Why Do SaaS Companies Prefer Multi-tenant Architecture?

Traditionally, an organization with an on-premise application maintains a separate and dedicated server and storage space, i.e., separate applications and separate infrastructure. The shift to cloud computing has been lucrative for these organizations with the introduction of a multi-tenant architecture. In this new setup, the SaaS vendor uses the same server and storage space to serve multiple user accounts, i.e., the same application with shared infrastructure.

The best trait of multi-tenant architecture is that each of the tenants (user accounts) are unaware of the other’s existence within the same infrastructure and hence act independently.

Multi-tenancy is a requirement for a SaaS vendor to be successful. — Marc Benioff, CEO, Salesforce

A suitable analogy for understanding multi-tenant architecture is an apartment building. In this setup, you have a common building, hallways, and amenities (cloud environment), however, you can customize the allocated space (user accounts) according to your requirements.

SaaS applications support multi-tenant architecture. Here’s how the architectural style looks like:

Multi-Tenancy: A single instance of software is hared by multiple clients

Let’s visit multi-tenancy architecture in detail and see what the architecture entails.

What is a Multi-Tenant Architecture?

In a multi-tenant architecture, a single instance of the software (workable application) is set up and runs on the cloud vendor’s infrastructure (AWS, Azure, GCP, etc.) and serves multiple tenants simultaneously.

In this architecture, the customers are unaware of other data as it is stored exclusively. That is, the tenants are invisible to each other.

Instead of 10 copies of the OS, 10 copies of the DB, and 10 copies of the app, it has 1 OS, 1 DB, and 1 app on the server. — CNCCookbook CEO, Bob Warfield

A suitable multi-tenant architecture example can be Salesforce (CRM software). Here, multiple users have access to the same product over the internet. The different users are unaware of each other’s existence and have their own customizations introduced in the product based on their specific needs.

What is a Single-Tenant Architecture?

In a single-tenant architecture, a single instance of the software runs on a dedicated cloud server and serves a single customer. This setup is practically feasible for organizations with resource-intensive workloads.

A suitable analogy for a single-tenant architecture can be a villa that you build for your family. In this setup, you have an exclusive building (dedicated server space) that you own. You do not have to share anything with anyone and all the computing resources are only available and accessible to you.

For SaaS products, a single-tenant architecture would imply that you are the tenant too, i.e., you own the software entirely.

Here’s how the single-tenant architecture looks like:

Single Tenant Architecture

Single-Tenant vs Multi-Tenant Architecture

For a better understanding of the differences between single-tenant and multi-tenant architecture, here’s a consolidated comparison table:

Single-Tenant Architecture Multi-Tenant Architecture
A single instance of software, single customer A single instance of software, multiple customers
SaaS client is the tenant SaaS client’s customers are tenants
Better security as it supports a single tenant with no shareability Security is a bit on the lower side due to increased shareability
No noisy-neighbor effect Prevalent noisy-neighbor effect
Full-time resource availability which, in turn, fosters reliability Resource availability depends on the priority list
You need to set up different server and storage space, which is expensive/td>

All the tenants share the server and storage space, which proves to be cheaper as it promotes economies of scale
Scalability can be complex Easier to scale whenever tenant capacity exceeds
Fewer chances of downtime Downtime can increase due to multiple resource requests jamming the server

What is the Noisy Neighbor Effect in Multi-Tenancy?

When multiple tenants make requests to the same database server, performance issues are evident — resulting in noisy neighbors. The only effective way to manage allocation and deallocation of resources is “priority setting.”

If a SaaS vendor is listed higher on the priority list, they will be the first to receive the share of requested resources. And, if they hold those resources for long, the others in the queue are likely to suffer.

How to Choose the Right SaaS App Development Partner

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Types of Multi-Tenant Architectures

There are two types of multi-tenant architectures that you need to be aware of. These include:

1. One App Instance, One Database

In this setup, a single instance of the software supports a single database. All the user accounts that access the software product have their data stored in a single database.

This multi-tenancy architectural style offers scalability and increases the corresponding resources and capacity as and when the tenants increase. However, the biggest drawback of one app instance, one database is the noisy-neighbor effect.


  • Easy to scale
  • Cheaper due to shared resources


  • Noisy-neighbor effect

Type of multi-tenant architecture: One app instance, shared database

2. One App Instance, Several Databases

In this setup, a single instance of the software supports multiple databases. Each of the tenants has a dedicated database that is exclusively and independently maintained.

This type of multi-tenant architecture can get expensive as you are asking for a separate space to store the tenant data. For expanding scalability, you would have to request the addition of database nodes, which can further add to the expenses.


  • Low complexity
  • Easy management
  • No noisy-neighbor effect


  • Expensive
  • Low scalability

Types of multi-tenant architecture: One app, several databases

How does Multi-tenancy Work?

In a multi-tenant architecture, a single instance of the software is shared on the public cloud and is accessible to multiple tenants. However, when a new tenant boards, the software instance can be customized to suit their needs.

Here’s a Stack Overflow discussion thread that rightly defines an instance.

What is an instance?

Although every tenant accesses the same software application, the instance customizations change the product experience for every tenant.

Benefits of Multi-Tenant Architecture

The benefits of multi-tenant architecture include:

1. Economies of Scale

Multi-Tenant Architecture allows renting the common resources for your application on the cloud infrastructure. The cost you pay to host an application is fixed and may vary with time. But, the value coming from each of the customers is only likely to expand.

Long term value of multi-tenant architecture is greater than the initial investment

You pay for cloud resources (which are fixed and vary with scalability), but the value and profits it brings along with every added customer are high. Thus, helping in improving economies of scale.

2. Expedient Maintenance, Updates, and Upgrades

In the case of SaaS Multi-tenant Architecture, users do not have to pay a considerable amount of fees to keep the software up to date. Maintenance costs are usually associated with a SaaS subscription and aren’t charged per case, unlike a Single-tenant structure. Thus, making a multi-tenant architecture a cost-effective solution.

Even the software architecture does not need any change as the code is shared and remains standard. It is easy to make upgrades to the technology stack or the application itself since it needs to be done at just one centralized point and is then reflected at all tenant ends.
The maintenance costs, especially for updates, get shared by all the tenants as they use the code from the same pool. This reduces the overall cost of maintenance for each tenant.

3. Convenient Onboarding of New Tenants

Multiple customer onboarding has become a prime focus for vendors since a poor user experience can directly affect the growth prospects. Hence, bringing customers and multiple users on board for using the product is a crucial task.

In a Multi-Tenant Architecture, the process of signing up and configuration of subdomain/domain are automated. The application also automatically performs tasks like the setup of default data for clients and configuring the application, thus making it easier still for the user to configure.

4. The Virtue of Scalability

As more hardware is added to a Multi-Tenant SaaS model, the horsepower of the entire system is powered up, thus providing scalability to all the tenants that are using the application and not just the newly added tenant. At times, it can be as simple as adding more hardware for the same existing resources of the technology stack.

Segregation of tenants in a multi-tenant environment

Unlike a single-tenant solution, a vendor does not need to build a new and unique data center for every new tenant when using a multi-tenant architecture. In multi-tenant applications, the server space scales up and down based on the tenant strength.


One SaaS vendor deploying the application on the cloud, which then supports multiple users — is a multi-tenant architecture. This architecture forms the backbone of every SaaS product available in the market.

This was all about what is a multi-tenant architecture and what goes at the backend when developing a SaaS product. If you are developing a SaaS application, a complete understanding of multi-tenant architecture is essential.

The choice you make is going to set the foundation for your business in the long run.

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Cut Investment Costs and Improve Economies of Scale with Multi-tenant Architecture

Rajnish Kumar Sharma

About the Author

Rajnish Kumar Sharma is a Technical Project Manager at Net Solutions and is a part of Continuous Integration (CI), Continuous Delivery (CD), and security initiatives. Apart from exploring new technologies and handling technical challenges, Rajnish is equally passionate about movies, cricket, and traveling.

Leave a Comment


8:01 PM, Dec 11, 2020

Is there any way to achieve multi tenancy on cloud architecture when application doesn't has support of multiple dbs


3:37 PM, Oct 15, 2019

Any success stories with multi-tenant architectures you came across? Though there are standard benefits/advantages over single tenancy, people scared about achieving availability and tenant isolation and prefers single tenant.


12:28 PM, Aug 31, 2018

How successful multi-tenant is when it comes to different flavors of same brand ?


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