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How does the account creation work when migrating from Atlassian hosted accounts to SSO in the cloud? Do we have to re-create access and permissions for everyone migrated over to SSO or will Atlassian match email addresses in the SAML claim to accounts already created?
Once you configured the SAML configuration, Atlassian Access would match the Atlassian Account's email addresses that are associated with the verified domain with the email addresses of the account in your IdP.
If they are matched, the user will be able to login via SAML SSO.
Atlassian Access doesn't affect the application access but only Atlassian Accounts. Setting up an Atlassian Access SAML configuration would not create a user in your instance. Think Atlassian Access as a centralized platform to manage users across all Atlassian product.
So you would still need to create a user in your instance if the user doesn't exist in the instance. But as long the user is created with an email address matches with the IdP's account, the user would be able to login via SAML SSO.