Where is the Atlassian Bundle?

Things could be better for the Aussie ALM giant. Atlassian's stock price is down about 49% over the past year while competitors Microsoft (-20%) and GitLab (-25%) are weathering the tech storm better. 

Revenue growth at Atlassian remains strong at about +30% year-to-year and they appear to be executing well on their overall strategy of moving from selling on-premises software to SaaS - claiming 55% year-to-year growth in cloud offerings in recent earnings.

However, while Jira remains ubiquitous and Confluence is common, I've rarely encountered most of their other products in the wild. There is a huge portfolio of (relatively) underperforming products. Atlassian Service Management is a long way from challenging ServiceNow for dominance, BitBucket is a distant 3rd for source control, and many offerings seem consigned to total obscurity.

Meanwhile, Atlassian's position is more fragile than you'd expect. Tool fatigue is punishing best-of-breed vendors and StackOverflow's survey data suggests that Jira is more than "the standard" than "loved".

Rundle Time

The play here is to follow Amazon's playbook with Prime and combine a range of decent offerings with a dominant one to increase pricing power, attack new markets, and drive growth in subscriptions. Prof G's "Rundle" is a recurring revenue bundle and I'm shocked we haven't seen it from Atlassian yet.

Competitors blazed the path

Microsoft's Azure DevOps has a $52/user/month bundle with Git, Test Authoring, Work Management, and more. Compute and Storage heavy offerings are offered as consumption metric'd add-ons.

GitLab is all in on this path offering a $99/user/month Ultimate Edition that includes a tightly integrated set of DevOps capabilities in damn near every niche.

Even at IBM, token licensing in the DevOps space drives customers to subscribe to a set of tools and in exchange for being able to shift across products as needs change.

Meanwhile, Atlassian is charging $15/month for a Jira user. There's room to go get more.

Killer insights

Value Stream Management is a growth area in the wider IT tooling market which Atlassian has targetted with Compass. For a customer who adopts a full, cloud based bundle the opportunity to deliver insights is unparalleled for Atlassian. They have the fewest integrations required, have perfect Jira data access, and as customers adopt ITSM offerings are well-situated to provide accurate outage and remediation data. You would be hard-pressed to find a better data set to use to predict which code changes are riskiest.

Combining engineering data for when features are ready with Trello's tasks tracking the business getting ready to launch those features would be differentiating and provide value flow data that a COO could act on.

Building off of Jira's ubiquity and increased SaaS footprint, Atlassian can answer a question nagging at every IT leader's mind: "Are we as good as our peers?" With opt-in benchmarking, teams could be compared across companies and industries. Atlassian may even be able to recommend process changes correlated with higher performance.

The opportunity to deliver increased intelligence and insights would enable Atlassian's brand to shift from "good tools" to a Smart brand like Google's. It can make us more intelligent and effective in our work.

Breaking out of IT

It's clear that Atlassian intends to be a Work Management company beyond the IT department. A key challenge is Microsoft, particularly Office 365. Everyone has Office and so everyone is already Sharepoint user (blocking Confluence). Everyone already has access to Microsoft Tasks tools (blocking Trello) as well. Organizational splits where Sharepoint is used by the business while engineering uses Confluence are as common as they are wasteful. Providing access to a range of good tools could drive the wedge from IT out to the rest of the business. Long term, a partnership with Google's G-Suite is a plausible path to attack the Office juggernaut. In the meantime, a basic bundle can get the ball rolling.

The challenges are real

Initially, a bundle will appeal to those already using a number of Atlassian tools and could cause a short-term decline in revenue. Atlassian's relatively limited reliance on traditional enterprise salespeople means the "upsell to the bundle" path will need to be less hands-on than other B2B companies that have made the switch to rundles.

A bundle also benefits when all the products involved are actually tightly integrated and provide coherent user experiences. Given its history of acquisitions, there are likely rough edges across the portfolio that will require significant effort to smooth out.

However, Atlassian is currently going to bat with an antiquated business model of stand-alone products. Moving to a bundle should protect their vulnerability to "all-in-one" competitors like GitLab while positioning them for higher per-user deal values and expansion outside of their traditional enterprise IT base.