Atlassian, the makers of JIRA and Confluence, give you a choice: host on your own hardware, or let Atlassian host the apps for you:

It is worth considering for a moment how unique this is. The industry has moved strongly to a SaaS, subscription model. Companies love it when they have your data, a steady income stream, and lower support costs from supporting essentially just one environment. Virtually every new product management app these days is SaaS-only. SaaS is often good for customers too. No more hassle of maintaining and upgrading software.

So why do we strongly recommend self-hosting? A few reasons:

More Plugins (aka Add-ons)

JIRA and Confluence have a thriving plugin ecosystem, visible at https://marketplace.atlassian.com.

Plugins are why you can't go wrong with JIRA and Confluence: you're not just buying a product, you're buying into a platform upon which hundreds of companies are madly building and making lots of money.

The dirty secret is this: most plugins don't work on Atlassian's Cloud-hosted version. Here are logarithmic graphs showing plugins by popularity (as per marketplace.atlassian.com stats), excluding unmaintained plugins incompatible with the past 3 releases. Blue plugins are self-hosted only, red are cloud-ready, and yellow are cloud-only.

Not a lot of red.

Things are improving for Cloud customers. Atlassian is pushing it's new cloud-compatible 'Connect' plugin framework, and in the 2015 Summit, Mike notes that Cloud-compatible plugins have grown from 50 to 300 in a year. If you consider only the top 50 plugins, the situation looks better:

However, given that:

• migrating a plugin to the Connect framework requires a complete rearchitect
• Connect plugins are severely limited in what they can do
• Connect plugins require a vendor-hosted component, putting a burden on the plugin vendor

it seems likely that outside the money-making top 50, the "long tail" comprising the vast majority of plugins will never be Connect-enabled.

More Integration Possibilities

This applies especially to Confluence. Your wiki does not exist in a vacuum. Confluence makes an awesome reporting platform.

For instance, if you have any SQL databases (and by running JIRA and Confluence, you already have two), you really need to look into the SQL, PocketQuery, and Play SQL plugins for Confluence, and Database Values and Arsenale Dataplane plugins for JIRA. For instance, the 'Top 50' charts above are rendered live from a SQL database using Pocket Query:

It is possible (with some effort) to move from self-hosted to cloud, and cloud to self-hosted.