Yesterday, after publishing a blog post about Nasdaq's Drupal 8 distribution for investor relations websites, I realized I don't talk enough about "Drupal distributions" on my blog. The ability for anyone to take Drupal and build their own distribution is not only a powerful model, but something that is relatively unique to Drupal. To the best of my knowledge, Drupal is still the only content management system that actively encourages its community to build and share distributions.
A Drupal distribution packages a set of contributed and custom modules together with Drupal core to optimize Drupal for a specific use case or industry. For example, Open Social is a free Drupal distribution for creating private social networks. Open Social was developed by GoalGorilla, a digital agency from the Netherlands. The United Nations is currently migrating many of their own social platforms to Open Social.
Another example is Lightning, a distribution developed and maintained by Acquia. While Open Social targets a specific use case, Lightning provides a framework or starting point for any Drupal 8 project that requires more advanced layout, media, workflow and preview capabilities.
For more than 10 years, I've believed that Drupal distributions are one of Drupal's biggest opportunities. As I wrote back in 2006:
Distributions allow us to create ready-made downloadable packages with their own focus and vision. This will enable Drupal to reach out to both new and different markets..
To capture this opportunity we needed to (1) make distributions less costly to build and maintain and (2) make distributions more commercially interesting.
Over the last 12 years we have evolved the underlying technology of Drupal distributions, making them even easier to build and maintain. We began working on distribution capabilities in 2004, when the CivicSpace Drupal 4.6 distribution was created to support Howard Dean's presidential campaign. Since then, every major Drupal release has advanced Drupal's distribution building capabilities.
The release of Drupal 5 marked a big milestone for distributions as we introduced a web-based installer and support for "installation profiles", which was the foundational technology used to create Drupal distributions. We continued to make improvements to installation profiles during the Drupal 6 release. It was these improvements that resulted in an explosion of great Drupal distributions such as OpenAtrium (an intranet distribution), OpenPublish (a distribution for online publishers), Ubercart (a commerce distribution) and Pressflow (a distribution with performance and scalability improvements).
Around the release of Drupal 7, we added distribution support to Drupal.org. This made it possible to build, host and collaborate on distributions directly on Drupal.org. Drupal 7 inspired another wave of great distributions: Commerce Kickstart (a commerce distribution), Panopoly (a generic site building distribution), Opigno LMS (a distribution for learning management services), and more! Today, Drupal.org lists over 1,000 distributions.
Most recently we've made another giant leap forward with Drupal 8. There are at least 3 important changes in Drupal 8 that make building and maintaining distributions much easier:
Open Restaurant is a great example of a Drupal 8 distribution that has taken advantage of these new improvements. The Open Restaurant distribution has everything you need to build a restaurant website and uses Composer when installing the distribution.
More improvements are already in the works for future versions of Drupal. One particularly exciting development is the concept of "inheriting" distributions, which allows Drupal distributions to build upon each other. For example, Acquia Lightning could "inherit" the standard core profile – adding layout, media and workflow capabilities to Drupal core, and Open Social could inherit Lightning - adding social capabilities on top of Lightning. In this model, Open Social delegates the work of maintaining Layout, Media, and Workflow to the maintainers of Lightning. It's not too hard to see how this could radically simplify the maintenance of distributions.
The less effort it takes to build and maintain a distribution, the more distributions will emerge. The more distributions that emerge, the better Drupal can compete with a wide range of turnkey solutions in addition to new markets. Over the course of twelve years we have improved the underlying technology for building distributions, and we will continue to do so for years to come.
In 2010, after having built a couple of distributions at Acquia, I used to joke that distributions are the "most expensive lead generation tool for professional services work". This is because monetizing a distribution is hard. Fortunately, we have made progress on making distributions more commercially viable.
At Acquia, our Drupal Gardens product taught us a lot about how to monetize a single Drupal distribution through a SaaS model. We discontinued Drupal Gardens but turned what we learned from operating Drupal Gardens into Acquia Cloud Site Factory. Instead of hosting a single Drupal distribution (i.e. Drupal Gardens), we can now host any number of Drupal distributions on Acquia Cloud Site Factory.
This is why Nasdaq's offering is so interesting; it offers a powerful example of how organizations can leverage the distribution "as-a-service" model. Nasdaq has built a custom Drupal 8 distribution and offers it as-a-service to their customers. When Nasdaq makes money from their Drupal distribution they can continue to invest in both their distribution and Drupal for many years to come.
In other words, distributions have evolved from an expensive lead generation tool to something you can offer as a service at a large scale. Since 2006 we have known that hosted service models are more compelling but unfortunately at the time the technology wasn't there. Today, we have the tools that make it easier to deploy and manage large constellations of websites. This also includes providing a 24x7 help desk, SLA-based support, hosting, upgrades, theming services and go-to-market strategies. All of these improvements are making distributions more commercially viable.
Last October, I shared the news that Nasdaq Corporate Solutions has selected Acquia and Drupal 8 for its next generation Investor Relations and Newsroom Website Platforms. 3,000 of the largest companies in the world, such as Apple, Amazon, Costco, ExxonMobil and Tesla are currently eligible to use Drupal 8 for their investor relations websites.
How does Nasdaq's investor relations website platform work?
First, Nasdaq developed a "Drupal 8 distribution" that is optimized for creating investor relations sites. They started with Drupal 8 and extended it with both contributed and custom modules, documentation, and a default Drupal configuration. The result is a version of Drupal that provides Nasdaq's clients with an investor relations website out-of-the-box.
Next, Nasdaq decided to offer this distribution "as-a-service" to all of their publicly listed clients through Acquia Cloud Site Factory. By offering it "as-a-service", Nasdaq's customers don't have to worry about installing, hosting, upgrading or maintaining their investor relations site. Nasdaq's new IR website platform also ensures top performance, scalability and meets the needs of strict security and compliance standards. Having all of these features available out-of-the-box enables Nasdaq's clients to focus on providing their stakeholders with critical news and information.
Offering Drupal as a web service is not a new idea. In fact, I have been talking about hosted service models for distributions since 2007. It's a powerful model, and Nasdaq's Drupal 8 distribution as-a-service is creating a win-win-win-win. It's good for Nasdaq's clients, good for Nasdaq, good for Drupal, and in this case, good for Acquia.
It's good for Nasdaq's customers because it provides them with a platform that incorporates the best of both worlds; it gives them the maintainability, reliability, security and scalability that comes with a cloud offering, while still providing the innovation and freedom that comes from using Open Source.
It is great for Nasdaq because it establishes a business model that leverages Open Source. It's good for Drupal because it encourages Nasdaq to invest back into Drupal and their Drupal distribution. And it's obviously good for Acquia as well, because we get to sell our Acquia Site Factory Platform.
If you don't believe me, take Nasdaq's word for it. In the video below, which features Stacie Swanstrom, executive vice president and head of Nasdaq Corporate Solutions, you can see how Nasdaq pitches the value of this offering to their customers. Swanstrom explains that with Drupal 8, Nasdaq's IR Website Platform brings "clients the advantages of open source technology, including the ability to accelerate product enhancements compared to proprietary platforms".
Some of the largest brands in the world are emerging as leading sponsors and contributors of Drupal. Pfizer, for example, has been using Drupal to improve its internal content workflow processes. Not only is Pfizer a major user of Drupal, they are also making their Drupal improvements available for everyone's benefit, including their competitors. This kind of innovation and collaboration model is relatively unheard of and is less likely to happen with proprietary software.
Another great example is Boston.gov. Last year the City of Boston migrated Boston.gov to Drupal. Shortly after the launch of Boston.gov, they released Boston.gov's source code to the public domain. By open-sourcing their project, the city of Boston is challenging the prevailing model. Anyone can see the code that makes Boston.gov work, point out problems, suggest improvements, or use the code for their own city, town or organization.
The City of Boston isn't the only government agency that is changing their way of innovating. In 2012, the White House released the code behind "We the People", the Drupal-based application that allows the American people to submit petitions directly to the President of the United States. By releasing the code that supports "We the People", any government in the world can take advantage of the project and implement it in their own community.
Next, the international media group Hubert Burda Media employs a team of six Drupal developers that build and maintain Thunder, a Drupal 8 distribution that can be used by any of the 164 brands that Burda supports. Last year, Burda open-sourced Thunder, allowing competitors to benefit from Burda's development, know-how and best practices. As part of their work on Thunder, Burda is an active contributor to Drupal 8's media initiative. Burda is also inviting its competitors to contribute to Thunder.
Some may wonder what is beneficial about sharing innovation with competitors. Today, technology is becoming more and more complex and the rate of change is accelerating. It is becoming increasingly difficult for any one organization to build an entire solution and do it well. By contributing back and by working together, these organizations can keep a competitive edge over those that don't use open source and collaborate. What looks strange to some, is actually perfectly logical to others. Those that contribute to open source are engaging in a virtuous cycle that benefits their own projects. It is a tide that raises all boats; a model that allows progress to accelerate due to wider exposure and public input. It's a story that is starting to play out in every industry -- from pharmaceutical companies, to media and publishing, to government.
As I wrote in my 2016 Acquia retrospective, I believe that the use of open source software has finally crossed the chasm -- most organizations don't think twice about using open source software. The next step is to encourage more organizations to not just use open source, but to contribute to it. Open source offers a completely different way of working, and fosters an innovation model that is not possible with proprietary solutions. Pfizer, Boston.gov, the White House and Burda are remarkable examples of how organizations benefit from not only using but contributing to open source.
In order to help people understand the power of this model we have to change the lens through which organizations see the world. It's hard to disrupt the status quo, but fortunately we now have powerful examples that highlight how great organizations are using open source to change their operating model.
If you want to help challenge the prevailing model at your own organization, here are the basic steps that your organization can implement today:
Today Acquia was named a leader in the The Forrester Wave: Web Content Management Systems, Q1 2017. This report is especially exciting because for the first time ever Acquia was recognized as the leader for strategy and vision, ahead of every other vendor including Adobe and Sitecore.
I take great pride in Acquia's vision and strategy. As I wrote in my 2016 retrospective, I believe that the powerful combination of open source and cloud has finally crossed the chasm, and will continue to drive change in our industry.
Today, cloud is the starting point for any modern digital experience project, but this wasn't always the case. Acquia was one of the first organizations to explore Amazon Web Services in 2008 and to to launch a commercial cloud product in 2009. At the time that was a bold move, but we have always seen the cloud as the best way to provide our customers with the necessary tools to build, deploy and manage Drupal.
Since its founding, Acquia has helped set the standard for cloud-based delivery of web content management. This year's Forrester report shows that many of our competitors are only now introducing a cloud delivery platform. Acquia's eight year commitment to the cloud is one of the reasons why we were deemed the leading vendor for strategy.
Second, organizations can no longer afford to ignore open source software. Acquia is the only open source leader in both the Forrester Wave and the Gartner Magic Quadrant for Web Content Management. There are a lot of inherent benefits to open source software, including speed of innovation, cost, quality, security and more. But the thing that really sets open source apart is freedom. This extends to many different users: for developers freedom means there are no limitations on integrations; for designers that means creative freedom, and for organizations that means freedom from vendor lock-in.
In addition to our commitment to open source and cloud, Forrester also highlighted Acquia's focus on APIs. This includes our many contributions to Drupal 8's API-first initiative, but it also includes our APIs for Acquia Cloud, Acquia Cloud Site Factory and Acquia Lift. APIs are important because they enable organizations to build more ambitious digital experiences. With Open APIs, organizations can use our software in the way they choose and integrate with different technology solutions.
This is why Acquia's solution -- using open source, cloud, and open APIs -- is so powerful: it prepares organizations for the current and evolving demands of digital experience delivery by allowing them to innovate faster than traditional solutions.
Thank you to everyone who contributed to this result! It's another great milestone for Acquia and Drupal.
As my loyal blog readers know, at the beginning of every year I publish a retrospective to look back and take stock of how far Acquia has come over the past 12 months. If you'd like to read my previous annual retrospectives, they can be found here: 2015, 2014, 2013, 2012, 2011, 2010, 2009. When read together, they provide a comprehensive overview of Acquia's trajectory from its inception in 2008 to where it is today, nine years later.
The process of pulling together this annual retrospective is very rewarding for me as it gives me a chance to reflect with some perspective; a rare opportunity among the hustle and bustle of the day-to-day. Trends and cycles only reveal themselves over time, and I continue to learn from this annual period of reflection.
If I were to give Acquia a headline for 2016, it would be the year in which we crossed the proverbial "chasm" from startup to a true leader in our market. Acquia is now entering its ninth full year of operations (we began commercial operations in the fall of 2008). We've raised $186 million in venture capital, opened offices around the world, and now employ over 750 people. However, crossing the "chasm" is more than achieving a revenue target or other benchmarks of size.
The "chasm" describes the difficult transition conceived by Geoffrey Moore in his 1991 classic of technology strategy, Crossing the Chasm. This is the book that talks about making the transition from selling to the early adopters of a product (the technology enthusiasts and visionaries) to the early majority (the pragmatists). If the early majority accepts the technology solutions and products, they can make a company a de facto standard for its category.
I think future retrospectives will endorse my opinion that Acquia crossed the chasm in 2016. I believe that Acquia has crossed the "chasm" because the world has embraced open source and the cloud without any reservations. The FUD-era where proprietary software giants campaigned aggressively against open source and cloud computing by sowing fear, uncertainty and doubt is over. Ironically, those same critics are now scrambling to paint themselves as committed to open source and cloud architectures. Today, I believe that Acquia sets the standard for digital experiences built with open source and delivered in the cloud.
When Tom (my business partner and Acquia CEO) and I spoke together at Acquia's annual customer conference in November, we talked about the two founding pillars that have served Acquia well over its history: open source and cloud. In 2008, we made a commitment to build a company based on open source and the cloud, with its products and services offered through a subscription model rather than a perpetual license. At the time, our industry was skeptical of this forward-thinking combination. It was a bold move, but we have always believed that this combination offers significant advantages over proprietary software because of its faster rate of innovation, higher quality, freedom from vendor lock-in, greater security, and lower total cost of ownership.
Acquia has continued its evolution from a content management company to a company that offers a more complete digital experience platform. This transition inspired an internal project to update our vision and mission accordingly.
In 2016, we updated Acquia's vision to "make it possible for dreamers and doers to craft the digital world". To achieve this vision, we want to build "the universal platform for the world's greatest digital experiences".
We increasingly find ourselves at the center of our customer's technology and digital strategies, and they depend on us to provide the open platform to integrate, syndicate, govern and distribute all of their digital business.
The focus on any and every part of their digital business is important and sets us apart from our competitors. Nearly all of our competitors offer single-point solutions for marketers, customer service, online commerce or for portals. An open source model allows customers to integrate systems together through open APIs, which enables our technology to fit into any part of their existing environment. It gives them the freedom to pursue a best-of-breed strategy outside of the confines of a proprietary "marketing cloud".
We continued to grow rapidly in 2016, and it was another record year for revenue at Acquia. We focused on the growth of our recurring revenue, which includes new customers and the renewal and expansion of our work with existing customers. Ever since we started the company, our corporate emphasis on customer success has fueled both components. Successful customers mean renewals and references for new customers. Customer satisfaction remains extremely high at 96 percent, an achievement I'm confident we can maintain as we continue to grow.
In 2016, the top industry analysts published very positive reviews based on their dealings with our customers. I'm proud that Acquia made the biggest positive move of all vendors in this year's Gartner Magic Quadrant for Web Content Management. There are now three distinct leaders: Acquia, Adobe and Sitecore. Out of the leaders, Acquia is the only player that is open-source or has a cloud-first strategy.
Over the course of 2016 Acquia welcomed an impressive roster of new customers who included Nasdaq, Nestle, Vodafone, iHeartMedia, Advanced Auto Parts, Athenahealth, National Grid UK and more. Exiting 2016, Acquia can count 16 of the Fortune 100 among its customers.
Digital transformation is happening everywhere. Only a few years ago, the majority of our customers were in either government, media and entertainment or higher education. In the past two years, we've seen a lot of growth in other verticals and today, our customers span nearly every industry from pharmaceuticals to finance.
To support our growth, we opened a new sales office in Munich (Germany), and we expanded our global support facilities in Brisbane (Queensland, Australia), Portland (Oregon, USA) and Delhi (India). In total, we now have 14 offices around the world. Over the past year we have also seen our remote workforce expand; 33 percent of Acquia's employees are now remote. They can be found in 225 cities worldwide.
We've also seen an evolution in our partner ecosystem. In addition to working with traditional Drupal businesses, we started partnering with the world's most elite digital agencies and system integrators to deliver massive projects that span dozens of languages and countries. Our partners are taking Acquia and Drupal into some of the world's most impressive brands, new industries and into new parts of the world.
I enjoy writing these retrospectives because they allow me to chronicle Acquia's incredible journey. But I also write them for you, because you might be able to learn a thing or two from my experiences. To make these retrospectives useful for everyone, I try to document both milestones and difficulties. To grow an organization, you must learn how to overcome your challenges and growing pains.
Rapid growth does not come without cost. In 2016 we made several leadership changes that will help us continue to grow. We added new heads of revenue, European sales, security, IT, talent acquisition and engineering. I'm really proud of the team we built. We exited 2016 in the market for new heads of finance and marketing.
We adjusted our business levers to adapt to changes in the financial markets, which in early 2016 shifted from valuing companies almost solely focused on growth to a combination of growth and free cash flow. This is easier said than done, and required a significant organizational mindshift. We changed our operating plan, took a closer look at expanding headcount, and postponed certain investments we had planned. All this was done in the name of "fiscal fitness" to make sure that we don't have to raise more money down the road. Our efforts to cut our burn rate are paying off, and we were able to beat our targets on margin (the difference between our revenue and operating expenses) while continuing to grow our top line.
We now manage 17,000+ AWS instances within Acquia Cloud. What we once were able to do efficiently for hundreds of clients is not necessarily the best way to do it for thousands. Going into 2016, we decided to improve the efficiency of our operations at this scale. While more work remains to be done, our efforts are already paying off. For example, we can now roll out new Acquia Cloud releases about 10 times faster than we could at the end of 2015.
Lastly, 2016 was the first full year of Drupal 8 availability (it was formally released in November 2015). As expected, it took time for developers and the Drupal community to become familiar with its vast array of changes and new capabilities. This wasn't a surprise; in my DrupalCon keynotes I shared that I expected Drupal 8 to really take off in Q4 of 2016. Through the MAP program we committed over $1M in funds and engineering hours to help module creators upgrade their modules to Drupal 8. All told, Acquia invested about $2.5 million in Drupal code contributions in 2016 alone (excluding our contributions in marketing, events, etc). This is the most we have ever invested in Drupal and something is I'm personally very proud of.
Acquia remains an amazing place for engineers who want to build great products. We achieved some big milestones over the course of the year.
One of the largest milestones was the significant enhancements to our multi-site platform: Acquia Cloud Site Factory. Site Factory allows a team to manage and operate thousands of sites around the world from a single console, ensuring all fixes, upgrades and improvements are delivered responsibly and efficiently. Last year we added support for multiple codebases in Site Factory – which we call Stacks – allowing an organization to manage multiple Site Factories from the same administrative console and distribute the operation around the world over multiple data centers. It's unique in its ability and is being deployed globally by many multinational, multi-brand consumer goods companies. We manage thousands of sites for our biggest customers. Site Factory has elevated Acquia into the realm of very large and ambitious digital experience delivery.
Another exciting product release was the third version of Acquia Lift, our personalization and contextualization tool. With the third version of Acquia Lift, we've taken everything we've learned about personalization over the past several years to build a tool that is more flexible and easier to use. The new Lift also provides content syndication services that allow both content and user profile data to be reused across sites. When taken together with Site Factory, Lift permits true content governance and reuse.
We also released Lightning, Acquia's Drupal 8 distribution aimed at developers who want to accelerate their projects based on the set of tested and vetted modules and configurations we use ourselves in our customer work. Acquia's commitment to improving the developer experience also led to the release of both Acquia BLT and Acquia Pipelines (private beta). Acquia BLT is a development tool for building new Drupal projects using a standard approach, while Pipelines is a continuous delivery and continuous deployment service that can be used to develop, test and deploy websites on Acquia Cloud.
Our core product, Acquia Cloud, received a major reworking of its user interface. That new UI is a more modern, faster and responsive user interface that simplifies interaction for developers and administrators.
Our focus on security reached new levels in 2016. In January we secured certification that we complied with ISO 27001: the international security and compliance standard for enterprise cloud frameworks. In April we were awarded our FedRAMP ATO from the U.S. Department of Treasury after we were judged compliant with the U.S. federal standards for cloud security and risk management practices. Today we have the most secure, reliable and agile cloud platform available.
We ended the year with an exciting partnership with commerce platform Magento that will help us advance our vision of content and commerce. Existing commerce platforms have focused primarily on the transactions (cart systems, payment processing, warehouse/supply chain integration, tax compliance, customer credentials, etc.) and neglected the customer's actual shopping experience. We've demonstrated with numerous customers that a better brand experience can be delivered with Drupal and Acquia Lift alongside these existing commerce platforms.
Entering 2017, I believe that Acquia is positioned for long-term success. Here are a few reasons why:
As I explained at the beginning of this retrospective, trends and cycles reveal themselves over time. After reflecting on 2016, I believe that Acquia is in a unique position. As the world has embraced open source and cloud without reservation, our long-term commitment to this disruptive combination has put us at the right place at the right time. Our investments in expanding the breadth of our platform with products like Acquia Lift and Site Factory are also starting to pay off.
However, Acquia's success is not only determined by the technology we back. Our unique innovation model, which is impossible to cultivate with proprietary software, combined with our commitment to customer success has also contributed to our "crossing of the chasm."
Of course, none of these 2016 results and milestones would be possible without the hard work of the Acquia team, our customers, partners, the Drupal community, and our many friends. Thank you for your support in 2016 – I can't wait to see what the next year will bring!
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