App stores have become commonplace in the software industry, but not as far as the software development life cycle is concerned. To change this, Atlassian, at its annual self-titled Summit in San Francisco last week, opened the doors to its new marketplace, where developers can access development process and collaboration tools to improve their agility.

Atlassian turned in its first hundred-million-dollar revenue year in 2011, an impressive feat for a company that was once considered an upstart by then-heavyweights Borland and HP. The company has attracted big-time investors from Accel Partners, and last fall it moved into a swanky new SOMA (the hot startup district South of Market Street) office in downtown San Francisco, complete with all the beanbag chairs, free sodas and granola bars you’d expect from a hip software company.

At the Atlassian event, third-party software and collaboration tool vendors demonstrated their products in the new marketplace. Indeed, on its launch day last week, the Confluence enhancement suite Zen Foundation was trumpeting a day-one site license sale to Walgreens, without any actual meetings between the pharmacy chain and the software vendor. This, claimed Atlassian cofounder and CEO Mike Cannon-Brookes, is the power of his company’s new business model for enterprise software sales: It’s about the quality of the tools, not the quality of the sales engagements, the lead generation or the giveaways.

Atlassian’s business model competes with open-source and free software tools, not with large enterprise software packages that cost six figures. “Our tools have to compete with free,” said Cannon-Brookes. “We have a customer base of people who’ve said, ‘I care about my tools.’ It’s strange more companies don’t say that.”

Thus, he said, it’s been a rough process for some of its initial marketplace vendors to meet their requirements. “Some [vendors] are a little upset, but we kept knocking them back, saying ‘This is not good enough yet.’ We run our QA guys over it, and we’re careful because everything in there has our brand on it, too.”

The Atlassian Marketplace also includes some enterprise-focused services and features that Grant said will help expand the company’s reach into the largest of development shops. Specifically, Marketplace purchases can be license-synchronized, so that only one purchase order per year is required to pay for Marketplace purchases. The alternative would be that each department purchaser would have to get a separate purchase order and check written up for each new plug-in the team wants to buy.

But just how will anyone make money on the Atlassian app store, when statistics tell us that the Top 10 applications in the iPhone or Android app stores are earning all the money? “The difference is, we’re not going to have a million applications,” said Cannon-Brookes. “Secondly, we’ve tried to make as many different ways of discovering applications. We tried to make the categories really intelligent, and based them on business function.”
Picking up on JIRA
As such, the growth of JIRA and Confluence since the founding of Atlassian in 2002 has come from the budget-friendly price and user-friendly focus. It’s spawned a vibrant ecosystem of users who’ve put the issue-tracking and wiki software to various uses, or expanded these platforms to include more and more of the software development life cycle.

In March, Atlassian released version 5.0 of JIRA, which opened up every data point in the issue tracker to the outside world via a RESTful API. This has been quickly utilized by third parties, some of which are even basing their futures on Atlassian’s platform.

In fact, two test management companies, QMetry and Zephyr, have dived whole hog into the JIRA platform to fill what they’ve both identified as a gap in the Atlassian world’s life cycle.

“JIRA was taking the shape of a platform,” said Samir Shah, CEO of Zephyr. “The ecosystem around their plug-ins was expanding because it was great for building little doodads that were plug-ins to the main product. What we saw missing in the Atlassian product line was core testing that needed to happen in a structured way, while they have all the pieces in place to dream it, design it, build it, ship it.”

Shah said he saw demand in the marketplace for test management solutions inside the JIRA platform. For the “build it” part, there are a slew of development tools that create ways to manage the entire development process, to get requirements, and to move things along. “What ended up happening with our customers, when it came time to do testing, they’d step out of JIRA, record their tests, and come back to JIRA,” he said. “For large enterprises, for companies that had JIRA, it was essentially a lot of people saying ‘Why should we even have jumped out of JIRA?’ ”

Shah then pushed his board and team to focus exclusively on JIRA as its platform of deployment and use. He said that, so far, this decision has been lucrative and allowed the company to continue growing.

QMetry has followed much the same path. The company offers its own take on Web-based test management, and Michael Wellborn, business development manager at QMetry, said this year’s sales targets are well over double the targets for 2011. The recent addition of RESTful item targeting in JIRA allowed QMetry to integrate even further into the issue-tracking system, and to tie test failures and successes to individual bugs.

Of course, there are many gaps that are filled by other JIRA-related tools, both from Atlassian and from third parties. There is burn-down chart plotting from GreenHopper, and Visio-like functionality of Creately. Atlassian’s new marketplace has something for just about everyone involved in the development process.

Software vendors aren’t the only ones hanging their futures on Atlassian’s rising star. Howard Tiersky, president of contract application development firm Moving Interactive, said that his teams open up JIRA and Confluence to the teams that contract their work. This allows their customers to have direct access to requirements and issues, and even gives them the ability to take a picture of the interface, draw a circle around an item, and visually describe a change, all within Atlassian’s ecosystem.

Tiersky said that opening his company’s issue tracker and wiki to clients has allowed them to “become part of our agile process. Clients would go, ‘Holy cow! This is much better! Can you help us become more like you?’ As a result, we’ve become kind of a consultant to our clients as to how to improve their agile practices.”