Why Should the Rest of Us Care About Multi-Tenant SaaS?

Loraine Lawson
Slide Show

Eight Insights on the True Value of SaaS

Cloud computing and SaaS bring so much more to the table than simple outsourcing.

Warning: Your eyes may glaze over at the next paragraph, particularly if you're a business user. That's a normal reaction to techno babble and marketing-speak. But stick with me, I promise this is going somewhere useful.


Cloud and SaaS vendors love to throw around the term "multi-tenant," and that's also true with those specializing in SaaS integration. I know what it means technically: It's a way to design software-aka, an architecture-so it runs on one server, but is used by multiple clients or tenants. You can read that on Wikipedia, for Pete's sake.


But I didn't really understand the business arguments. In fact, I was pretty dismissive of the term-I'd hear it and feel a bit uncomfortable, as if they told me something random, irrelevant and vaguely personal, like "I'm a Lutheran" or "I'm a lacto-ovo vegetarian."


This week, I was reading IT Toolbox Director Leigh Dow's two-part interview with Informatica Vice President of Cloud Marketing Darren Cunningham. In the first part, Dow asked Cunningham about the mult-tenant architecture and why it matters. Her questions were excellent but his answer, I felt, left something to be desired. Here's part of it:

It's built to be multitenant and easy to use and differentiated from the perspective of who can manage Informatica Cloud. The self-service interface and core performance of the engine runs transparent to the customer but the benefit is if you already have an Informatica solution in house you can support a hybrid implementation. Informatica Cloud allows users to build jobs in the on-premise environment and then run jobs in the cloud, which requires less technical staff involvement. IT can then focus on the more complex data integration efforts which truly require more technical skills.

Still, seeing that question was an embarrassment and a revelation for me. I can't believe in all my talks with companies bragging about their multi-tenant solutions I hadn't once thought to ask that.


In my defense, this became a big topic in niche tech sectors over the past year, and I've spent nine months of that time pregnant, which, for me, translates into a lot of sickness and the attention span of a very stupid dog.


There's no doubt Informatica has an impressive eat-your-own-dog-food story, which Ann All recently explored in "Are Growth-Oriented Companies More Likely to Use SaaS?" But other cloud and SaaS apps are part of that story, too, according to Informatica CIO Tony Young, who writes that Informatica's IT Apps team contributed 60 percent of its budget to innovation in 2009 and 2010-as opposed to the average 20 percent-thanks in large part to SaaS applications.


So, clearly, multi-tenant architecture has worked out well for Informatica and other SaaS vendors. But given that IDC says SaaS now is growing at six times the rate of on-premise software, I started wondering: What's in it for the rest of us?


In other words, does it matter to you, an end-user organization, how SaaS vendors build their apps? Is there any business benefit to it? Can it save money? And what about integration-how does it impact that?


Or is all this multi-tenant talk just marketing-speak?


I decided to do some digging. Although there are SaaS/cloud offerings that use a single-tenant (dedicated server) approach, many of the discussions I found focus more on why SaaS, as multi-tenant, is better or not better than on-premise, which tends to be single-tenant. That means most of the information written comes from mid-2010 or earlier, when vendors were still trying to sway businesses.


Still, much of the information still applies and I did find more general posts about multi-tenancy. What I've learned is that there are many pros, a few issues that can be cons and some surprising issues that are both. I'll share my findings Monday.

Add Comment      Leave a comment on this blog post
Jan 21, 2011 6:15 AM Glenn Gruber Glenn Gruber  says:


Adding to Renat's comments, I'll add a few practical benefits of MT: cost and speed of adding new features.

On the cost side, it's simply less expensive for a software company to develop and maintain a single code-base rather than many. Whether they pass that benefit onto customers of course is another story, but it can contribute to lower license/subscription costs. The lower costs can help ensure the sustainability of the vendor which is also very good for customers. I mean if you make an investment in someone's software, you want it to stay around for a while. Switching costs may be lower than if you made a multi-million dollar lump sum, sunk cost investment in an on-premise deployment, but it's a pain in the butt to change.

Further, managing a homogenous infrastructure, increasing utilization of computing resources via a shared infrastructure all contribute to keeping costs down.

And my second point is more directly felt by customers. By having a single code base it's easier and more likely that the software company can add more features and do so more rapidly.  Often with many single-instance implementations, layers of customization and custom modules evolve which can make it more difficult, or impossible, to add new features to all customers.

Jan 21, 2011 8:11 AM Darren Cunningham Darren Cunningham  says:

Hi Loraine, I guess I could have answered the question differently. Renat pointed out some of key benefits above and I'm looking forward to reading your follow-up posts next week.

Here's a good discussion on why I (and others) believe multitenancy is critical:



Jan 21, 2011 11:41 AM Renat Zubairov Renat Zubairov  says:

Unfortunately I'm not able to find my references but here is my list of "Why multi-tenant" is important:

1. Efficiency - multi-tenant may be up to 100 times more efficient than multi-instance. RAM is major limiting factor for multi-instance clouds and memory efficiency is in clear benefit with multi-tenant.

2. Upgrades - multi-tenant architectures are by definition simpler to upgrade. Major promise of SaaS vendors is simpler to implement by having clear multi-tenant backend than multi-instance zoo.

3. Feedback - multi-tenant applications may be more informative in terms of customer feedback than isolated multi-instance. Short feedback cycles for SaaS is very important advantage the SaaS vendor has to improve and develop the functionality of the system.

Jan 24, 2011 2:33 AM Jerry Combs Jerry Combs  says: in response to Darren Cunningham

After reading your post and the link provided by Darren my conclusion is that the consumer of a service should NOT care about multi-tennancy. Some point out that it more efficient and therefore cheaper to the consumer but I don't think the customer should care about the architecture...only about the price. I actually think that given the choice that customers would rather have an isolated, dedicated, system if they could get it at the same price. It is possible that virtualiztion and automation could allow this to happen.

Jan 24, 2011 4:07 AM Loraine Lawson Loraine Lawson  says: in response to Jerry Combs

Jerry-Maybe not. The next post is the one that actually explores the question, and I found different reasons - which I hope are more customer-focused - than the post above. So, you might want to wait. Then again, if cost is your only concern, then - yes - that's probably the case. But there are considerations with multi-tenant that can be on the con side.The posts are usually daily, but I'm going on maternity leave, so the blog is on a different posting schedule for awhile. It should appear later this week.Thanks for reading - I look forward to your further thoughts.

Feb 28, 2011 4:51 AM Ram Kumar Ram Kumar  says:

This is not an accurate analogy, but roughly communicates the essence of what we are debating.

If you are renting a house in a city, would you really care about the engineering design of the foundation and the frame structure. You won't. You generally go by the reputation of the owner and sometimes check out the reputation of the builder.

But if you were to rent an apartment in an unknown island, on a building that is said to have 25,000 floors. you may want to educate yourself about the underlying technology, stability and reliability. SaaS and Cloud are emerging technologies and it is safer to dig deeper and know your vendor's architecture and infrastructure, no matter what SLAs he commits on paper.




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