As it prepares to abandon its on-prem server products, Atlassian is content. Users? Not so much

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In October 2020, Atlassian announced that it would extremity support for its server products connected February 15, 2024. With that deadline now little than 5 months away, nan Australian developer is contented it's done nan correct point by customers – yet has warned investors nan move is simply a consequence to revenue.

Atlassian erstwhile offered its wares successful 3 forms. The preferred action is from nan cloud, successful accepted software-as-a-service style that sees Atlassian negociate package and infrastructure. Users tin besides bargain datacenter licenses that renew annually and require self-management. Until 2021, you could besides get server products nether a perpetual license, but users who wanted support and upgrades request to pay.

In 2020 Atlassian decided it wanted to beryllium a unreality company. It based on that doing truthful would present a amended acquisition for customers, and flagged deprecation of its server products.

By trying to service some audiences we did neither well

"Our first products were servers," Atlassian main gross serviceman Cameron Deatsch told The Register. "This was really each package merchandise worked earlier nan internet."

But astir 13 years agone Atlassian started to waste cloudy software, and according to Deatsch "realized early connected that SaaS is nan early of endeavor software, broadly."

The Australian vendor kept its SaaS and server products astatine parity, but didn't find that easy.

"By trying to service some audiences we did neither well," Deatsch admitted.

In 2016, Atlassian truthful divided nan codification guidelines for its SaaS and server products – a modulation that Deatsch conceded different package companies had done years earlier. While Atlassian believed its early laic successful nan unreality and SaaS, nan server products were kept alive.

"The biggest logic we did it is we were not afloat tin of handling each our server customers successful our unreality astatine that time," Deatsch told The Register. Privacy, information sovereignty, and nan situation of nailing privateness and regulations for illustration nan US Health Insurance Portability and Accountability Act(HIPAA) besides meant Atlassian wasn't assured it could present for each customers.

But by 2020 it was fresh to spell all-in connected SaaS – for astir customers.

"Even pinch 3 years to hole for these changes, we understand that not each customer will beryllium fresh to make nan move from our server products to our unreality products. And, immoderate of you person business requirements that mightiness forestall you from ever operating successful nan cloud," wrote co-founder and co-CEO Scott Farquhar.

Atlassian truthful persisted pinch its datacenter licenses, to guarantee it continued to connection an on-prem option.

But nan vendor didn't alteration nan licensing tiers for datacenter licenses, which commencement pinch a set that covers betwixt 1 and 500 users – astatine a level price, sloppy of really galore group really usage nan software.

Owners of server licenses looking for an on-prem migration way truthful faced nan imaginable of paying for 500 seats – which costs astatine slightest a 5 fig sum each twelvemonth – moreover if they person galore less users.

Deatsch told The Register that determination was made because Atlassian focussed connected nan needs of larger users arsenic it continued improvement of nan datacenter products.

Atlassian besides felt that larger users mightiness person method reasons that prevented them from adopting its SaaS, but that smaller customers astir apt did not. Deatsch added that orgs pinch astir 200 users will find it's cheaper to adopt nan SaaS alternatively than datacenter licenses – apt moreover much truthful aft full costs of ownership calculations.

Yet Atlassian happily offered server licences priced for up to 10, 25, 50, 100, 250, aliases 500 users.

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Some customers who can't aliases won't adopt Atlassian's SaaS aren't happy because nan datacenter licenses mean they look value rises.

Users who are caught successful that trap show The Register that repeated requests for elasticity person gone unanswered, and that Atlassian knows immoderate customers look an intolerable prime – but nan vendor isn't budging.

"I deliberation location are tons of mini users astatine nether 500 seats who don't cognize what to do," said Thomas Murphy, a elder head expert astatine Gartner. Murphy cited different vendors' migration plans that connection extended support, particularly for civilization apps. He's unsure why Atlassian chose not to do so.

Another root of interest is that Atlassian's improvement plans are now very overmuch unreality first – arsenic typified by past week's acquisition of asynchronous video outfit Loom and informing users it will only beryllium integrated pinch unreality products. Holders of datacenter licenses won't get nan apparently revolutionary caller embedded video features.

Some users who contacted The Register told america they've started, and paused, migrations distant from server products because nan process was not easy.

Atlassian's Deatsch told The Register migration rates person exceeded nan vendor's forecasts.

"We thought enterprises would beryllium slow, but they were fast," he said. "Many sewage unreality mandates from their CIOs."

His extremity for nan adjacent 5 months is to guarantee that each remaining server customer "knows their options and understands incentives for illustration migration tools, discounts, and extended trials."

Revenue risk

But Atlassian is besides bracing for nan effect of customers who determine to extremity paying for server support.

In nan company's astir caller letter to investors, co-CEOs Farquhar and Mike Cannon-Brookes named "two important factors which whitethorn effect our gross results successful FY24."

One was macroeconomic uncertainties. The different was "customer purchasing and migration decisions related to nan end-of-support for our server offering," which nan brace warned will "drive quarter-to-quarter variability successful our unreality and datacenter gross maturation rates depending connected erstwhile and really our server customers yet take to migrate: nonstop to cloud, nonstop to datacenter, aliases to immoderate operation of unreality and datacenter.”

The co-CEOs admitted "some information of our Server customers will not migrate successful FY24." Or possibly they'll conscionable discontinue Atlassian altogether.

Deatsch declined to stock nan number of server users yet to migrate, but said Atlassian is definite its determination to spell cloud-first was correct.

"It was a monolithic strategical bet, but astatine each measurement on nan measurement we corroborate it is nan correct call," he said. ®

Bootnote: If you're yet to migrate your Atlassian server and aren't happy pinch your options, contact nan writer here.