Businessmodel of Atlassian

Customer Segments

Atlassian has a mass market business model, with a multi-sided market; most of its consumer segments represent specific business functions and not industries – this means that its offerings can be used in different ways across different functions in the same organization. The company has taken advantage of this by building software ecosystems for various business segments, each representing a particular business function.

• Software (JIRA Software, BitBucket, Bamboo, Confluence, HipChat) – The company’s key offering, the JIRA Software, is aimed at streamlining software development. A number of the other offerings of the company, such as Bamboo and BitBucket, are targeted specifically at coders and software developers.
• IT (JIRA Software, IRA Service Desk, Confluence, HipChat) – The JIRA suite, including JIRA Service Desk and JIRA Software, allows IT teams to quickly respond to their organisation’s needs by maintaining effective feedback channels (through the Service Desk) and allowing for efficient and managed workflows (through the Software).
• Marketing (JIRA Core, Confluence, HipChat) – The company’s project management tools, including JIRA Core and Confluence, allow marketing teams to keep track of data and marketing material.
• Finance (JIRA Core, Confluence, HipChat) – JIRA Core is used by some of the largest financial institutions globally to manage financial processes such as procurement and financial reporting.
• Operations (JIRA Core, Confluence, HipChat) – JIRA Core allows operations managers to keep track of tasks, personnel, and deadlines. Confluence allows managers to set and communicate policies and operations documents.
• Human Resources (JIRA Core, Confluence, HipChat) – The Atlassian software suites, including JIRA Core and Confluence, can assist HR managers from recruitment and onboarding to personnel management.
• Legal (JIRA Core, Confluence, HipChat) – JIRA Core allows legal teams to create and manage legal materials including contracts and policies – these materials can be disseminated via Confluence. ### Value Proposition

Atlassian offers the following value propositions: Customisation, Price, Cost Reduction, Risk Reduction, and Convenience.

• Customisation – Atlassian recognizes that each business has different requirements and allows each business the freedom of choosing which of its products it wants in whichever combination it wants – the integrated nature of the products affords consumers this flexibility. This possibility of customization is furthered by the Atlassian Marketplace, where over 1,700 add-ons for the key products may be purchased to add additional features.
• Price – Atlassian works on a high-volume low-cost model. It spends far less than its competitors on sales and marketing, selling directly to consumers via its website. This allows it to charge far less for the same offering.
• Cost and Risk Reduction – By giving managers the ability to manage and further streamline their workflows, Atlassian provides a cost reduction to its clients by eliminating work-hours spend on unnecessary administrative tasks. In the same vein, the ability to manage workflows reduces the risk of mistakes or oversight in management.
• Convenience – By offering an integrated solution, Atlassian allows its clients to perform multiple functions on the same integrated platform. ### Channels

Atlassian’s only sales channel is direct online sales through its website. It does not have a sales team and spends only 15% to 20% of its revenue on sales and marketing. Compare this to a common figure of over 100% of revenue as marketing costs spent by tech companies within the first few years of an IPO.

Customer Relationships

Atlassian relies mainly on self-service – its website has a range of self-help material including product guides and live training. It also relies on community, through a community Q&A forum where clients can post questions which can be answered by other clients or by Atlassian staff, and through maintaining an experts program through which independent expert partners can sign up to assist Atlassian clients while showcasing their own products or services.

For personal assistance, Atlassian offers, at a fee, enterprise support services that provide technical account management through direct access to senior engineers in the company.

Key Activities

Atlassian’s key activity is the creation and maintenance of an integrated platform for customers to use for a variety of business functions.

Key Partners

Atlassian maintains an ecosystem of partners that create and sell add-ons for its services and that provide expert assistance to its clients. Some examples of partners include Adaptavist, Comalatech, and Zivra, all of which also serve Fortune 1000 companies.

Key Resources

Atlassian’s key resource is its people – it has over 1,400 employers in 6 offices in 5 different countries and spends over half of its expenses on R&D.

Cost Structure

Atlassian, unlike most other tech companies, spends only 15% to 20% of its revenue on sales and marketing. Its other key cost driver is research and development, at 40% to 45%. General and administrative expenses take up around 18% of total revenue.

Revenue Streams

Atlassian earns from subscription, maintenance, and perpetual license fees:

Revenue Stream Amount in FY 2015 ($’000) Proportion* Subscription 85,891 26.9% Maintenance 160,373 50.2% Perpetual License 57,373 17.5% Other 15,884 5.0% Total 319,521 100% *Figures are rounded and thus do not tally