Atlassian is shutting down its data center product line and forcing all remaining customers to migrate to the cloud by March 2029, in a move that will affect thousands of enterprises still running the collaboration software on-premises.

The Australian software maker will stop selling new data center subscriptions to new customers by March 30, 2026, and end all data center license sales by March 30, 2028. Existing licenses will expire and become read-only on March 28, 2029, the company said in a statement.

The decision comes as Atlassian pushes harder into AI-powered collaboration tools that it says cannot be delivered effectively through on-premises deployments. With only about 1% of its customer base still on data center products, the company appears ready to sacrifice that remaining segment to focus entirely on cloud revenue.

Atlassian defends strategy as customer-focused

Atlassian said the decision reflects the company’s core philosophy. “The decision to EOL Data Center products is core to Atlassian’s value of ‘Don’t F&#k the Customer’ – something that guides every decision we make,” an Atlassian spokesperson said.

The company cited two key factors driving the timeline: “customer readiness for cloud within the timeframe” and “the value we can provide to customers in the cloud that far outweighs that in a data center.” The spokesperson said the company believes “this is ultimately the right destination for customers,” while acknowledging that “some of our customers are at different stages of this journey.”

When asked about extended support options, the Atlassian spokesperson said the company is “committed to offering extended maintenance for certain Data Center customers by exception after March 28, 2029, ensuring customers have the flexibility and support they need for a successful transformation.” However, the company provided no details about qualification criteria or pricing, with the spokesperson directing concerned customers to “reach out to their Atlassian representative or contact Atlassian online.”

AI features drive cloud-only strategy

Atlassian is betting that enterprise customers will accept the forced migration in exchange for AI capabilities that require cloud infrastructure. The company’s Rovo AI assistant, enterprise-wide search functionality, and what it calls the “Teamwork Graph” for connecting data across applications are all cloud-dependent features.

“By moving to the Atlassian Cloud Platform, our customers will immediately get access to world-class enterprise search, across Atlassian and third-party apps,” the company said in its announcement. Cloud customers can also “bring on Rovo as an AI teammate” and “break data silos that exist in data center products.”

Compressed timeline raises enterprise concerns

Industry analysts question whether the three-year timeline is realistic for large enterprises accustomed to longer technology lifecycles.

“On paper, three years may look workable, but in reality, this is compressed for global enterprises used to five- to seven-year lifecycles,” said Sanchit Vir Gogia, chief analyst at Greyhound Research. “Microsoft and Oracle typically softened such transitions with extended support tails and hybrid options. Atlassian has been more uncompromising.”

Gogia said the strategy reflects operational priorities as much as innovation. “Atlassian no longer wants to split engineering across three delivery models,” he said. “The company’s cloud business is richer in margin, simpler to support, and easier to modernise.”

However, the economics tilt differently for customers. “Average cloud licensing costs 28% higher than data center equivalents, without accounting for add-ons like Atlassian Access,” Gogia said.

Enterprise migration challenges

The forced transition creates particular stress for the most complex customers. Gogia noted that while Atlassian highlights that three-quarters of its most complex accounts are already moving to cloud, “the quarter that remain are precisely those where migration is least feasible.”

These include banks, healthcare providers, defense contractors, and public agencies where compliance and workflow interdependencies make abrupt transitions hazardous. Migration barriers fall into three categories, according to Gogia: technical challenges where complex customizations cannot be lifted and shifted without re-engineering; legal issues surrounding data residency and audit regimes; and organizational constraints related to retraining thousands of staff within a three-year timeframe.

“For many CIOs, the deeper concern is that Atlassian’s corporate calendar, not their regulatory reality, is setting the agenda,” Gogia said.

Competitive implications

The sunset decision carries strategic risks. “Forced transitions rarely create goodwill: they often push CIOs to dust off vendor scorecards and ask whether alternatives might provide better long-term leverage,” Gogia warned.

The timing coincides with intensifying competition from Microsoft Teams, Google Workspace, and ServiceNow, all offering bundled ecosystems that combine collaboration, productivity, and development tools. According to Gogia, Amadeus has already signaled this shift by choosing GitHub and ServiceNow rather than following Atlassian to the cloud.

“Atlassian could tighten revenue in the near term, but in the eyes of enterprise buyers, its positioning risks shrinking from platform to tool,” Gogia said.

To address migration challenges, Atlassian has built support programs scaled to customer size, offering self-service tools for smaller organizations and white-glove “Solution Design Acceleration” for the largest enterprises, the statement added. The company is also offering special consideration for Bitbucket customers with dual licensing options. The success of Atlassian’s strategy will depend on whether promised AI capabilities and operational benefits justify the disruption and costs of mandatory migration for enterprise customers who have resisted moving to the cloud.

More Atlassian news:

• Atlassian moves toward bundling on collaboration tools
• Atlassian gathers its apps into collections to bolster productivity
• Atlassian Rovo brings AI smarts to enterprise search