Atlassian Software Company Strategic Management Evaluation

Executive Summary

Atlassian as a software company headquartered in Sydney Australia. The company provides software for project managers and developers to assist them in order them to manage their staff, project and etc. JIRA, Confluence, Bitbucket, and Trello are some of the company’s well-known products and services. This report has analysed and evaluated Atlassian strategy management and focused on how Atlassian applies the management strategy theories and tools. Five key elements of business strategy have been used to abstract Atlassian’s approach. Environmental element has discussed the external forces and Porter five forces model has been used to determine the company’s strategic position. Also industry challenges, market forces and internal environment have been analysed. Atlassian has a unique business model and built the software ecosystems for different business segments that each can represent different business function.

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Atlassian’s products, sell themselves and the team is supporting the customer value proposition. Atlassian’s outstanding capabilities enable the company to outperform its competitors. Atlassian approaches its partners and key stakeholders strategically in order to create and sell add-ons and professionally support its customers. Atlassian’s performance in compare to its peer group within the software industry has exceeded the peer average in operating and net margin. Atlassian is proud to announce itself as an economically and environmentally sustainable business in the industry. Atlassian contributes to the industry’s profit as well as its own profit. Also environmentally contributes to the volunteer works in order to remove the exotic weeds in Sydney region. Atlassian has a strategic plan to expand the company by adding users as the team is growing, adding products, more instances of products for additional purposes, and add-ons from market place. Some recommendations have been made to assist the company in achieving its future plans and objectives.

Table of Contents

Executive Summary……………………………………………………………………………………………………………….1

Introduction…………………………………………………………………………………………………………………………..3

Company Profile………………………………………………………………………………………………………………….…3

Evaluation, Element 1…………………………………………………………………………………………………….4, 5, 6

Element 2…………………………………………………………………………………………………………………….…….6, 7

Element 3………………………………………………………………………………………………………………………..…7, 8

Element 4………………………………………………………………………………………………………………………………8

Element 5………………………………………………………………………………………………………………………………8

Sustainability…………………………………………………………………………………………………………………………8

Forward Plan……………………………………………………………………………………………………………………….…9

Conclusion…………………………………………………………………………………………………………………..…………9

Recommendation …………………………………………………………………………………………………………………9

References…………………………………………………………………………………………………………………..…10, 11

Appendices………………………………………………………………………………………………………………………….12

Introduction

This report will analyse how Atlassian applies the strategic management theories and evaluate its management strategies. By focusing on the key elements of the business strategy, the report will analyse the company’s performance, capabilities, industry challenges and market forces, business model and internal and external forces influencing the company. Atlassian’s sustainability and forward plans will be considered and some recommendation will be provided for Company to achieve its future plans and goals.

Company Profile

Atlassian, operates as a software company headquartered in Sydney-Australia, founded in 2002 by Mike Cannon-Brookes and Scott Farquhar. Atlassian Corp, PLC, was incorporated in 2013 in the UK and had its Initial Public Offering on NASDAQ in 2015. The Company develops software for project managers and developers. Atlassian’s most known products include JIRA, Bitbucket, Confluence, Trello, Stride, Hipchat, and Crowd. (Atlassian Corporation 2019).

(Atlassian Corporation 2019).

Evaluation of Atlassian’s Strategic Management Approach

Key Elements of Business Strategy

Element 1: Environments

1.1  External Forces (PESTLE Analysis)

Political factors such as trade regulations have some negative impacts on Atlassian such as barriers to free trade that reduce the market opportunities and tariffs which increase the costs. Economic factors such as tax rates and currency risks have negative impacts on the Atlassian marketplace. Social factors have both positive impact on Atlassian such as skill levels and demographics of the population. Technological factors can have both negative and positive impacts such as trend to cloud distribution which reduces the price but on the other hand reduces the product margin. Legal factors can negatively impact the company by the anti-trust law in the IT Industry that reduces the credibility of the IT industry in Australia. Environmental factors such as ecological approach and waste management can have positive impact on Atlassian Corporation (Fern Fort University 2019). (Please refer to Appendices 1.1)

1.2 Industry Challenges

Atlassian’s industry challenges, have been discussed by using Porter’s five forces model. The managers in Atlassian Corporation can use it to develop profitable opportunities and explore a strategic position in IT industry (Hubbard et al 2019, P. 75).

  (Fern Fort University 2019).

New entrants in IT services can put pressure on Atlassian through reducing their costs, lowering their price and providing new value propositions to their customers. To tackle the threats of new entrants, they can innovate new products to customers which not only brings new customers but also can keep the old customers. Atlassian can build capacities by researching and developing that allow them to keep defining the standards and will reduce the entrance of new players in the firm. The higher supplier bargaining power can lower the profitability of IT service. Atlassian can build an efficient supply chain by having more suppliers to cope the bargaining power of its suppliers. Also by using different materials to design products and if the price of one raw material increase then they can shift to another.

Atlassian’s long term profitability is directly influenced by their buyers’ bargaining power. The customers can bargain and seek discounts if they are smaller and more powerful. To reduce their bargaining power, Atlassian can build a large base of customers that reduces the customer’s bargaining power and provides opportunities to increase sales. Substitute products or services also can influence the profitability of the Company, for example Google Drive and Dropbox are substitute to dearth of hardware drives. Atlassian can decrease the impact of it by being service oriented instead of product oriented. Also by understanding the customer’s core need they can provide batter product or service to them. Atlassian is operating in a very competitive industry and rivalry among the competitors can reduce the price and profitability in the industry. Atlassian need to build a long term and sustainable differentiation, and also can collaborate with the competitors and rather than competing for the small market they can increase the market size. Atlassian’s managers can use the Porter Five Forces to better understand the game changing trends and rapidly respond to exercising the new opportunities (Fern Fort University 2019).

1.3  Market Forces

Atlassian’s traditional market is still its core target market and looking forward to expand its product and service capabilities. The Company has obtained major influx in Fortune 500 companies and plans to influence Fortune 500,000 companies now (Brookes & Simons 2015).

1.4 Internal Environment

IT and software are changing the world and Atlassian is at the centre of this industry. Atlassian’s company is driven by honest values, strong culture and consistent revenue growth, operating successfully to free the potential of every team. Brett Jackson, Atlassian’s product director, states that the Company’s mission is building a different software company that listens to the customer’s expectations and solves their problem (Brainmates 2019). Atlassian’s company culture and product strategy are trying to create unique value for their customers. Atlassian’s product are easy to adopt and use with affordable prices. The Company’s culture of innovation, openness, and accountability for customers, establishes an environment that consistently driving the product leadership, and low-cost distribution. The figure below indicates the Atlassian’s culture that is exemplified by their core values (Atlassian 2017).

Giles (2016).

Element 2: Business Model

2.1 Business Acquisitions

Atlassian has acquired AgileCraft recently. It is a service that helps enterprises to plan the strategic projects and work-streams. In 2018, the Company acquired OpsGenie and Trello in 2017 which was the company’s major acquisition (Atlassian Corporation 2019). 

2.2 Business Model

Atlassian’s unique business model is a mass market business model. It has many consumer segments that representing specific business functions. It means it can offer different business function within the organisation. The company has built the software ecosystems for different business segments that each of them representing a specific business function (Atlassian Corporation 2019).

(Asay 2014).

2.3 Value Proposition

Atlassian is offering the value propositions such as price, customisation, cost and risk reduction, and convenience (Careers at Atlassian 2019). Atlassian demonstrates strategic capabilities to empower its future success and customer value proposition (Atlassian Corporation 2019). 

Element 3: Organisational Capabilities

According to Atlassian annual report, their key success in the firm is their capabilities in producing tools for extenders and developers, flexibility, customer satisfaction, their performance and their scalability association. These capabilities enable the company to compete with the competitors such as Microsoft, Google, IBM, and etc. Atlassian’s other capability which is deploying in the cloud, enables them to enhance traction in cloud space and defeat the competitors (Atlassian 2016). Atlassian has capability to provide service to technical, software and business teams. The Company’s data centre solution provides different services to all their customer ranges from individuals to well established enterprises (Peachy Essay 2018).

Element 4: Management of Key Stakeholders

Atlassian keeps an ecosystem of partners and key stakeholders who create and sell add-ons for the company’s services and also provide professional assistance to the customers. Atlassian’s main products such as Jira and Confluence assist managers in better managing their stakeholders (Atlassian Corporation 2019).

Element 5: Organisational Performance

Analysing Atlassian’s performance requires a comparison with company’s peer group within the industry. Companies such as Fildessa group plc, Salesforce.com, New Relic, and etc. are some of Atlassian’ peer group based on their business line, performance and business size. In comparing Atlassian’s key profitability and valuation ratios to their competitors, Atlassian have exceeded the peer average in operating and net margin for couple of years which indicates that the Company’s operation is more efficient than the peer group. Atlassian’s return on capital and profitability ratios are higher than the peer average and their customer acquisition costs are lower than the peer group. Comparing Atlassian’s performance to competitors in the last couple of years indicates that the Company is outperforming (Atlassian Corporation 2019).

Sustainability

To analyse Atlassian’s sustainability, this report refers to the Company’s approach to its people, profits, and planet. Atlassian is proud of its reputation to fascinate and keep its human resources for a long term. Atlassian hires its staff selectively and works hard to retain them and reduce the employee turnover. Atlassian is economically sustainable and can stay in the business for a long term. It contributes not only to its own profits but the economic environment in which it operates and provides extensive seed funding for other technology businesses in Australia. Atlassian is a well-known company to be responsible to the biosphere. The Company has provided significant environmental benefits by delivering its products and services via the internet and cloud which not just saves money but also provides an environmental friendly alternative to the organisations and enable them to achieve environmental efficiency. Atlassian has done volunteer works to assist with removal of exotic weeds and bush regeneration in the Sydney region (Atlassian Corporation 2019) & Wehner (2016).

Forward Plans

In order to expanding the business in future, Atlassian has four ways to develop and expand; First, by adding users by team’s growing or adding new teams. Second, additional products cross sell or introduction for existing costs. Third, more instances of products already using as adopted across company for different purposes. Fourth, add-ons from marketplace, increase value and stick to own products (Brookes & Simons 2015).

Conclusion

This report has analysed and evaluated Atlassian strategy management approaches and focused on how Atlassian applies the strategic management theories and toll in its business. The report has focused on key elements of business strategy and has evaluated five elements of business strategy to figure how Atlassian approaches them. The key elements include: 1. Environments (internal and external forces, industry challenges and market forces), 2. Business model (acquisition and value proposition), 3. Organisational capabilities, 4. Management of Key stakeholders, 5. Organisational performance. Atlassian’s sustainability has analysed by evaluating the company’s approach to its People, profits, and planet. Then looked at Atlassian’s forward plans and some recommendation has been made in order to achieve the company’s future plans.

Recommendations

A new opportunity for Atlassian is to invest more in HR that enables the company to protect competitive advantage of its company culture. Atlassian can use its unique activities and culture to differentiate itself from the competitors because these are not replicable by them. The Company can invest more in marketing because it will increase sales and add value to the company’s core products. The last recommendation is to expand the company to the countries that willing to gain emerging markets of technological start-ups and knowledgeable workers (Carlson 2017).

References

• Asay, M 2014, Atlassian’s upside-down business strategy: Could it work for you?, TechRepublic, viewed 7 May 2019, <https://www.techrepublic.com/article/atlassians-upside-down-business-strategy-could-it-work-for-you/>.
• Atlassian Corporation Plc PESTEL & Environment Analysis 2019, Fern Fort University, viewed 5 May 2019, < http://fernfortuniversity.com/term-papers/pestel/nyse4/3965-atlassian-corporation-plc.php>.
• Atlassian Corporation Plc Porter Five Forces Analysis 2019, Fern Fort University, viewed 4 May 2019, < http://fernfortuniversity.com/term-papers/porter5/analysis/3965-atlassian-corporation-plc.php>.
• Atlassian Corporate Website 2019, viewed 1 May 2019, <https://www.atlassian.com/company>.
• Atlassian 2016, Team Annual Report, viewed 3 May 2019, <https://s2.q4cdn.com/141359120/files/doc_financials/2016/Q4/Atlassian-FY2016-Annual-Report.pdfA>.
• Atlassian 2017, Team Annual Report, viewed 3 May 2019, <https://s2.q4cdn.com/141359120/files/doc_financials/2017/AGM/2017-Atlassian-Corporation-Plc-Annual-Report-and-Accounts.pdf>.
• Careers at Atlassian 2019, Cleverism, viewed 7 May 2019, <https://www.cleverism.com/company/atlassian/>.
• Carlson, R. M. (2017). Atlassian: Analysis and strategic recommendation (Undergraduate professional Thesis). University of Montana Missoula, viewed 3 May 2019, <https://scholarworks.umt.edu/cgi/viewcontent.cgi?article=1179&context=utpp>.
• Giles, B 2016, ‘Core values posters’, Evaluation Partners Blog, viewed 3 May 2019, <https://www.google.com/search?q=Atlassian%27s+Internal+Environment+(vision/mission/values/culture)&rlz=1C1CHZL_enAU692AU692&tbm=isch&source=iu&ictx=>.
• Hubbard, G, Rice, J & Galvin, P 2019, Strategic Management 6th edn, Pearson Australia, Melbourne Victoria.
• Strategic Management: Atlassian Case study 2018, Peach Essay, viewed 7 May 2019, <https://peachyessay.com/sample-essay/strategic-management-atlassian-case-study/>.
• Cannon-Brookes, M & Simons, J 2015, The Atlassian Business Model, viewed 7 May 2019, <https://www.youtube.com/watch?v=Exx_LVWpNII>.
• Wehner, Clayton 2016, ‘Atlassian: A Sustaining Organisation’, bluetrain, viewed 5 May 2019, <https://bluetrainenterprises.com.au/blog/2016/03/03/atlassian-a-sustaining-organisation/>.
• 5 minutes with Brett Jackson, Director of Product (Atlassian) 2019, Brainmates Blog, viewed 2 May 2019, <https://brainmates.com.au/general/5-minutes-with-brett-jackson/>.

Appendices