Why Multi-Tenant SaaS Architecture is Table Stakes in Modern Business
Software as a Service (SaaS) companies are able to deliver software across the globe with efficiency and speed. The SaaS business model requires a company to experiment, iterate, and make decisions based on what was learned at a blazing pace. But how should a SaaS company architect their software compute, network, and storage services?
The two main choices are single tenant and multi-tenant architecture. They each can have benefits depending on your business model. Find out why multi-tenant is a perfect match for SaaS companies in the modern era.
What is Multi-Tenant SaaS Architecture
Multitenancy is a software architecture where a single software instance can serve multiple, distinct user groups. Software-as-a-service (SaaS) products and services are examples of multitenant architecture.
Imagine an apartment building. Each tenant has their own key and is able to come and go as they please. There are shared resources like the elevator, but each tenant is not able to see what is in their neighbor’s apartment unless invited in.
Single Tenant vs. Multi-Tenant
Single tenant
Single Tenant is a single instance of the software on a single server that is dedicated to a single customer. If we build on the apartment analogy, the single tenant is akin to a single family home.
Single Tenant benefits include:
- Security: A dedicated server environment means there are less entry points for hackers to breach your security because less people have access to the environment.
- Dedicated Performance: A single tenant environment means resources are never shared and the max load on the system is available to a customer at any time.
- Control: Having a dedicated environment allows you to adjust and optimize your server resources to get every last bit of performance
Single Tenant risks include:
- Cost: It is much more expensive to use a dedicated server because you either need to buy and maintain a server or you need to pay a company, who will lose money on providing a dedicated server unless they charge you a premium.
- Scalability: When a SaaS business needs to scale fast, which is common for SaaS businesses, adding additional single tenant environments is slow and would require more developer resources for dev ops.
- Redundancy: With a single server environment, there is a risk that the data is in one physical location. Should there be a power outage or other disruption, a SaaS service will be unavailable until the disruption is resolved. This down time could mean losses in revenue for a SaaS.
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Multi-tenant
For Multi-Tenant, a SaaS provider runs a single instance of an application and offers access to individual customers. Each user has access to the software instance and the resources are shared with one or more servers.
The benefits of Multi-Tenant includes:
- Cost: Costs for shared resources are much cheaper than a dedicated server environment. A hypothetical cost comparison using Amazon Web Services:
| Service | Single Tenant Cost Per Month | Multi-Tenant Cost Per Month |
| Web Server | $131.04 | $10.48 |
| Application Server | $65.62 | $10.48 |
| Database | $452.88 | 28.05 |
| Caching Server | $54.90 | $0 |
| Monitoring | $4.00 | $0.48 |
| Total | $661.44 | $49.50 |
- Maintenance: shared resources means the cloud server provider will take over maintenance duties, including operating system and security updates. For example, if you had multiple single tenant environments, each one we would need upgrading and there is a risk that some are on different versions of software, making troubleshooting and security a nightmare. No management of infrastructure or software above and beyond internal resources enables businesses to focus on value creation instead of increasing the budget for dev ops.
- Scalability: Many cloud, multi-tenant providers have options to scale your server resources on demand allowing a SaaS company to scale quickly. For example, configuration can be done while leaving the underlying codebase unchanged, as opposed to a Single-tenant-hosted solutions are often customized, requiring changes to an application’s code. A single tenant customization can be costly and can make upgrades time-consuming because the upgrade might not be compatible with your environment. Scaling should be as cheap and fast as possible for a growing SaaS company.
The risks of Multi-Tenant includes:
- Deep customization: Custom changes to the server are usually not possible when using Multi-Tenant which can reduce performance at times.
- Security: multiple tenants can mean multiple points of entry for a hacker. Back to the apartment analogy, the more people in an area, the higher chance that one of them can invite an unsavory character over or do something that compromises the rest of the tenants.
- Updates and Integrations: Multi-Tenant environments are tricky to upgrade or integrate with other systems. Connecting to applications from other environments may take longer.
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How is multi-tenant used by SaaS companies
SaaS companies need flexibility and cost savings to grow
The benefits of Mult-Tenant for SaaS is flexibility and cost. For example, Amazon Web Services provides on-demand instances:
“With On-Demand Instances, you pay for compute capacity by the second with no long-term commitments. You have full control over its lifecycle—you decide when to launch, stop, hibernate, start, reboot, or terminate it.”
These instances are cheaper and can scale or wind down as needed. SaaS companies are at their best when they can experiment and iterate. Flexibility and reduction in costs for those experiments is an essential element of SaaS growth.
Redundancy
Redundancy is used to prevent down time due to server crashes or security breaches. For example, redundancy of Amazon’s worldwide network of servers is a necessity for SaaS multi-tenant environments. If one zone goes down, then another can come online and the customer would never see an issue. A redundant single tenant setup would be much more expensive.
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Why is multi-tenant used by SaaS companies
Speed, flexibility, and smart use of resources. These are the attributes of an effective SaaS business and the benefits of a Multi-Tenant environment. It is no wonder why it is the dominant way SaaS companies serve their software to customers.