With its advent in the 2000s, SaaS (Software as a Service) has become the very face of convenience and cost-efficiency for organizations. According to IDC,
The market will surpass $112.8 billion by 2019 at a compound annual growth rate (CAGR) of 18.3%.
Today, when it comes to SaaS application development, developers, as well as businesses, aim for the most cost-effective as well as an efficient approach for SaaS application development. Multi-tenant SaaS architecture, that is why is preferred much more as compared to single tenancy.
The multi-tenant system certainly leads when it comes to developer communities and businesses that wish to leverage the best of resources, for lesser cost and optimum efficiency. However, there are a host of other benefits that entail the selection of a multi-tenant architecture in a SaaS application.
But, before introducing you to these advantages, let us first walk you through a comparative analysis of single-tenant and multi-tenant architectures in SaaS applications.
Single-Tenant Vs Multi-Tenant Architecture
Here are some major differences between the two kinds for you to understand how multi-tenancy can serve you better.
Single-tenant architecture, as the very name suggests, is a system wherein each customer has their own independent database and instance of the software. It is a scenario wherein only a single instance of software is allowed to run on the SaaS server per client. This sort of tenancy implies that there’s essentially no sharing of any instance among clients.
Though not many SaaS providers today offer single-tenant SaaS, security, data backup, and ease of migration to a self-hosted environment are some advantages that this architecture ensures.
Multi-tenant SaaS tenancy, on the other hand, implies centralized administration to maintain a common code-based application and run a common instance(s) of the application for multiple tenants (organizations/businesses). However, the confidential data for each tenant is secured from any other tenant.
Apart from the software application, each customer also shares a multi-tenant database. As for the data, each set of data is tagged as belonging to each customer. The software is pre-programmed to segregate and secure the data for each user.
Apartments are a perfect example of a multi-tenant architecture. They have a centralized administration for security (at the main gate), electricity, water, and other facilities. These facilities are owned by the apartment owner and shared by the tenants.
Salesforce multi-tenant architecture exemplifies it rather brilliantly. Salesforce has been effectively serving several clients (tenants) using multi-tenancy.
Businesses and organizations that need SaaS for a lower cost and optimum efficiency, multi-tenancy is it.
While each of these has their pros and cons, the present-day vendor market presents us with a scenario wherein multi-tenancy sells better than single tenancy, except for when businesses are looking for self-hosted environments. And here’s why.
1. Expect the Investment Cost to Decrease in the Long Run
Since a multi-tenant platform allows the sharing of resources, databases, and the application itself, the investment comes drastically down in the long run. Especially, in comparison to single-tenant Saas, the investment costs are lesser since the total costs are shared by multiple tenants sharing the application.
For the vendor, it is easier to deliver a SaaS solution at a lower cost than to deliver a single-tenant SaaS solution. With each incremental tenant, no extra cost has to be incurred in the vendor’s end, thus bringing down the investment cost for the tenant as well. Economies of scale render the cost of onboarding on the vendor’s end to be zero, yet a marginal but incremental revenue.
2. Optimized Efficiency in Performance
Since the different elements in the technology stack are shared and enjoy the economies of scale, this sort of SaaS architecture offers optimum speed, efficiency, and reliability that SaaS can offer.
The vendor offers shared code, elements of the technology stack, and databases to various tenants all at the same time, which makes it is easier for the vendor to assess and optimize speed, utilization, response time across the entire system, and even update the technology stack when needed. Thus, efficiency becomes one of the identifiers of the multi-tenant SaaS platform.
The scope for optimum utilization of resources is way higher in a multi-tenant application than in a single-tenant application. Since multiple tenants use the same infrastructure and resources, the utilization becomes optimum and maintenance gains momentum.
Also, if at any given point of time, a tenant does not utilize a certain resource, the same can be used by another tenant. This makes utility of all resources commensurate with one another, keeping the machine in constant motion.
3. Expedient Maintenance, Updates, and Upgrades
The modules included in a multi-tenant application are highly configurable. This enables each tenant to use the application in the most convenient manner and without changing the underlying code.
Even the data structure does not need to undergo any change as the code is shared and remains common. 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 but is reflected at the all tenant ends.
The maintenance costs, especially for updates, gets shared by all the tenants as they use the code from the same pool. This reduces the overall cost of maintenance for each tenant.
Moreover, the user doesn’t need to bother about updating new features and updates, neither do they need to pay hefty maintenance fees or charges. Updates either come as a part of the subscription or, if any maintenance fee has to be paid, it is shared by multiple tenants, thus making it nominal (which, by the way, includes updates).
4. Convenient Onboarding of New Tenants
Customer onboarding has become a prime focus for vendors since a poor experience can directly affect the growth prospects for any vendor. Hence, bringing customers and users on board for using the product is a crucial task. It becomes important to lay emphasis on the self-sign up the process.
In a multi-tenant application, the processes 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 of application, thus making it easier still for the user to configure.
5. 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.
Unlike in 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 tenants use a common infrastructure. There is no need for raising the number of data centers for the individual tenants.
Hence, scaling has few implications for vendors as well as users. This, however, depends on the size of the application and the infrastructure required.
The Bonus: Better Service Support
Contrary to the case of single tenancy, in multi-tenant SaaS architecture, the provider needs to administer just one platform that hosts multiple tenants. Since the maintenance of different applications or technology stacks is not required, it is so much easier to deliver more prompt and efficient service support, thus leading to quicker and better troubleshooting and problem-solving.
Customer support is indeed one of the most important aspects of business today. As we discussed earlier, poor experiences lead to loss of business. Improving customer support is one among the effective ways of improving customer experience.
In fact, according to Totango, “55% of SaaS companies rate Customer Retention Cost as the key metric to measure.”
Multi-tenant SaaS architecture makes for long-term benefits for vendors as well as users, be it in terms of maintenance, cost of investment, or development. However, no matter which architecture you use, it entails a few challenges which you need to identify and take in your stride in the long-run.
As you reap the benefits and face the challenges that this architecture presents, there are things you will need to figure out in the context of your organization and the goals you are aiming at.