When implementing Atlassian Cloud at the enterprise level, figuring out how to structure your setup is one of the biggest decisions you'll make. Many companies move to Atlassian Cloud Enterprise to take advantage of all of its bells and whistles, but they struggle with deciding on the best way to organize their environment.
So, how do you know whether a federated or centralized model is right for you? Both approaches have their strengths and trade-offs, and the choice really comes down to your company’s unique needs and business goals.
This guide breaks it all down for you. We’ll walk through the differences between the two approaches, share real-world examples, and weigh the pros and cons so you can make the best call for your business.
Atlassian Cloud: Federated vs. Centralized
In our experience, clients usually don’t know the differences between federating or centralizing their Atlassian Cloud architecture. They also get confused by licensing and have strong opinions about what they want for their company (rightfully so, no one knows their business like they do). As an Atlassian Platinum Solution Partner, it’s our duty to make sure you know what to ask for, so here’s our breakdown of the two cloud setups.
The Federated Model
A federated model spreads Atlassian tools across multiple independent instances. Think of it as a university campus, where each department has its own building with unique layouts and restricted access. Essentially, each business unit or team operates its own Jira instance while still aligning to enterprise-wide governance.
When Do Federated Sites Work Best?
Federated architecture is ideal for these scenarios:
- Mergers and Acquisitions
Newly acquired companies can keep using their own Jira instance while still following the organization’s overall processes. This keeps things running smoothly while still giving leadership the visibility they need. - Varied Processes Between Company Divisions
Different teams often have their own ways of working, and autonomy allows them to thrive. For example, a marketing team might set up their Jira instance to manage campaigns, while a software engineering team uses a different instance optimized for issue tracking and sprint planning. - Compliance and Data Privacy
This approach is key for industries like healthcare or finance, where legal regulations require strict data segregation. For instance, a global company with multiple business units operates in different regions. The IT team might run independent Jira instances for Europe, North America, and Asia to meet local data residency laws while ensuring each region has autonomy to operate tailored workflows. In this case, a federated approach is the company’s best bet.
Benefits of a Federated Model
- Flexibility - Each department can customize its instance to fit its needs, from workflows and custom fields to administrative settings.
- Data Residency and Segmentation - Organizations can localize data to specific geographic regions or comply with laws like GDPR in Europe.
- Delegate Administration - Business units manage their own set-ups, which means less work for the central admin team.
- Smaller, More Efficient Set-Ups - With separate environments, admins have less clutter to manage, and users experience better performance.
What to Consider with Federated Atlassian Cloud Instances
- Cross-Instance Collaboration - Collaboration across departments becomes trickier with federated infrastructure. For example, a developer on one instance can't easily track how their work overlaps with marketing tasks on another instance. That developer also can’t track how their work aligns with developers on other instances. This becomes a problem when there are dependencies between teams or when someone is responsible for overseeing multiple instances.
- App Costs - Marketplace apps may need to be licensed separately since they live in different instances. This gets expensive fast since you may have to pay for products multiple times. Plus, you may also end up paying for app licenses that users may never use.
You should also note that having federated instances could potentially lower your costs because you aren’t paying for licenses that departments don’t need. For example, not every team member requires access to specific tools like Draw.io, which typically charges per licensed user. With a federated instance, you avoid the risk of double-paying for users who might belong to multiple instances, as each instance operates independently.
- Consistency and Standards - It’s harder to enforce standards around project configurations, workflows, and permissions across instances.
The Centralized Model
Unlike the federated model, the centralized approach consolidates all teams into a single Jira instance. Picture a skyscraper, where each department lives on its own floor, but everyone shares the same building infrastructure.
When Does a Centralized Instance Work Best?
A centralized architecture is ideal for businesses that value:
- Highly Interconnected Teams
When teams work closely together on shared goals, having everyone in the same instance makes it easier to stay on the same page. This improves visibility and coordination across departments. - Standardization and Consistency
Organizations looking to enforce strict project configuration standards across teams benefit from a shared structure. - Portfolio-Level Oversight
A single instance makes it easier to track enterprise-wide progress using tools from the Strategy Collection, like Focus or Jira Align.
Benefits of a Centralized Model
- Streamlined Administration - Managing everything in one environment cuts down on complexity. It’s much easier to align permissions, roles, and workflows when they all live in a single system.
- Improved Collaboration - With all your data in one place, teams can quickly search for information, track dependencies, and stay connected with their work.
- App Cost - A single shared instance eliminates the need for duplicate app licenses. However, in a centralized instance, all users are consolidated into a single system. This means you’re charged for app add-ons across the board, even for people who don’t need or use them.
- Simpler Reporting and Analytics - Dashboards and reports bring together data from all departments, giving you a full picture of what’s going on.
What to Consider When Centralizing Atlassian Cloud Instances
- Scalability - Huge instances can slow things down, especially during tasks like indexing or running reports.
- Complex Configuration - With different teams using the same instance, configurations can get messy and complex, confusing admins and end users alike. However, good governance can help with this by providing structure to streamline the instance and maintain order.
- Compliance Issues - If sensitive data needs to follow specific geographic or regulatory rules, it’s hard to manage everything in one instance.
A Healthcare Company Adopts a Centralized Atlassian Cloud Setup
For example, we had a client in the healthcare technology space that had already transitioned to Atlassian Cloud Enterprise, but things got more complex after a series of mergers and acquisitions. Our client wanted to migrate and merge the two newly acquired companies into their existing Atlassian Cloud instance.
After interviewing stakeholders, understanding their current setup, and reviewing their Atlassian licensing agreement, Praecipio recommended either opting for federated instances to maximize flexibility or choosing a centralized instance supported by strong governance, standardized processes, and comprehensive cleanup.
While our client ultimately decided to consolidate instances, they will need support bringing systems under one roof in order to make it all work. The centralized approach will also give the healthcare tech company the opportunity to reorganize its ecosystem, optimize workflows, and build a unified Atlassian Cloud instance.
Making the Right Choice for Your Business
There’s no one-size-fits-all solution when it comes to federated vs. centralized Atlassian Cloud architecture. For large enterprises with mixed requirements, a hybrid approach may be the answer. For instance, you might need to centralize core departments like IT and engineering while federating regional teams or acquisitions to maintain flexibility.
Ultimately, choosing between a federated, centralized, or hybrid Atlassian Cloud architecture depends on your organization's unique needs. From regulatory requirements to business structure, there’s a lot to consider when setting up your cloud environment, but the best choice you can make is to work with an Atlassian Solution Partner. A partner will work with you to design and implement your ideal setup.
With deep experience in enterprise-level Atlassian Cloud migrations, Praecipio can guide you through the decision-making process. We learn the ins and outs of our customers’ operations, systems, and future needs so we can recommend a cloud setup that delivers maximum performance and aligns with your long-term strategic goals. Like we did for our healthcare tech customer, we will give it to you straight and help you make the right decision for your business.
Whether it's deciding between federated vs. centralized Atlassian Cloud architecture or navigating complex migration requirements, contact our team to develop the best cloud strategy for your organization.
