The expanded Adobe-Microsoft partnership significantly deepens the strategic relationship between the two companies – a relationship that kicked off at Adobe MAX two years ago. With this new agreement, Microsoft displaces Amazon Web Services (AWS) in a large account and will be able to sell a leading marketing cloud portfolio (including market-leading experience management) to its Dynamics 365 Enterprise customers. Adobe gains a key ally (and a new channel – including both direct enterprise sales and partners) for Adobe Marketing Cloud as it girds for battle with marketing cloud competitors from the CRM arena that play broadly in digital marketing, sales and support.
At Microsoft Ignite, a sold-out event in Atlanta, CEOs Satya Nadella and Shantanu Narayan took the stage for the opening keynote on September 26, 2016 to announce an expanded partnership around cloud and customer engagement. Highlights of the new agreement include:
- Adobe is committing to Microsoft Azure as its preferred cloud provider for all three of its clouds: Creative Cloud, Document Cloud, and Marketing Cloud.
- Microsoft is committing to Adobe Marketing Cloud as its preferred marketing services provider for Dynamics 365 Enterprise. Adobe and Microsoft will co-sell Adobe Marketing Cloud to enterprise customers. (Microsoft will continue to sell its own marketing automation solutions to SMB Dynamics customers.)
Integrations between Adobe Marketing Cloud and Microsoft Dynamics 365 Enterprise will be rolled out during the course of 2017.
IDC's Point of View
This partnership makes great sense for both companies.
Microsoft, which has made limited forays into Web analytics and digital experience in the past, certainly understands the value of tying experience management to digital marketing – and not just marketing but also sales and support. This agreement addresses Microsoft's marketing cloud shortcomings for enterprise customers in one fell swoop. Microsoft and Adobe plan deep integrations that will make Adobe Marketing Cloud solutions "native" Dynamics 365 Enterprise applications (though Adobe branded). Microsoft is partnering with a leading marketing cloud vendor – and the only leading marketing cloud vendor that is not a direct competitor to its CRM offerings (see IDC MarketScape: Worldwide Marketing Cloud Platforms 2016 Vendor Assessment, February 2016). Assuming the partners execute, this agreement will dramatically enhance Microsoft's competitive position vis a vis Salesforce and Oracle – neither of which have made experience management a key component of their marketing clouds.
Adobe realizes that marketing owns just part of the customer experience. The themes for Adobe Summit the past couple of years have been "Marketing Beyond Marketing", and "Becoming an Experience Business". Teaming up with Microsoft gives Adobe a much bigger story.
In terms of buyers: Microsoft and Adobe both sell to both IT and LOB. Teaming up for sales makes great sense, especially around digital experience where their mutual competitors are weak:
- IT plays an important role today in digital experience technology acquisition and Microsoft is a key IT supplier (although not for digital experience solutions). Microsoft's presence in IT should help Adobe, which has a foothold within IT organizations that are responsible for Web content management but isn't otherwise considered an important IT supplier.
- Many companies are establishing digital experience teams, often as part of the CMO's organization. Initially, these teams were chartered with Web and mobile experience delivery but their purview is expanding to include company-standard digital marketing solutions. These teams also play a role as a center of excellence/clearing house for new, innovative digital marketing technologies that one group or another is experimenting with. Adobe has a strong footprint in marketing organizations (in enterprise, i.e. major brands, and with leading interactive and digital agencies) and Microsoft will benefit from this.
Marketing teams may well decide that owning the digital marketing stack from a technology perspective is a distraction, once it solidifies; and organizations may, in future, decide that responsibility for the 360-degree customer experience needs to reside elsewhere. Whatever ownership model/organizational structure emerges, IDC believes that the integration of digital experience delivery and digital marketing, ecommerce, and customer support systems is paramount. This expanded partnership seems poised to capitalize on that requirement.
Analytics is already a core differentiator for digital experience/marketing cloud vendors and it will become increasingly important as the market moves to real time offer management. The ability to fully leverage data, machine learning, and predictive analytics – in real time, with high performance, and with the level of automation that enables marketers, merchandisers, and customer service teams to optimize the digital experience – will be key to success.
Adobe and Microsoft will collaborate on data integrations that leverage their data science, artificial intelligence, machine learning, and advanced analytics capabilities. Customers will be able to use these integrations across Adobe and Microsoft solutions to create new data-driven sales and marketing capabilities – harnessing their data for critical insights and predictions, and connecting customer touchpoints to drive brand loyalty and growth.