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SaaS: Single-Tenancy vs. Multi-Tenancy

When it comes to SaaS (Software as a Service) delivery model, single-tenancy and multi-tenancy are terms that are commonly discussed. To choose what model works best for your business, it is essential to understand what these terms mean, how they are different from each other, and their benefits and drawbacks.

What is Single-Tenant SaaS?

A single-tenant SaaS is a type of cloud architecture where every customer gets a dedicated instance of the software and the supporting infrastructure. In a single-tenancy, the server, database, and infrastructure services provided to one customer (also known as the tenant) are not shared with other customers—for example, Oracle Cloud.

To draw a real-world analogy, single-tenancy is like a neighborhood with independent houses. Each house has its own facilities that are not shared with other houses in the neighborhood and can be customized to suit the buyer or tenant’s needs.

Benefits of Single-Tenant SaaS:

    • Complete Control: As single-tenancy offers dedicated infrastructure, customers can customize the solution and add functionalities based on business needs. Software upgrades can also be installed individually as per the customer’s convenience instead of waiting for the vendor to roll out.
    • Reliable Performance: With an entire environment dedicated to a single client, resources are ample and always available, delivering high application performance. One customer suffering application downtime during upgrades does not cause availability issues for other customers.
    • Robust Security: In single-tenant architectures, application instances and databases are stored on dedicated SaaS servers, accessed only by people within the customer organization. As customer environments are completely separated from one another, the risks of unauthorized access and data breach are minimized.
    • Easy Restoration and Backup: As single-tenant environments offer separate, remote backups, it is easier to restore or backup the database in the event of a data loss. Customers can easily access and restore lost data and settings.

Drawbacks of Single-Tenant SaaS:

    • More Maintenance: Dedicated cloud environment typically means it is up to the customer to regularly patch and upgrade systems to keep them up and running smoothly. Constant maintenance can be resource-intensive, tedious, and time-consuming.
    • Complex Set Up: Single-tenant environments have a complex setup process as the software instance and databases must be configured for each customer around their needs. Due to this complexity, getting started with the solution takes a long time.
    • High Cost: As there is only one customer per environment, single-tenancy comes at a premium price. Every customer is required to invest in setup, hosting, maintenance, and upgrades that add up to the costs significantly.

What is Multi-Tenant SaaS?

A multi-tenant SaaS is another kind of cloud architecture where a single software instance and the supporting infrastructure serves multiple customers. Although it’s a shared model, each tenant’s data is isolated and remains invisible to other tenants, ensuring data security. Resources are distributed among the customers based on their workloads using load balancers (that allocate required application data between databases and servers).

While single tenancy resembles a neighborhood with independent houses, multi-tenancy is like an apartment building, where every tenant gets a flat of their own, but common amenities such as security systems, elevators, gym, and community halls are shared.

Examples of multi-tenant SaaS include Gmail, Dropbox, Salesforce, and Amazon Web Services (AWS).

Examples of multi-tenant SaaS include Gmail, Dropbox, Salesforce, and Amazon Web Services

Benefits of Multi-Tenant SaaS:

    • Lower Cost: As multi-tenancy involves sharing the software instance, databases, and servers between multiple customers, the cost is much lower when compared to single-tenancy.
    • High Scalability: Multi-tenancy favors scalability. As software and hardware are common to all customers, it is easy to add or remove resources based on business needs.
    • Easy and Quick Provisioning: Multi-tenant SaaS environments are easy to set up and configure. They usually involve a simple and quick sign-up process to start using the solution. The automated setup offers seamless user experience and helps achieve faster time to value when compared to single-tenant counterparts.
    • No Maintenance: As the software instance is hosted on the server belonging to the SaaS vendor, maintenance and upgrades are completely handled by the vendor. Automatic upgrades save a lot of time and effort for the customer. Further, as maintenance costs are associated with the SaaS subscription, customers are not charged on a per case basis, as they are with single-tenant SaaS.
    • Standardized Compliance: Multi-tenant SaaS solutions adhere to key industry-standard compliance regulations, such as PCI DSS for FinTech and HIPAA for healthcare. This is very helpful for customers who cannot afford to invest in compliance management.

Drawbacks of Multi-Tenant SaaS:

    • Limited Customization: As multi-tenancy comes with shared infrastructure, extensive customization options such as changes to the database are not allowed.
    • Security Risk: Although the tenant data is isolated from one another, multiple tenants still share the same database. This broad scope of access reduces the extent of control customers have over security of the environment. One customer experiencing a breach may affect other customers operating the solution. In multi-tenant SaaS, security is a shared responsibility.
    • Less Control: Customers cannot entirely control changes in a multi-tenant environment. Sometimes the system upgrades may cause hardware or software issues that can affect all customers, or if one customer faces an issue, it can impact others as well.

Should You Choose Single-Tenancy or Multi-Tenancy?

Choosing the right architecture for your organization depends largely on factors such as technical goals, budget, resource usage needs, security requirements, etc.

For large enterprises who want high performance, complete control, customization, and robust security, single-tenancy works best. On the other hand, for small and medium organizations looking for an affordable, easy-to-deploy, scalable, and maintenance-free option, multi-tenancy is an excellent fit.
That said, it is important to note that most SaaS solutions on the market today are multi-tenant due to the flexibility, cost-efficiency, and resource optimization capabilities it offers.