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Summary

At the Atlassian Summit 2018 event in Barcelona, the company made a number of announcements. Notably, following its decision on July 26, 2018 not to compete in the real-time communications and developer chat space and withdraw its products HipChat and Stride, it announced a partnership with Slack instead. It is strengthening its presence in the ITSM space with the launch of Jira Ops, which facilitates incident management, and it has also acquired OpsGenie, which specializes in incident alerting and has a wide range of tool connectors. Together with its StatusPage acquisition, these offerings tie together well and expand on Jira Service Desk, Atlassian’s help desk. Atlassian is an unusual company in the high-tech space, because it is without the usual sales pressures, and its steady growth is a testament to its approach. The expansion into the ITSM space will cause disruption to the incumbents

Ops is an important area for Atlassian’s growth

The introduction of Jira Ops creates an out-of-the box, streamlined process for incident management in IT operations. It has ready-built connectors to a range of tools, mostly in the Atlassian ecosystem. OpsGenie, however, expands much wider, and feeds into the Jira Ops process, which provides timely and easily discovered incident information. Atlassian products are built on the concept of a unit of work that is recognized across the complete end-to-end lifecycle and passed from tool to tool. DevOps, the bringing together of development and operations in a coordinated and collaborative embrace, is a huge opportunity for Atlassian.

Atlassian does DevOps and ALM without the labels

Atlassian has software offerings in the application lifecycle management (ALM) space but chooses not to call itself an ALM company. At the event, the company's co-CEO Scott Farquhar talked about the ops opportunity without once mentioning DevOps. This understated approach is in keeping with Atlassian’s style of how to delight its core clientele (the people who do the work) without hype or overselling. Its biggest selling products (Jira, Trello, and Bitbucket) typically enter a customer’s development environment and expand to the broader IT department and also with products such as Confluence, Jira Service Desk, and other ALM point products from its portfolio. Jira holds these together as the process and management hub so versatile that it often further expands into the customer’s business as a business process tool.

The key to understanding Atlassian is that it never chases big-ticket sales orders, but incrementally builds its customer base and never loses sight of keeping its customers satisfied. This approach also means that it can dispense with a traditional sales force. The downside is that its expansion is steady (a 35% to 40% year-on-year growth rate), with the company executives having the patience for the long game. The upside is that this surprising model works and has continuing growth.

The changes taking place in IT with cloud-native computing has been anticipated by Atlassian with its move to the cloud a few years ago, and over 80% of its new customers use its cloud services. The company is also alert to the use of artificial intelligence (painfully with the termination of its chat products), a key factor in the success of Slack. Farquhar said Atlassian is researching AI and already using it in Jira Service Desk.

Atlassian is an outlier as far as technology companies go. It has revenue of $0.87bn and yet has no sales force in the traditional sense, but instead has "concierges", who will point out to large customers the potential of connecting or expanding their Atlassian products. The company continues its growth trajectory from its launch to the present with an unchanged company culture. Atlassian has a focus on enabling open, collaborative team work and has a unique corporate culture in the high-tech world, which propels it at a moderate and steady pace (profitable from the start and without the need for a VC backer) and therefore spared the high pressure a VC typically brings.

Appendix

Author

Michael Azoff, Principal Analyst, Information Management

michael.azoff@ovum.com

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