people collaborating
Atlassian's move to buy Trello confirms the consolidation taking place in the collaboration software industry. PHOTO: Gerry Roarty

Atlassian’s $425 million acquisition of task management provider Trello this week could signal increased industry consolidation with more enterprise collaboration chat providers buying asynchronous collaboration tools, an analyst told CMSWire.

“Vendors that are strong in asynchronous collaboration will probably try to go out and find ways to acquire solutions for synchronous collaboration, and the other way around. We’re all working together, but not just in real-time. There is asynchronous collaboration because of multiple time zones and other aspects of professional time," said Adam Preset, research director and digital workplace analyst at Gartner.

Broader Collaboration Portfolios

Adam Preset
Adam Preset

Acquisitions of these kinds allow vendors like Atlassian to grow their identities beyond bread-and-butter products — in Atlassian’s case, that’s JIRA and Confluence, which the company's annual report indicates generates two-thirds of its income, and HipChat.

“One of the other ways these acquisitions function is to promote a sense of identity to the market at large,” Preset said. “The acquisition by Atlassian of Trello shows that Atlassian is a lot more than HipChat, and not just an alternative to Slack. Rather, it shows Atlassian has a vision of how people could collaborate and what they’re doing is improving their portfolio to give customers better outcomes.”

This type of consolidation isn't new, he added. Video-conferencing and collaboration provider Cisco Systems bought Heroik Labs' Worklife, which is designed to help enterprises prepare for and run effective meetings, for example.

For Cisco, acquiring Worklife meant improving the workplace meeting beyond the real-time capabilities (like video) of the actual meeting.

Acquisitions Heat Up

Other digital workplace experts agreed Atlassian’s big move certainly won’t be the industry’s last of its kind.

According to 451 Research, buyers spent $3.7 billion in this space in 2016, more than twice the spending of any year since 2007.

In 2007, Cisco’s $3.2 billion WebEx buy accounted for nearly all of that cash that year.

Last year, though, no acquisition crossed the $1 billion mark but it was still a busy year for technology buyers in collaboration. And here comes Atlassian, just two business weeks into the New Year. Researchers attribute the growth to the rise of mobile devices, remote workforces and Software-as-a-Service (SaaS) delivery models.

“I’m sure there will be more to come,” said Stacey Epstein, CEO of San Francisco-based Zinc (formerly Cotap), which provides a mobile enterprise collaboration app. “No question, this is a hot space. All of cloud, but also collaboration, is ripe for acquisition.”

Stacey Epstein
Stacey Epstein

After all, someone has to pay for the enterprise collaboration market’s hefty forecasts: MarketsandMarkets has it at $49.5 billion by 2021.

Some notable acquisitions last year included:

Microsoft, which debuted Microsoft Teams last fall, has been quiet on acquisitions in the space since its blockbuster $8.5 billion Skype (2011) and $1.2 billion Yammer (2012) deals. 

Epstein predicts Microsoft getting back in the game with more “building and buying.” 

Consolidation Is 'Natural and Necessary'

Atlassian's move to buy Trello only confirms the consolidation that's taking place in the collaboration software industry, said Robert Bellmar, EVP of Business Operations at West Unified Communications Services, based in Omaha, Neb.

“Consolidation is a natural and necessary phase for any industry or organization, having successfully occurred in multiple industries before, including diverse sectors like automotive, healthcare, music and personal computing,” Bellmar said. “Despite the apprehension expressed by some skeptics, consolidation in collaboration space will be highly beneficial."

Robert Bellmar
Robert Bellmar

This type of consolidation allows customers to have higher-quality choices when selecting collaboration tools for their organizations, he added.

“When competitors merge overlapping products and services,” Bellmar said, “customers benefit. This not only minimizes concerns about the legitimacy of a vendor, but also the uncertainty around support or scale. IT leaders typically prefer established vendors with financial stability and a consistent track record. By decreasing noise in the marketplace, consolidation leaves customers with only the highest quality options."

Improving Workplace Communication

Mergers and acquisitions aside, the winners in this space are those that provide technology that makes people work better together.

So who’s going to win in 2017?

Epstein of Zinc said with a laugh she wants no one but Zinc to emerge victorious in the enterprise collaboration space.

“The winners,” she said, “will carve out their own niche in what I call neglected industries and that’s what our strategy is about. Hospitality and healthcare and some of these other companies, these employees all have phones and they know how to text. But they’ve never had anything that connects them to the enterprise.”

Jeff Corbin, CEO of APPrise Mobile, a native mobile app platform for mobile communications based in New York City, said the landscape of companies vying to offer a mobile messaging solution in the workplace is becoming increasingly crowded as can be seen by the “behemoths” like Facebook and Microsoft offering such solutions.

Jeff Corbin
Jeff Corbin

“The company best positioned to succeed in the enterprise should be Microsoft given their significant penetration into businesses via their Office suite,” Corbin said in an interview before the Atlassian acquisition of Trello. “Slack and HipChat have taken a bottom-up/grass-roots approach to trying to penetrate the enterprise focusing on groups of workers. Workplace by Facebook is still perceived as consumer-focused, although it probably is too early to know and one shouldn’t doubt Facebook’s ability to succeed.”

The question that should really be asked is whether messaging or chat is the “be-all/end-all” when it comes to mobile communications and collaboration, Corbin said.

“While chat is a small and important component of the mobile communications opportunity,” he added, “it is our opinion that the focus should be on the delivery of content via mobile. From there, the chat will come.”