There is no industry that isn’t getting disrupted by technology: Shantanu Narayen/Adobe Systems

Shantanu Narayen, CEO of Adobe Systems

Shantanu Narayen, CEO of Adobe Systems, says that the Indian IT industry is entering a phase of enterprise software where companies must have the stomach to embrace change. He feels that the current digital push by the government has ensured tremendous opportunities for all the players and it is only a matter of picking the right bets. Edited excerpts of an interview:

Q: Your new office in Noida is an indication of your confidence in India as well as your growth plans for India. So, we have always talked about how bullish you are about the India story and how strategic a role India plays in Adobe’s growth plans. But from where you sit today, what does India look like?

You are right. Whenever I come here, we actually wear two hats. The first one is India as a market in itself and how that is growing and we can talk about Digital India and all of the opportunities that is going to afford.

And second is the role that the Adobe India centre plays in our global aspirations. We have been growing really well as a company and India has always had a disproportionate part of that growth. So yes, we continue to be excited. We are always ranked one of the best places to work here and employees are doing some amazing stuff.

Q:Your results are out on 28 September, so you cannot give us any forward-looking statements or talk about numbers, but I can talk to you about the kind of growth that we have seen for Adobe in your previous quarter and once again record revenues that you have announced in Q2 and lastly on the back of the kind of growth that you have seen as far as your cloud businesses are concerned. On the back of that,how do you manage expectations at this point in time? People are expecting after nine quarters that you are going to be able to deliver on this kind of growth. I do not want to talk to you about numbers, but how do you manage expectations and what is the dilemma and the challenge of being able to do that?

We look at opportunity and at the end of the day, if we can demonstrate, especially to financial investors, how large the opportunity is and if you can demonstrate a cadence for execution, then you think expectations will take care of it.

So, I like to focus a lot more on the opportunities, both the opportunities we have talked about, namely the entire creative economy and how design is becoming more important and aesthetics and how the creative cloud is clearly pioneered, how you can transform an existing desktop business into a cloud subscription-based business.

The second is the marketing cloud and everything to do with digital disruption. There is not an industry in the world that is not getting disrupted by technology; we are enabling them to use technology to do that. And so, two massive opportunities and as long as we continue to execute, the financial expectation takes care of itself.

Q: Let me talk to you about dealing with government and specifically in India, the Prime Minister has this big Digital India vision and you have of course met him in the Valley. In India as well, a lot of people are betting on that opportunity. We were talking to Linkedin. They have launched three products specifically for India, developed in India, made for and made by India. How are you seeing this play out? It has been about two-and-a-half years since the Digital India vision in that sense was unveiled.

There are a couple of things that make India a really unique opportunity as they relate to Digital India. The first is mobile.

India has the opportunity to leapfrog generations of technology and in this mobile-first or, in many cases, mobile only environment, any company like Adobe or others in the Valley who use India as an opportunity to innovate around mobile first, it is going to pay off not just in India as an opportunity, but also everywhere else, in all of the other markets. So, that is one big opportunity.

However, when you look at what has happened here with the Aadhaar card and everything to do with how people are moving inefficient paper based processes to digital, the Adobe Sign product has a very unique opportunity.

Think about identity on the web and how if you can digitally complete a transaction. So, Adobe Sign and what the government is doing with respect to what is happening on Aadhaar or companies like e-mudhra are actually able to now do digital transactions, I think that is just a massive opportunity. And last but not least the cost of transactions in India, whether it is financial services or automotive, are much lower.

And so, targeting how you can look at efficiencies in your business and then translate that across the world, we are actually continuing to see growth. When you see companies like Interglobe Aviation (Indigo), they are among the most successful in the world, or what is happening with companies that in some cases are emulating Us-based business models in travel or automotive or transportation, just a big opportunity for us in India.

Q:I will get to the enterprise opportunity in just a second, but let me continue to talk to you about the government opportunity. One of the concerns specifically that we saw in at least as far as the domestic technology companies when dealing with government was that revenues are inconsistent. They are patchy and lumpy. I know you do not like any of those words. So, what is your India team telling you in terms of being able to transact and deal with government? Has it got significantly better and easier?

We look at it as a little bit of a do you have the right bowling pins and if you have the bowling pins strategy—maybe we are a little bit more fortunate than local companies in that given the magnitude of our business, we can take a much longer-range approach to some of these businesses.

And for us, maybe the only metric is not revenue. In other words, if we can find that we are actually serving customers well and you are getting government agencies to adopt these technologies, you believe that as the number of transactions increase, the revenue will follow. In the commercial space for example, a similar opportunity might be in video whereas the amount of video that is being consumed, and the Olympics were certainly an example of that, is happening more on digital.

If you price your model where you are getting revenue as digital streams increase, it will take care of itself. So, our approach at Adobe has always been let us go find some key customers in government who have this vision of digital transformation and as long as you get them signed up and you build a great product and the business model allows you to grow as the business grows, that is a luxury that we have over the smaller companies.

Industrial IoT will score over consumer IoT

In 2015 industrial and enterprise IoT solutions attracted over 75% of funding as compared to consumer IoT companies; this trend is expected to continue in 2016

A file photo of the EHang 184 passenger-carrying drone at Consumer Electronics Show (CES) in Las Vegas, Nevada, US.

With over $20 billion in merger and acquisition (M&A) deals and close to $2 billion in funding, the Internet of Things (IoT) witnessed significant traction in 2015.

Between 2010 and 2015, over $7.5 billion has been invested in IoT companies globally in over 900 deals. While until 2014, consumer-focused IoT solutions (primarily in Wearables and Quantified Self) garnered a slightly higher share of total IoT investments, industrial and enterprise IoT solutions attracted over 75% of funding in 2015 as compared to consumer IoT companies.

This trend is expected to continue in 2016 by a larger order of magnitude—2-3 times more than consumer IoT.

IoT is defined as a worldwide network of “things” that include identifiable devices, appliances, equipment, machinery of all forms and sizes with the intelligence to seamlessly connect, communicate and control or manage each other to perform a set of tasks with minimum intervention. The goal of IoT is to enable things to be connected anytime, anyplace, and with anything or anyone.

Industrial and enterprise IoT solutions are primarily in the verticals of smart manufacturing, Industry 4.0, smart grids, oil rigs and refineries, wind farms, retail and logistics. Most of these industries have had sensors and been experimenting with sensor-enabled automation for a long time. Now with IoT, the focus is on artificial intelligence and machine learning, security and sensor computing.

Consumer IoT solutions are being developed in segments like home automation, health care, quantified self (gaining self-knowledge by using technology such as sensors on your smartphones or wearables to track your own data such as heart rate, stress levels, etc.), sports, automotives, and entertainment. And, the focus of consumer IoT extends much beyond the three areas of industrial IoT, to include miniaturization, power management, mesh networks, better connectivity protocols, interoperability and convergence platforms.

We are witnessing disruptive innovation in the consumer IoT space across verticals. These include charging pods mounted on street-light poles wirelessly charging electric cars on the move; transparent, non-intrusive heads-up display (HUD) for cars that can handle voice calls, text and e-mail messages, music, radio, and map-based navigation; network-enabled, cloud-powered, AI-driven dolls that can converse with kids and double up as security devices; miniaturized and portable ambulatory/holter and stress analysis ECG (electro cardiogram) machines that one can carry on person, avoiding a visit to the big hospital; smart pots that allow users to remotely monitor soil and light conditions and even water their plants through a mobile application; and smart insoles that measure impact stress on a runner’s feet and knees and provide intelligent analysis and guidance to improve one’s body dynamics and performance.

Comparatively, in industrial IoT, innovation is incremental. Many large technology companies are cautiously participating in the consumer IoT innovation through corporate venture funds and accelerator programmes. But this does not amount to a true open support of the innovation ecosystem.

From a professional venture capital investor’s point of view, industrial IoT has short-term adoption and business potential, hence most consumer IoT products are perceived as point solutions. And, this sentiment is currently driving the investment decisions of professional venture capitalists in the IoT space.

However, one key trend that we are observing in the consumer IoT funding space is the rise of crowd-funding. Many consumer IoT companies, in their early stages are using crowd-funding platforms to raise seed funds.

These companies seek professional venture capital funding only once their idea is validated, the product developed and early adopters garnered, and the solution and the company are ready to scale. This model of democratizing the venture capital through crowd-funding (in the early stages) is the most sustainable and scalable framework for consumer IoT ecosystem growth, and is expected to continue for the next few years.

The recent regulatory breather—JOBS Act (in the US)—that allows investors to buy securities through crowd-funding is effectively a welcome step for the young IoT companies.

Currently, in the IoT evolution timeline, we are at a stage where we were during the early 1990s of the internet era. The Google(s) and Facebook(s) of the IoT are yet to be born and/or yet to come to the fore.

For IoT to evolve as a web of platforms for connected smart objects, the biggest challenge will be to overcome the fragmentation of vertically oriented closed systems and architectures and application areas towards open systems and integrated environments and platforms.

For IoT to go mainstream, the industry needs to solve remaining technological barriers (interoperability, security, etc.), explore integration models, validate user acceptability, promote innovation on sensor/object platforms, and demonstrate cross use-case issues. Moreover, industrial and consumer IoT solutions need to be duly supported and evolve together.

Ratan Tata, Nandan Nilekani and Vijay Kelkar team up for Avanti Finance to provide loans to poor

Ratan Tata, Vijay Kelkar and Nandan Nilekani have started a technology enabled financial inclusion vehicle, Avanti Finance, which will be focused on delivering affordable and timely credit to under-served and un-served segments in India. 

The aim is to leverage on the social sector presence of Tata Trusts and other like minded partners and the rapidly evolving India Stack (Jan Dhan - Aadhar - Mobile), UPI and payments bank ecosystem. Avanti would use this ecosystem and will innovate on product design in consonance with the indigenous needs, to deliver seamlessly for the end consumer, said the statement. 

According to the release, 'the promoters strongly believe that the institutional inequalities and information asymmetries are depriving the target customer segment of access to affordable credit'. The target customer segment over the last few years has displayed very low delinquency rates compared to any other customer segment, but still is charged the highest rate of interest. Avanti's primary objective is to make a difference in this sphere thereby enhancing the prosperity in these communities .. 

Ratan Tata, Chairman of Tata Trusts has been actively engaged in several initiatives of the Tata Trusts since his retirement. His endeavours in the last few years have been focussed on creating a sustainable model for interventions which have lasting impact on communities, especially the under-privileged and the deprived. 

Tata and Nilekani are bringing their investments from their respective philanthropic capital, and any gains will be reinvested in philanthropic causes. Avanti will apply for registration to the Reserve Bank of India in the coming days. 

The founding directors of Avanti are Ratan Tata, Dr. Vijay Kelkar, Nandan Nilekani and R Venkataramanan. A senior leadership team with experience Technology, Microfinance, Enterprise Risk Management, Credit Operations and Customer Service, Leadership and Strategy Consulting, Structured Finance and Investment Banking is in place. 

"Avanti will be a platform to impact the poor through credit at individual and community levels to create a lasting improvement in their livelihoods and standard of living, ushering prosperity. I am thankful to Dr. Kelkar and Nandan for agreeing to be part of this purpose driven initiative", said former chairman of Tata Trusts. 

Nandan Nilekani , co-founder of Infosys stated "I am humbled by Ratan's initiative and his inviting me to be a part of this venture. My participation in Avanti is more driven by social motivation rather than anything else - with a view to serve the underserved and unserved and make the Tata Trusts and other likeminded partners philanthropy more effective. Technology is an important differentiator and allows us to make a difference in many ways than one". 

Avanti will establish operations before the end of the financial year. 

Vijay Kelkar is currently the chairman of the National Institute of Public Finance and Policy (NIPFP), and India Development Foundation. R Venkataramanan is currently the Managing Trustee of Tata Trusts.