Enterprise

Why Atlassian is a wild card in Microsoft and Salesforce's bid to own workplace collaboration

The company is in the midst of a difficult cloud transition. But co-CEO Mike Cannon-Brookes has a plan to win.

​Atlassian co-founder and co-CEO Mike Cannon-Brookes.

Atlassian co-founder and co-CEO Mike Cannon-Brookes is leading the company's transition.

Photo: Atlassian

Atlassian has increasingly been sandwiched between two sides of the software industry: application providers that target specific job functions and platform providers that aim to support broad collaboration within an enterprise.

Now, it's wading deeper into the latter, which means taking on Microsoft and Salesforce even more directly. Its latest product releases expand its offerings outside the world of IT and begin to bring together its disparate application suite into a common dashboard.

Among the announcements the company is making at its Team 2021 conference that kicks off on Wednesday is the launch of Jira Work Management, which takes Atlassian's popular service for developers and expands it to HR, finance and other departments. It's also announcing Team Central, a repository of sorts for employees to check items like project statuses and weekly team priorities.

Combined, it's a bid to facilitate deeper interdepartmental collaboration, which is effectively what Teams and Slack are trying to own. The difference, according to co-CEO Mike Cannon-Brookes, is that those two companies will only serve as the entry point to get to the deeper work that occurs on apps like those Atlassian sells.

"These are connection applications. They're a signal that things can move through and you can do slightly more things in them," he told Protocol. "But the idea that your world of work is going to change from a browser to Slack" or Teams isn't true, Cannon-Brookes added.

It's a reflection of the next stage of the battle over collaboration software. As Microsoft and Slack angle to keep users on their respective messaging services as much as possible, application providers like Atlassian are increasingly adding native features that promise to draw users away.

But in Atlassian's case, the company has had both organizations in its sights for years. Some products are very similar. Atlassian, for example, acquired data visualization firm Chartio in February, a deal that positions the company to offer something akin to Microsoft's productivity graphs.

There's also the backdrop of Atlassian trying, and failing, to build its own messaging service with HipChat and Stride, which ended with Atlassian selling those services to Slack in exchange for a stake in the company. It's unclear how that relationship might change as Salesforce, which has some applications that compete with Atlassian's, prepares to absorb Slack.

Even Atlassian's motto — to "unleash the potential of every team" — is a hop, skip and a jump away from Microsoft's recent ad campaign.

For now, Atlassian continues to rely on Teams and Slack as key ways to reach customers. Its new conversational ticketing system it acquired last year, Halp, is built for both. And it's taking a similar approach to both Slack and Microsoft by making integration a priority, a key feature for the future as the number of application providers explodes.

"With the SaaS landscape as it is, we are all going to need to learn a lot more about integration than we ever have," said Cannon-Brookes.

Cloud transition

Part of that is due to Atlassian needing to focus on overcoming its own internal struggles. Despite a blockbuster year and a rosy outlook — the company saw sales increase 33% to $1.6 billion last year, and plans to hire 1,000 workers — Atlassian faces the difficult task that other legacy application vendors are also grappling with: how to move customers quickly to the cloud.

"Our largest investment right now is making sure we can handle all of our customers in the cloud," Chief Revenue Officer Cameron Deatsch told Protocol.

It's a journey that Cannon-Brookes recognizes will take multiple years. While Atlassian has made progress in navigating that challenge, it hit a stumbling block in its most recent quarter. Revenue in the three months through March is now expected to hit as high as $572 million, better than the company previously outlined. But a portion of that surge was due to a sharp increase in sales of on-premise licenses, a phenomenon that Cannon-Brookes attributes to the rush among users to purchase before a looming price increase and the elimination of some on-premise versions of its software.

"It's not a concern," he said. "We understand this transition is not going to be linear."

To support that transition, Atlassian spent years rearchitecting many of its products to one common, cloud-based platform supported by AWS, a move that Cannon-Brookes says enabled the company to more quickly develop new products.

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