Let's begin by asking, why would Adobe acquire Elastic Path?
Forrester turned a few heads when its most recent report was released, essentially saying only Oracle is being considered as a leader in the Digital Experience Platform (DXP) space. Presumably, the reason is that the Adobe Experience Platform does not offer a native commerce engine. Hence, Forrester docked Adobe a few marks for having to rely on third-party commerce platforms. Forrester demoted Adobe from being the lone leader to a strong performer, competing with IBM, Salesforce and SAP Hybris – leaving Oracle all by its lonesome in the leaders category.
Some might consider that (myself included) an unwarranted demotion, given the Marketing Cloud Expansion and record profits Adobe earned the last two years. Adobe has done a tremendous job recently making sure its entire marketing cloud is integrated and streamlined to create an unprecedented cohesive experience for the end user — dubbing it “The Experience Cloud”. However, sadly, none of that matters because Forrester (and others) couldn’t overlook the fact that Adobe doesn’t have an integrated commerce platform. So this brings us to the conundrum.
How Can Adobe Overcome This Perceived Shortcoming?
Well, the answer to that is simple: acquire a commerce engine. Which one and why? Well I will detail some of the reasons behind that in the next section, but simply put: the headless nature of Elastic Path makes it the easy choice to integrate with any platform and its powerful commerce engine makes it the right choice for Adobe.
How Adobe Wins?
With Elastic Path part of its Platform, Adobe can finally claim a complete DXP, probably the best DXP in the space. Adobe already has one of the best content management systems in the industry (The Forrester Wave™: Web Content Management Systems - 2017, Gartner Magic Quadrant: WCM 2017) and one of the best marketing clouds around (The Forrester Wave™: Digital Experience Platforms - 2017 , Gartner Magic Quadrant: Digital Marketing Hubs - 2017) so adding one of the best commerce solutions in the space in Elastic Path there will be little doubt to the dominance of the Adobe DXP.
As for the technology stack of Elastic Path and Adobe Experience Manager, well they are both based on the Java Stack. Not that it makes a big difference since Elastic Path is headless but to integrate two products and cross-train common resources, having a common technology stack can be a big advantage. In fact, Adobe CMS and Elastic Path Commerce have been integrated by dozens of clients. I’ve encountered a handful in my work experience. Also, Adobe and Elastic Path are not strangers with many integrations and joint initiatives in their past.
What Makes This a Plausible Scenario?
If you look at history, Adobe has done this before. They acquired Neolane in 2013 and branded it Campaign and now it is one of the leading marketing automation suites in the industry. And in 2010, Adobe acquired Swiss company Day Software, branding it Adobe CQ then Adobe Experience Manager which is widely considered a top enterprise CMS.
Even before that, Adobe acquired Omniture in 2009 dubbing it Adobe Analytics, another top tool in the industry. In fact, in the last 27 years Adobe has acquired 46 companies, 8 of which Adobe paid over $100 million for
The final reason this may be a potential acquisition, it will make Adobe a lot of money. With every acquisition mentioned above, Adobe has solidified its cloud offerings and made insane profits. Their revenue was at $1 billion in 1999, grew to $4 billion in 2012 and $5.85 billion in 2016 (Adobe Systems Incorporated). None of these acquisitions were immediately integrated with the larger DXP and none of them worked on day 1, but the larger point is that Adobe has become pretty good at acquiring good products, then integrating them with their DXP.
Seems like a solid plan but there are potential pitfalls.
How Adobe Might Lose
To understand one way Adobe might lose with this proposed acquisition, let’s start by examining how they might win. Adobe has done this too many times. So much so that a lot of the features and capabilities unveiled with its products over the years have a lot more to do with making these DXP products work well together than showing true innovation. If the Adobe DXP does not have too many tools in its current form, adding a complex piece like eCommerce will certainly do the trick.
It just seems like an awful big burden for the DXP to incorporate a commerce layer that’s only applicable to a fraction of its customers. For verticals like media, education, technology, travel and hospitality, healthcare and financial services, they don’t care about their DXP having an eCommerce capability.
Along the same lines of the integration theme, having the expertise that spans all the products in the DXP will also become an issue. In fact, many believe that is already an issue.
A few years back Adobe recognized that there is a need for a skill set that can operate on the marketing cloud as whole and started the Multi-Solution Architect program. It began an exhaustive plan to cross-train its Architects on the different tools of the DXP. So an Analytics expert starting to learn Campaign, AEM, Audience Manager and Target and so on. There are mixed reviews on how well that has worked but it would certainly require Adobe to have a much more intense cross-training program to add commerce to the mix.
The most important reason why Adobe loses however, is that it would be going against progress. The entire digital world is heading towards headless architecture and Microservices (like Elastic Path) while Monolith solutions are a thing of the past. Although such a move would have immediate monetary value, one can argue that it would spell the end of Adobe’s dominance of the Digital Experience world (or at least second place according to Forrester). In fact, if Adobe acquires Elastic Path, we all lose because Adobe is a major player so it may not be able to change the progress of the digital space but it can sure slow it down.