Essay On Atlassian: Strategies, Growth, And Competitive Analysis.

Introduction to Atlassian Software Company

Question:

Discuss about the Case Study of Atlassian Software Company.

Atlassian is one of those startup companies that have reached the highs as a full-grown enterprise within a very short period. Having started its journey in 2002 and founded by Mike-Cannon-Brookes and Scott Farquhar its software facilitates the business teams to unleash their complete potential by collaborating successfully. The software made by Atlassian is also in demand as it acts as developmental tool for agile teams. This Australian based company has been all the rage with their very first software, JIRA that was a great success (Atlassian, 2017). At present, Atlassian operates in six locations of prominent nations and the products of this company help the team members of several different companies to achieve their visions and perform things accordingly (Scholes et al. 2014). However, the unique business policies of Atlassian and especially their product sales and distribution strategy have been the key to success.

An analysis of Porter’s five forces will help to understand better, how the competitive forces of the tech industry have shaped the strategies of Atlassian all these years. If Atlasssian’s marketing strategy is observed it will show how the company has entirely redefined the competitive strategies of tech companies along with their outlook to address competition in the rapidly evolving market (Gazzola and Colombo 2014).

The enterprise Atlassian was formed on credit of around A$10000 by the entrepreneurs Mike Cannon Brookes and Scott Farquhar. In no time, the venture was a success and generated revenue of worth A$1 million in the very first year. Later, in the year 2005-06 the company grew to an enterprise of worth A$149 million; deservingly, the founders of the company Mike Cannon Brookes and Scott Farquhar were titled with entrepreneur of the year by accounting giant Ernest and Young (Atlassian, 2017). In recent years, Atlassian reported to have generated $215 million as revenue in 2014 and in the next year, FY15 Atlassian reached to A$319.5 million, having a considerable increase of 49 percent on the previous year’s revenue (Atlassian, 2017).

The tech market in which Atlassian operates is immensely competitive in nature and the solutions for effective rivalry are rather fragmented. In addition, this IT market has relative low barriers for new entrants and the threat of competing with the new ones remains always. Atlassian face competition from the larger software companies as well as from the traditional ones (van den Bosch and De Man 2013). The larger software organizations offer complete productivity suites and collaboration, while on the other hand, smaller companies offer specific products for precise use cases and also for features. Among all the competitors of Atlassian in the market, the principal ones are Microsoft Corporation, Hewlett-Packard, IBM, Google, Salesforce.com and the like (Atlassian, 2017). However, Atlassian has surpassed most of them with their innovative distribution model. Most of the companies follow the traditional distribution models for their companies where they concentrate on quota-based sales representatives and tend to rely on cracking large deals. This strategy is not appropriate to meet the requirements of the teams because the teams of different organizations are constantly driving their decisions of purchasing technology.

Atlassian Software Company's Business Policies and Strategies

The Macro Environmental Factors of Atlassian is revealed through the Pestle analysis of the company. This analysis would require detailed investigation on political, economic, social, technological and legal factors of the enterprise (Bharadwaj et al. 2013).

Political Factors: Operating in six prominent locations at present and that too in different continents, Atlassian like all other multinational giants has to huge amount of taxes especially in the region of U.S and Netherlands. High tax rates are likely to increase subscription rates of the Atlassian products.

Economic Factors: The inflation rates and the factor of Gross Domestic Product tend to have an impact on the purchasing ability of the consumers. As the economy of any nation declines, it though not directly, but indirectly affects the purchasing ability of the buyers (Gazzola and Colombo 2014). Among the six locations where Atlassian operates now, Netherlands, San Francisco and California in the States, Philippines, Japan and of course Australia, all are developed countries leaving Philippines. Hence, this tech company has less risk to suffer from any such fluctuations in the economic factors.

Social Factors: More and more companies are becoming multinational and technologically advanced these days. Therefore, the demand for the software made by Atlassian is likely to increase.

Atlassian also focuses on staff wellbeing and for this donates a considerable amount of its profit. In addition, numerous children in the developing countries are helped by Atlassian to receive education. Their leave schemes are also framed to cater to the employee interests.

Technological Factors: Being a tech enterprise, the major concern for Atlassian will obviously be technological factors. This industry is rapidly reshaping itself generating high competition and Atlassian, keeping this fact in mind is spending a lot in technological improvement. From FY13 to FY15 it spent a huge amount of US$247.6 million on research and developmental work. Besides, to upgrade its technological aspects Atlassian has purchased tools like instant messenger HipChat, Crucible and Fisheye and Clover as well as acquired Stepka’s Authentisoft (Atlassian, 2017).

Legal Factors: The legal factors affecting Atlassian’s business across the globe are currency exchange, legal registrations to obtain outsourcing facilities for the business purposes and in the case of cross country businesses.

The corporate strategy of a company determines how the enterprise can attach value over the organization’s business grounded on its resources and competencies (Guiso, Sapienza and Zingales 2015). Based on the RC module of corporate strategy, the purpose of analyzing corporate strategy of Atlassian is to identify its valuable resources that put in value to the corporate portfolio of the said company. In order to review the corporate strategy of Atlassian first its resources and competences are to be analyzed.

Physical Resources: Atlassian has strong presence in four of the continents and its production capacity is pretty impressive as several popular products have been lunched under the enterprise within these few years.

Financial Resources: Atlassian has considerably strong financial resources in form of investors and besides, the company itself generates huge revenue.

Human Resources: Atlassian has currently 17000 employees from across the globe working for the company.

Porter's Five Forces Analysis of Atlassian Software Company

Intellectual Capital: The company has nearly 13 products patented under its name and more than 60000 satisfied customers using them.

Threshold competences: According to this, a company is required to fulfill the minimum requirements of the customers. Employing its unique resources, especially those that support competitive advantage a company continues to sustain the industry competition. In view of this, Atlassian understands the consumers’ demand very well that they want cheaper products of high quality and easily available. Atlassian by making their products available online eliminating sales force from the marketing and distributing process fulfills these conditions (Grant 2016).

Core Competences: Their strategy for online marketing is difficult for others to imitate; where most of the competitive companies still depend on sales representatives to distribute their products, Atlassian has eliminated this phase and thus, has an edge over its competitors. Growth: Having started its journey in the year 2002, the company has shown signs of steady growth in the past 14 years; from being a startup, it is at present, a full-grown enterprise with almost 2000 people (Atlassian, 2017).

Organizational Management: The HR strategy of the company is considerably good it has been hiring competent individuals from across the globe (Guiso, Sapienza and Zingales 2015). Besides that, the smooth operation of the company explains high-quality organizational management.

R&D technology: Atlassian emphasizes developing and improving its intellectual and technology properties, which is why it has been spending a lot on research works.

Risk: However, Atlassian bears considerable amount of risk factor in its style of business. In the first place, the industry, in which it belongs demands continuous innovation and this will be challenging to the company to keep innovating. Besides, to continue with the ‘no sales force’ strategy in a competitive market is also a matter of great risk (Amini and Bienstock 2014).

Service delivery: Every organization must look into its customer experience and that whether they are facing any trouble to use their products (Albeladi, Khan and Khan 2014). In this case, Atlassian is always improving the way they operate and receiving feedbacks from the customers on regular basis.

It is an inescapable fact that a strong and well-thought business strategy provides an organization the desired foundation as well as platform to achieve its goals. It consists of the key factors like corporate culture, strategic planning and strategic intents, its evaluation and future thinking and these factors decide how a company is likely to attain its goals. Discussing about Atlassian’s business strategy these above-mentioned factors are worth analyzing:

Corporate Culture: Corporate Culture or Organizational culture of a company refers to its collective beliefs and ideals, vision, leadership, teamwork, flexibility and change management. Atlassian, as a company has a clear set of beliefs and ideals. It is an open company and sharing becomes their first principle. The corporate culture of the company insists the members to spark the change within them first and prioritizes continuous improvement above all. It is an organization that is not driven by pure business intentions but with heart and passion, keeping a balance between everything (Amini and Bienstock 2014). They regard their customers as their topmost priority and ensure that the consumers have a flawless experience at every stage of their purchase. They even evaluate the experience of the buyers after sale and consider their perspective as well. Their teamwork culture is of high praise; they strive to put that first which is right for the team and due to a happy workplace, all the members willingly devote much of their time at job.

Pestle Analysis of Atlassian Software Company

Strategic Planning and Strategic Intent: Atlassian as a tech company has rightly identified the nerve of this industry i.e. to outpace all other rival companies by rapidly advancing in high-growth fields like cloud computing, data analytics, cyber security, XaaS and lastly in digital content. Atlassian has been quite vigilant in grasping these technological factors of progress and has incorporated most of them in their software products (Grant 2016).

Alongside this, Atlassian follows a unique sales and distribution strategy that keeps it much ahead of other competitors. The philosophy of ‘no sales force’ allows the organization to spend the minimum amount on sales and marketing, as all its products are directly available on the official website of their company. The buyers have the facility of free trial and after that; they are allowed to directly subscribe the software from the site. This also establishes direct relationship between the customers and the company. Atlassian’s distribution model explains how they have thoughtfully connected them with the customers at every step. They believe in building great products, keeping the price considerably low, pursuing volume, selling the products online, maintaining transparency in pricing and making the trials easy and hence, easy trials require great products so the cycle ends with creating great and innovative products (van den Bosch and De Man 2013).

Evaluation of Strategic Planning: Their strategy of ‘no sales force’ has been a huge success until now and the high revenues generated by them go in their favor. In 2015, Atlassian had to spend only 21% of its revenue in sales and marketing.

Future Thinking: Having been established as a brand with this strategy, Atlassian intends to continue with it. Besides, its endeavor to improve continuously will certainly benefit them in the long run (Atlassian, 2017).

The entrepreneurs Scott Farquhar and Mike Cannon-Brookes have been the leaders of exceptional influence throughout, who have successfully gathered competent workforce for their company and with the vision of reaching the peak have made Atlassian a well-established brand in tech industry. The way they have made the company adaptable with the rapidly changing industry with their uniquely structured policies, shows clear sign of strategic leadership (Nahavandi 2016).

Having begun as a startup Atlassian went on for several acquisitions and its most popular products like JIRA, Confluence spawn huge revenue for the company every year (Atlassian, 2017). Presently, Atlassian is in a very stable condition as a company and shows prominent signs to remain that in future also.

Conclusion:

Winding up the discussion, as the case study reveals it can be said that Atlassian’s greatest contributory feature in the tech industry is to implement ‘no sales force’ model that shows new ways to the smaller companies and new startups. Unlike others, it spends more amount of money in building products rather than marketing and selling their products. They are in the right track to say that creating great products automatically attracts customers if the products are made easily available to them. Besides, the organization highly concentrates on employee as well as customer satisfaction and this explains the reason behind their remarkable success.

References:

Albeladi, K.S., Khan, U.A. and Khan, P.M., 2014, March. Driving business value through an effective IT strategy development. In Computing for Sustainable Global Development (INDIACom), 2014 International Conference on (pp. 561-563). IEEE.

Amini, M. and Bienstock, C.C., 2014. Corporate sustainability: an integrative definition and framework to evaluate corporate practice and guide academic research. Journal of Cleaner Production, 76, pp.12-19.

Atlassian. (2017). Atlassian | Software Development and Collaboration Tools. [online] Available at: https://www.atlassian.com/?_mid=52b420e7a027ee5e85a26786021320be&aceid=&adposition=1t1&adgroup=12404612438&campaign=186505358&creative=179601586500&device=c&keyword=atlassian&matchtype=p&network=g&placement=&ds_kids=p17793883759&gclid=Cj0KEQjww7zHBRCToPSj_c_WjZIBEiQAj8il5J4EpxAUFVai1DoQa34jcgvQkO9vL3d0dSc1E-CqPuUaAkpD8P8HAQ&gcldata-src=aw.ds

Atlassian. (2017). Atlassian | Software Development and Collaboration Tools. [online] Available at: https://www.atlassian.com/

Bharadwaj, A., El Sawy, O.A., Pavlou, P.A. and Venkatraman, N.V., 2013. Digital business strategy: toward a next generation of insights.

Gazzola, P. and Colombo, G., 2014. CSR integration into the corporate strategy. Cross-Cultural Management Journal, (06), pp.331-338.

Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

Guiso, L., Sapienza, P. and Zingales, L., 2015. The value of corporate culture. Journal of Financial Economics, 117(1), pp.60-76.

Nahavandi, A., 2016. The Art and Science of Leadership -Global Edition. Pearson.

Scholes, K., Regner, P., Johnson, G., Whittington, R. and Angwin, D., 2014. Exploring strategy: Text & cases. Pearson.

van den Bosch, F.A.J. and De Man, A.P. eds., 2013. Perspectives on strategy: contributions of Michael E. Porter. Springer Science & Business Media.