Saas: multi or single tenant

Multi tenancy refers to the architectural principle where one instance of the software serves multiple client organizations (tenants). To achieve this the software is designed to separate the data and configuration of the different client organizations. The benefit of this is that it shares hardware, which lowers the price and as its all a single instance of the software and therefore easy and quick to update.

Single tenancy on the other hand refers to an instance of the software running exclusively for one client organization. In short you could consider it hosting. So when to choose single tenant? Some organizations, like banks or governmental agencies, have regulatory mandates to keep their data behind their firewalls and some others have to keep their data within country boundaries. That would be a good reason. Also single tenancy allows for customization -changing of the software- where as multi tenancy usually only allows for configuration -changing of the software’s settings.

Some organizations may feel uneasy about a multi tenant model. There’s no need for this. Chances are you have experience with it already as most free e-mail providers like Yahoo, Hotmail and Gmail are multi-tenant. Ground rule: choose single tenant only if there is a good objective reason that justifies the price difference. If not, go multi tenant.