Adobe And Salesforce Are Shaking Up The Old Software Order

“Viva la revolución!” is no longer the defiant cry of those railing against the injustice and oppression of an old-world order. Or perhaps it is. Shantanu Narayen is the chief executive officer of Adobe and while he is most certainly not an Argentinian Marxist revolutionary, he holds a sense of conviction that Che Guevara might have recognized.

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Adobe was founded in 1982 and is best known for its digital creative suite, including its image-editing software Photoshop and document-management application Acrobat. In what is probably one of the biggest upsets in technology history, Adobe has overtaken Oracle to become the second most valuable software company in the world, with a stock market value of over $170 billion.

“We’re worth more than Oracle, we’re worth more than SAP – we’re worth a lot more than IBM,” said Narayen, ticking off the legacy IT firms that his company has overshadowed. “We’re all about growth.”

It's a new software world order, and it's either cloud or collapse under the weight of an antiquated IT infrastructure. Satya Nadella's Microsoft has come out as the clear winner in this new world. He balances the best of cooperation against the competition to stay ahead of both savvy veteran-companies and nimble cloud startups.

Salesforce, a provider of cloud-based CRM software, is making strides of its own and recently passed right on by German-based SAP in market value. It's also now within 4 percent of overtaking Oracle. "Customers don't talk about them much," said billionaire founder Marc Benioff of his Oracle competitor. Benioff acknowledged that aggressive sales growth is what's putting companies like his Salesforce out in front of the race. "The customers have spoken in terms of the revenue acceleration of the cloud companies."

Benioff once worked as one of Oracle’s top-earning salesman. The company founder, Larry Ellison, long-scoffed at the whims of Wall Street as they chased cloud stocks – believing that cloud-computing would blow by like the wind. Ellison could not have been more wrong, and it was, perhaps, that short-sightedness that now means the tech titan must play catch up in a contentious cloud market.

In a stock market offering minimal growth options, says RBC tech analyst Alex Zukin, cloud stocks have become reliable growth market in a low interest rate space. In addition, Silicon Valley cloud-based startups have almost become rock stars due to their unconventional CEOs, the billion-dollar "unicorn" status, and household name recognition. But in cases like Uber and Lyft, the consumer-facing services tend not to fare as well as their B2B startup brethren. Business software, on the whole, is a more reliable bet, and options like Atlassian and ServiceNow are worth billions each.

Cloud software happened quickly to Silicon Valley (and the rest of the world). Between the cost-savings, the flexibility, and scalability of SaaS-based cloud offerings – it didn't take long for companies to see the value. Adobe was one of the first firms to transition from disc-based software products to an online pay-as-you-go version. It took three years for the company to regain its upward revenue trajectory but in the four years since it's surged up more than 130 percent.

Since the cloud revolution has taken over, the legacy software providers have taken steps to embracing the new cumulus way of doing business. Both Oracle and SAP have implemented their strategies for recouping any losses. Oracle, for instance, is introducing its new Autonomous Database, which promises new automation capabilities that others may find difficult to match. Each company is finding its own way to reasserting its position as the undisputed leader of the tech industry.