"Multi-tenant" is a term vendors love to use, but what does it really matter to you and your organization?
Friday, I shared how I came to realize that maybe there's more business value than you might, at first, assume when you hear SaaS vendors brag about being multi-tenant. Here's what I've been able to piece together about why multi-tenancy is relevant as a business issue for your organization, with an eye-as always-toward integration.
It's cheaper. Multi-tenancy is the key to SaaS' low cost. Oh, sure, more money for the vendors, you might be thinking. But the savings here are substantial and customers do benefit. How substantial? David Dobrin, a long-time IT veteran and founder of B2B Analysts, Inc., says multi-tenant appears to be 10 times cheaper than a single-tenant solution in a shared data center.
It's easier to use and manage. When Informatica Vice President of Cloud Marketing Darren Cunningham talks about Informatica's SaaS solution, he uses terms and phrases such as "easy," "a focus on usability," and "wizards are designed to help less technical people in the business." That's common among SaaS and cloud vendors. In part, that's because they know most of their sales come from the business, rather than IT, and that means usability is key. But it's also a result of the multi-tenant approach. As the name says, multi-tenant is designed to be rolled out to multiple users. To do that, you have to keep things simple, and in part, that does mean less customization.
Dobrin points out that on-premise applications were designed to be "intermediated" by IT. The assumption for these single-tenant apps is that IT will deal with the set up, tweak things and handle all aspects of deployment. Hence, the thriving niche markets for things like implementing SAP or customizing CRM. SaaS takes over deployment and management task jobs from IT by focusing on simplicity and usability. This leads to savings, he contends:
The SaaS company is taking over the job of delivery to the user from your IT department, and they're getting a lot of leverage because they're delivering it to lots of users, not just the users at your company. Not unnaturally, they can do automatically what your IT department has to do manually. With that automation come a lot of savings in cost for them and a lot of improvement in the user experience for you.
Upgrades are simpler. In the same vein, it's easier to roll out updates, as most vendors will tell you. There's no big release, no hiring a consultant firm to help you upgrade-they just roll out the changes to everyone and they're done. As Forrester noted over a year ago, in a ZDNet article on whether or not you should use cloud multi-tenant solutions:
With multi-tenant, Gmail can add features overnight; Exchange only once every three years. Multi-tenant Cisco WebEx gets a quarterly update; IBM Lotus Sametime can't (though LotusLive.com can). Because there is a single instance of the code in a multi-tenant cloud solution, the innovation is continuous, incremental, and globally available.
Limited or no customization. One potential downside to all this easy use and wide-spread deployment made possible by a multi-tenant architecture is it's harder to customize. That's not all bad news-Dobrin argues that a lot of customization adds unnecessary expense, and many times, the business divisions want it, but don't need it-and often, the true cost of all these "nice to haves" is hidden by the way IT is financed. "IT organizations are service organizations, and they're rewarded for providing service, so they simply defer the astronomical costs of managing, maintaining, and upgrading around the customizations because they look bad," he writes.
SaaS vendors don't even offer customization, and business users-enchanted by how quickly they can be up and running and by the snazzy user interface-seem to accept this.