Atlassian co-CEO Scott Farquhar speaking at the AWS Sydney Summit.

Atlassian co-CEO Scott Farquhar has shed light on a major challenge facing the $8.7 billion Australian-born software giant, as its customers shift to the cloud, and played down the chances the company will imminently pursue more acquisitions.

Speaking before an audience of technology industry executives in Sydney on Wednesday, Mr Farquhar outlined his ambitions for Atlassian to "survive for 100 years" and not succumb to the traps that many dominant, brand name corporations fell into in recent decades.

"It's actually easier to build a big company than it is to build a long-term company," he said at the annual Amazon Web Services (AWS) Summit in Sydney on Wednesday.

"Companies today are optimised for the current environment they live in, and when change happens, as it inevitably does, companies can't adapt.

"It's not the largest company, it's not the most successful company, it's not the strongest company, it's the most adaptable companies that are going to survive".

To that end, he said Atlassian was already taking steps to transform its business.

For example, the company is in the process of moving its global operations from being hosted on its own servers, to being hosted in the cloud by AWS, the outsourcing vendor famously used by Netflix and a string of other giant corporations.

This comes as Atlassian expects many of its customers to shift from using its software products hosted on company-owned servers to versions hosted remotely in the cloud over the next decade.

"About a third of our revenue, give or take, comes from the cloud," he later told journalists in a briefing.

"There are many companies that haven't yet adopted the cloud and want to choose to run something internally for various reasons.

"We have invested heavily so we have leading cloud versions of our products ... we see the future. In 10years time I would think 90 per cent of our customers will be in the cloud."

Atlassian in January paid $US425 million ($561 million) to acquire Trello, a collaboration and project management tool, the biggest of the 18 acquisitions it has made in its history. Trello is used in creative industries, as distinct from the company's flagship JIRA software, which is typically used by technical teams of software developers and IT help desks.

"For us,it fits in our portfolio really well," Mr Farquhar said of the acquisition. "The integration is going really well.

"At the moment we wouldn't do any more acquisitions, but we could do in the future. We want to make sure any acquisition we do is really successful, so we don't do big ones back to back."

Research house Gartner estimated last year that up to $US1 trillion in IT spending by companies could be affected by the shift to the cloud by 2020. It has also estimated that 80 per cent of software vendors will have shifted to cloud-based, subscription-based selling models by that point.

However, there can be a short-term margin impact for software companies making this shift. This is because installed software typically involves higher upfront fees than subscription-based products.

Referencing fallen corporate giants such as the airline Ansett and grocery chain Franklins, Mr Farquhar added: "When things changed they didn't adapt to the changing environment. And as a result they are no longer the large companies they once were."

See the article here:

Atlassian aims for corporate immortality in the cloud - The Australian Financial Review