Monday, September 24, 2018

Adobe, Microsoft and SAP Announce Open Data Initiative: It's CDP Turf But No Immediate Threat

One of the more jarring aspects in Adobe’s briefing last week about its Marketo acquisition* were several statements that suggested Marketo and Adobe’s other products were going to access shared customer data. This would be the Experience Cloud Profile announced  in March and based on an open source data model developed jointly with Microsoft and stored on Microsoft Azure.**  When I tried to reconcile Adobe’s statements with reality, the best I could come up with was they were saying that Adobe systems and Marketo would push their data into the Experience Cloud Profiles and then synchronize whatever bits they found useful with each application’s data store. That’s not the same as replacing the separate data stores with direct access to the shared Azure files but it is sharing of a sort. Whether even that level of integration is available today is unclear but if we required every software vendor to only describe capabilities that are actually in place, the silence would be deafening.

The reason the shared Microsoft project was on Adobe managers’ minds became clear today when Adobe, Microsoft and SAP announced an “Open Data Initiative” that seemed pretty much the same news as before – open source data models (for customers and other objects) feeding a system hosted on Azure. The only thing really seemed new was SAP’s involvement. And, as became clear during analyst questions after the announcement at Microsoft’s Ignite conference, this is all in very early stages of planning.

I’ll admit to some pleasure that these firms have finally admitted the need for unified customer data, a topic close to my heart. Their approach – creating a persistent, standardized repository – is very much the one I’ve been advocating under the Customer Data Platform label. I’ll also admit to some initial fear that a solution from these vendors will reduce the need for stand-alone CDP systems. After all, stand-alone CDP vendors exist because enterprise software companies including Microsoft, Adobe and SAP have left a major need unfilled.

But in reviewing the published materials and listening to the vendors, it’s clear that their project is in very early stages. What they said on the analyst call is that engineering teams have just started to work on reconciling their separate data models – which is heart of the matter. They didn’t put a time frame on the task but I suspect we’re talking more than a year to get anything even remotely complete. Nor, although the vendors indicated this is a high strategic priority, would I be surprised if they eventually fail to produce something workable.  That could mean they produce something, but it’s so complicated and exception-riddled that it doesn’t meet the fundamental goal of creating truly standardized data.

Why I think this could happen is that enterprise-level customer data is very complicated.  Each of these vendors has multiple systems with data models that are highly tuned to specific purposes and are still typically customized or supplemented with custom objects during implementation. It’s easy to decide there’s an entity called “customer” but hard to agree on one definition that will apply across all channels and back-office processes. In practice, different systems have different definitions that suit their particular needs.

Reconciling these is the main challenge in any data integration project.  Within a single company, the solution involves detailed, technical discussions among the managers of different systems. Trying to find a general solution that applies across hundreds of enterprises may well be impossible. In practice, you’re likely to end up with data models that support different definitions in different circumstances with some mechanism to specify which definition is being used in each situation. That may be so confusing that it defeats the purpose of having shared data, which is for different people to easily make use of it.

Note that CDPs are deployed at the company level, so they don’t need to solve the multi-company problem.*** This is one reason I suspect the Adobe/Microsoft/SAP project doesn’t pose much of a threat to the current CDP vendors, at least so long as buyers actually look at the details rather than just assuming the big companies have solved the problem because they’ve announced they're working on it.

The other interesting aspect of the joint announcement was its IT- rather than marketing-centric focus. All three of the supporting quotes in the press release came from CIOs, which tells you who the vendors see as partners. Nothing wrong with that: one of trends I see in the CDP market is a separation between CDPs that focus primarily on data management (and enterprise-wide use cases and IT departments as primary users) and those that incorporate marketing applications (and marketing use cases and marketers as users). As you may recall, we recently changed the CDP Institute definition of CDP from “marketer-controlled” to “packaged software” to reflect the use of customer data across the enterprise. But most growth in the CDP industry is coming from the marketing-oriented systems. The Open Data Initiative may eventually make life harder for the enterprise-oriented CDPs, although I’m sure they would argue it will help by bringing attention to a problem that it doesn’t really solve, opening the way to sales of their products.  It’s even less likely to impact sales of the marketing-oriented CDPs, which are bought by marketing departments who want tightly integrated marketing applications.

Another indication of the mindset underlying the Open Data Initiative is this more detailed discussion of their approach, from Adobe’s VP of Platform Engineering. Here the discussion is mostly about making the data available for analysis. The exact quote “to give data scientists the speed and flexibility they need to deliver personalized experiences” will annoy marketers everywhere, who know that data scientists are not responsible for experience design, let alone delivery. Although the same post does mention supporting real-time customer experiences, it’s pretty clear from context that the core data repository is a data lake to be used for analysis, not a database to be accessed directly during real-time interactions. Again, nothing wrong with that and not all CDPs are designed for real-time interactions, either. But many are and the capability is essential for many marketing use cases.

In sum: today’s announcement is important as a sign that enterprise software vendors are (finally) recognizing that their clients need unified customer data. But it’s early days for the initiative, which may not deliver on its promises and may not promise what marketers actually want or need. It will no doubt add more confusion to an already confused customer data management landscape. But smart marketers and IT departments will emerge from the confusion with a sound understanding of their requirements and systems that meet them. So it's clearly a step in the right direction.

*I didn't bother to comment the Marketo acquisition in detail because, let’s face it, the world didn’t need one more analysis. But now that I’ve had a few days to reflect, I really think it was a bad idea. Not because Marketo is a bad product or it doesn’t fill a big gap in the Adobe product line (B2B marketing automation).  It's because filling that gap won’t do Adobe much good. Their creative and Web analysis products already gave them a presence in every marketing department worth considering, so Marketo won’t open many new doors. And without a CRM product to sell against Salesforce, Adobe still won’t be able to position itself as a Salesforce replacement. So all they bought for $4.75 billion was the privilege of selling a marginally profitable product to their existing customers. Still worse, that product is in a highly competitive space where growth has slowed and the old marketing automation approach (complex, segment-based multi-step campaign flows) may soon be obsolete. If Adobe thinks they’ll use Marketo to penetrate small and mid-size accounts, they are ignoring how price-sensitive, quality-insensitive, support-intensive, and change-resistant those buyers are. And if they think they’ll sell a lot of add-on products to Marketo customers, I’d love to know what those would be.

** I wish Microsoft would just buy Adobe already. They’re like a couple that’s been together for years and had kids but refuses to get married.

*** Being packaged software, CDPs let users implement solutions via configuration rather than custom development. This is why they’re more efficient than custom-built data warehouses or data lakes for company-level projects.

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