Atlassian: the power of teamwork
Management of Technology: New York University
This research paper tries to focus on the business operations and value chain of Atlassian an Australian software company. They make enterprise software applications that help teams, business collaborate effortlessly on projects and stay up to date. They provide an easy and effective mode of communication between teams which brings a whole new level of transparency between teams and organizations. They have gained immense success through their products and their business model in the years since they started operating. Since their IPO in 2016 their value has increased from $4 billion to $40 billion in just 4 years. This paper focuses on their key profit drivers, business model, its competitive advantage over competitors and their strategic positioning in the market. The impact of Covid-19 on its business operations are taken into consideration. Further this paper tries to shed light on how they tackle with transformative technologies that might disrupt their business model in the future, and how do they plan to incorporate them into their existing business model. Finally based on the research and analysis carried out, strategic recommendations and possible future plans are laid out.
Atlassian is an Australian software company, it was founded in 2002 by Mike Cannon-Brookes and Scott Farquhar. The two started the company out of their own pockets without the help of any outside investor or venture capital, without the pressure of anyone they were just keep on delivering the best that they could. In 2014 after a restructuring the parent company became Atlassian corporation PLC, with their headquarters in UK but the main office still remained in Sydney. Their main products specialize in the enterprise software solutions for business and teams of all sizes. The goal of the company is very simple to unleash the potential of every team in every organization. Their first product in the market was Jira, which teams could use to plan, track, and release software efficiently, and quickly than before. At the time of launch of Jira the corporate landscape was very different than what it is today, the market was still getting back from the dot-com bubble burst Tech companies were not that mature then, and in industrial and financial companies development and IT teams were not given much importance, they didn’t have much say in important decision makings (Mcduling, 2019). A lot has changed since then, the way organizations think, the way teams work and Atlassian has been a part of that shift. Since 2002, they have gone to release 15 world class software that can be used for different solutions based on the need of the customers. What is even better is that their software can be used together too to unleash even more business potential out of any organization. Different business can tailor fit a suite of Atlassian products according to their problem. To quote their founder Scott Farquhar “We served the most important teams inside an organization, well before anyone realized it was the most important team” (Mcduling, 2019). They became public in December of 2015 since then their stock price has increased from $30 to $179.79 totaling their total valuation around $40 billion (Yahoo Finance, 2020). With 10m monthly active users, 150K customers in more than 190 countries and more than 83 of
fortune 500 companies using Atlassian’s products their business is thriving (Atlassian, 2020). Every company has a core set of values that they abide by and it is this that separates them from their competitors. The core values that every Atlassian stands for are: open company, no bullshit; Play, as a team; Build with heart and balance; Don’t #@!% the customer; Be the change you seek. These 5 values shape their culture their thinking, their products and even their success. These values make them succeed and do better than others. Over the years Atlassian has grown from one software to a suite of software that solves a variety of problems on different level of the value chain. Their products can be used by different departments within an organization such as IT, Software Development, Business teams, DevOps thus increasing the overall performance of their clients. Atlassian provides over 15 applications/software’s which can be broken into 4 parts in terms of functionality: Plan, Tack, and Support; Collaborate; Code, Build, and Ship; Identity and Security (Atlassian, 2020).
Atlassian suite of products
Through their set of products, they aim to be a one stop solution for business helping them enhance their full potential, moreover all the Atlassian products are configured to work together thus creating more value when used as a set. They want to bring a new level of transparency in organizations, in the way they work, collaborate, share findings and plan their next journey. Apart from the products and software’s mentioned in figure 1, Atlassian also provide enterprise product offerings and help customers decide where their applications would be best run, on their own platform, cloud or a data center. Atlassian products can be integrated anywhere and all their solutions are available on the cloud too which provides easy and frequent updates. They also help manage data center which provides complete customization and administration at scale.
All their products mixed with their core values to exceed their customers expectation provides a stage for differentiation, their products are better than others, easier to use, and easier to install and it is this formula that has led to year on year growth of the company making it what it is. Their steady production and open culture to work has ensured growth even in times of turmoil. Atlassian stock returned 26.8% on its stock while most other companies went down (Martin, 2020).
Strengths. Atlassian main strength lies in their product, they deliver easy to use and install software which can be easily integrated into any business model. Their work environment and culture of openness is another distinct factor of theirs which differentiates them, that culture enables rapid growth and better decision making within the organization. They don’t have any sales team which reduces the marketing cost significantly as compared to other competitors or for that matter any business, not having a sales team enables them to save up a lot of money and spend it somewhere else such as Research and Development (RD) thus providing better end products.
Weaknesses. They are a growing organization and their employer base is just increasing at the start it is easy to manage a smaller number of employees but as the organization grows it gets difficult to keep track of things and to make sure your values and ethics are still being followed. They will have to have a steady product performance which is constantly better than the competitors since they don’t have a sales team and rely on word of mouth advertisement.
Opportunities. The opportunities for Atlassian are a lot, they have constantly stayed ahead, and all their products are deployed on cloud as well as could be installed on premise as well, seeing as how cloud is transforming the software industry, Atlassian has an edge as its already cloud ready. Another major opportunity lies in emerging markets and the potential in them, Atlassian just opened up a new office in India, where they plan to expand their operations in the many startups that are turning up every year. Slowly expanding across the borders will bring them close to new customers. The current pandemic has helped grow the user base as more and more people work from home and use enterprise software to communicate and plan their day to day tasks. This has presented an opportunity to ever further grow its customer base.
Threats. The major threat comes from its competitors, there is tough competition in the industry and a lot of companies compete for the users. Atlassian faces tough competition from Microsoft, Salesforce, Slack etc. They recently had to sell their app Hipchat to Slack. Another threat arises from the fast-growing industry, it is very easy to fall behind in the Tech industry, one disruptive innovation and it clears the slate. When you operated with or handle data there is always one large threat that is of security, Atlassian hosts a lot of applications and customer data on its cloud database, they need to make sure that they don’t fall victim to a cyber-attack.
Competitive Advantage and Positioning
Atlassian’s competitive advantage comes from its strengths and the opportunities that lie ahead in their field of work. Their no non-sense attitude and striving to excel customer expectation attitude reflects in their product and service. They make easy to use software which can be installed easily or accessed via cloud. They make really simple interface which makes it easy to adapt to. Through their integrated products they easily transform workplaces. Apart from its line of product, they also have Atlassian Marketplace where people can build custom apps that go with Atlassian’s products, they generate a good amount of revenue from this as they charge 25% commission on all sales. Apart from generating revenue this also incites outside interest from developers, generating a direct impact on product capabilities and performance, thus enabling their customers to choose from a wide variety of apps without any operational or development cost. None of their competitors have this kind of model in their business operations or value chain. Even without a sales team in 2016 they generated $320 million in business software, since then they have had a few salespeople, but they are mostly for targeted marketing, they still work without a sales team and rely on word of mouth advertisement. This model helps them shave lot of cost of their revenues and focus it to much better work such as RD which improves their product quality and capabilities far more than that of its competitors (Bass, 2016). Moreover, their cultural values are unique and hard to copy as they have inspired high level of openness and communication between their employees, this has led to faster growth and bigger achievements in a short amount of time. It is especially not easy for organizations that are already set up to follow or adapt their values thus making it unique to them. They saw early on that cloud is going to transform the way software industry works and invested on making their applications on cloud as well as on servers, they started build and learning about the hybrid cloud infrastructure and specialized their organization into it, now they help other organizations successfully make this transition. High morals and ethics, excellent product, unique business, sale models and early adoption of transformative technologies has helped Atlassian create a unique position for itself in the market. Their revenue has grown year on year, and they expect it to grow even more further. Thanks to their unique qualities they have maintained a competitive edge over their rivals.
The Telegraph used to outsource their IT service management and they used to face a lot of issues with issue resolution time, transparency and work quality, they used Jira service desk with Jira software to move those operations inhouse. The transition was smooth and now the IT and software development teams were able to work together and solve problems quickly. It resulted in an increase of 68% in resolution time, 50% reduction in call waiting and 140% increase in customer satisfaction. To quote Carol Johnson the IT director of Telegraph “With Jira Service Desk, we can move at the speed of the industry, support our customers, and deliver real business value” (Atlassian, 2020)
Trulia has a 250 person team that maintained all its operations related to its day to day business they adopted agile methodology early on but as they grew they were having trouble scaling it across their organization, they used Jira and bitbucket to handle their development process and ensure that their website and applications were on track and up to date. Trulia was able to develop and deliver high quality products faster and efficiently. To quote their CTO Daniele Farnedi “The biggest benefit of consolidating our platform on Atlassian has been providing a single point of visibility over our projects. Now we can see what everybody else is doing and understand each project's status in great detail. That enables everyone to be on the same page” (Atlassian, 2020)
Atlassian has provided its customers a way to scale business challenges that they face and improve transparency in organizations thus promoting better decisions. Their vast range of products (See Figure1) has helped many companies change the way they work and make the transition to the next step whether it to transporting to cloud or easing the development process. They have had success with multiple partners both small business and big enterprises.
Covid-19 and its impact
Since most of its business and products can be delivered online, also as there is no issues of any supply chain that they have to worry about during this pandemic regarding their product delivery Atlassian’s business operations have not been severely affected. Most of its developers can collaborate through homes and keep them updated as that is essentially the work that they do. Thus, ensuring steady flow of work. There has been a little drop in the share price but mostly it has gone up. Since the spread of the virus in January Atlassian has returned a hefty 28.6% on its stock (Martin, 2020). In their recent Q1 results for 2020 they beat the market by 16% points and their benchmark the Russell Midcap Index by 15% points. With most of its applications on the cloud they have an excellent cash conversion ability. Low cost, cloud-based collaboration tools like Atlassian’s will be in favor as teams across the world adapt to current remote working conditions (Smith, 2020).
Atlassian is a public ally traded company, they went public in the end of December 2015. At that time their company was valued at 4 billion dollars and today that value has crossed over 40 billion dollars. Atlassian is covered by a lot of financial analysts across various organization as of May 15 it had a 2.1 rating of buy. Not just that but Atlassian is also on the list of many hedge funds as a safe bet which indicates that its share price will go up. This is pretty good given the current scenario. As of May 15, it closed at a 3.73% high at $186.50. The analysts have maintained a buy position because of Atlassian’s strong business model, excellent product and the way they have positioned themselves in the market.
Atlassian has a very good business model and I would suggest that they keep maintaining that. For the future they can maybe make a small business development team that focuses on proper employee onboarding and also oversees small targeted advertising and marketing. Other than this, during my research I saw that Atlassian doesn’t have a Chief Innovation Officer (CINO), they do have a Chief Technological Officer and Chief Information Officer, but I highly recommend that they hire a new CINO who oversees the progress and vision of the company. I would suggest an Investor type CINO would be suitable for Atlassian as they have all the other type of roles either embedded in their core values and principles or otherwise in the culture and products. Their organizational thinking coupled with an Investor type CINO will help them see future prospects clearly and invest in them early on thus supporting steady growth and flow of cash.
Atlassian is an excellent organization that embodies great organizational practices and delivers out of the world software for its clients. Their business model and core values are what differentiates them from others. Supporting openness in work and culture has helped them make better decisions and a lot of other organizations tried to follow them too. Apart from that having a different kind of sales model has helped the reduce a lot of costs in their operations which their rivals are not able to save. This small difference results in better quality of Atlassian products and high-performance software. They early on catched on to transformative technologies in their industry and are now reaping its benefits, they now help other business make that transition smoothly. The recent pandemic has not had a lot of impact on them and analysts expect its share to keep growing.
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