?” We must have another cycle or we are going to run out of ideas here! Let me put that to you as a senior technologist in one of the largest companies in the Valley. What might be past the cloud?
First, on the transformation — just to tee up, thanks for all the kind words — that transition will probably bridge a little bit to what we see from both Adobe’s perspective, but more broadly from the industry standpoint as we look at what’s beyond the cloud.

But it’s worth stepping back because there are a lot of parallels between what we just went through in our own business and as I look at the future. As you say, there’s a lot of discussion has happened around Adobe’s transformation. I would say the two or three core things that may not be as well understood and that leads us to what’s next, is that you have to recognize when maintaining status quo is just not enough.

For us, in the last transition, there were two factors. First, back in 2008 with the economic slowdown, where we realized that the recurring revenue that we had as a company was such a small percentage of the business. And when a big macroeconomic event happens, we basically said we are never going to let that happen again as a business, both for ourselves but also from a market standpoint.
The second was with the advent of iPhone and the smartphone wave starting to happen, we realized we were fundamentally misaligned with the pace of innovation. We were still delivering 12- 18-month box software cycles and the market was moving much quicker.

And so those two factors led us to a point where we basically said no matter what the cost, we have to transform ourselves. I think that conviction and that notion that status quo is not enough is actually pretty critical for companies that look at transitions in the marketplace.

Frankly in hindsight, it looks obvious, but at the time customers were not super happy with us. Not all of the customers were happy. Some were, but some customers were quite pissed with us, and actually felt we were not listening to them and not doing the right thing by them. We had to have a balancing act of listening and adapting to our current customer needs, but also maintaining the conviction of where we had to go relative to this space of innovation and continuous innovation.

This is also an industry where yesterday’s success is really not that relevant. As far as we are concerned the whole cloud transformation of our business is done. It’s behind us and we are going to think about what’s around the corner.

When you ask what’s beyond cloud, first I will say, it’s not so much what’s beyond, but rather what’s building on all the changes that have happened. Each of the changes you mentioned, maybe except the network computer, but mobility and the cloud have really laid a foundation of computing model that we think unlocks pretty drastic set of innovations for the next decade.

From my vantage point, there are two or three areas that are super exciting. One, I think software over the next decade is going to go through a very transformational shift of not just being an adjunct in our lives. Software has already had a pretty profound impact if you look at last two, three decades from automation to productivity to touching lots of our professional lives and personal lives....MUCH MORE, including video