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Industry Analyst, Consultant and author, former programmer, systems analyst with 25 years experience. Spent three years in Europe as an industry analyst and as Correspondent for Information Week and other industry publications. Regularly consults with leading public and private enterprise software, database, and infrastructure companies. An award-winning columnist for leading IT and business magazines, Josh is widely quoted in the trade and business press and he blogs at Enterprise Matters.

9 responses to “The Multi-tenancy SaaS Argument – It’s a Vendor, Not a Customer Issue”

  1. JoeTierney

    Great post. I definitely see your point and I think you are right by default most of the time. It is very difficult for many customers to differentiate between SaaS or merely faux-SaaS models anyway. If a vendor’s leading message is “we’re multi-tenant” they’re going to loose the interest of all but the geekiest of buyers quickly.

    But the buyers have much to gain by fully understanding the real value multi-tenancy brings to the table. Geek speak aside, I view multi-tenancy giving the customer the power of community. A community that exponentially increases transparency – transparency of functionality, reliability, cost, security, and support. Now we stand together, while traditionally we have stood apart. We worked together towards common goals in forums and support blogs but our environments, our worlds, were very isolated (figuratively and literally). Multi-tenancy provides more than just economies of scale to the vendor, it provides economies of transparency to the customer. For one basic example, look to a Gmail outage. A minor disruption in service, an hour or two, leads to global coverage of the event. This level of transparency in reliability is new. It is extremely valuable for customers. It is multi-tenancy. It is extremely valuable in commodity solutions like email and even more so for more complex platforms like Workday.

  2. Subraya Mallya

    Josh
    Great post!. Agree with your analysis on Multi-tenancy being one of the ways to implement success SaaS technologies but not the only way. Definitely should not be for a big consideration for the customer. In fact, currently it is being routinely listed as one of the risks customer assumes i.e, that of co-mingling of data with that of their competition.

    One of the key drivers for SaaS vendors to go with Multi-Tenancy, besides economies of scale/TCO, is the potential pot of gold that gets accumulated with aggregate data across tenants. Conventional thought has been the data resides in a single db across tenant-owned-slices you could aggregate them and roll them up to create analytical models. Generating patterns, identifying trends and insights to drive high value analytics (descriptive & predictive) is going to be the future of Information Management. But that is now possible with massively parallel NoSQL technologies (Hadoop, MapReduce) even if data were to reside in multiple datastores.

  3. Nick Turner

    Multi-tenancy has advantages wherever you need a “cross tenant” view and involve participants in the application who serve many people “like you.” In a single tenant deployment you can’t do certain things such as:

    Transportation Management Systems: N new user of a multi-tenant solution has instant connectivity to 5000 or more carriers who are already on boarded and serving other customers.

    Global Trade where carriers, shipping lines, brokers and agents all need to be looking at the same data – but for many different customers.

    Retailer supplier communities: register once and communicate with many retailers. Retailers can also find new suppliers rapidly and they are already connected. This model would work well for Drop Ship.

    Consumable Purchases from “catalog” based vendors if the vendors and their catalogs are already on boarded I don’t have to do much more to engage (think Ariba).

    Automotive tier 1 and 2 suppliers delivering JIT to a highly flexible production schedule.

    All of which involve process and communications in a B2B environment. And I don;t know of a business that does buy from or sell to another business or service provider.

  4. Fabrice Cathala

    Josh,

    Thanks posting this great point about multi-tenancy. I couldn’t agree more and am surprised that I have never heard any position like yours before…

    If SaaS is an extended outsourcing model then, effectively, whatever “they” do to deliver the service at the agreed cost is their problem as much as you don’t manage the HR side of an outsourced department.
    I believe that this story about multi-tenancy superiority was born from some vendors having invested loads of money in it and using it as a key market differentiator several years ago… It’s a shame because I think that SaaS doesn’t need *BS* to strengthen its proposal.

    I like the name though, “multi-tenancy” sounds cool.

    Cheers,

    Fabrice

  5. jjreddick

    Multi-tenancy answers questions about long term sustainability and scalability for any SaaS provider. These are not side benefits but are at the core of the SaaS model.

  6. Darren Cunningham

    Josh, I wrote about the importance of multitenancy to the SaaS model and it resulted in similar commentary about this being a vendor benefit and not a customer benefit:

    http://cloudintegration.wordpress.com/2009/11/06/if-its-not-multitenant-its-not-really-saas/

    While I have experienced first hand the challenges of a single-tenant SaaS solution from a vendor perspective (I’ll save that for another post), I believe that the main benefit of multitenancy is the pace of innovation. I would break it down this way:

    1) Single code line. With all customers on the same version of the software, the vendor is able to deliver new features faster, but more importantly, customers are able to see enhancement requests become new features in weeks or months, not years. A lot has been written about the easy metadata customizations and seamless upgrade benefits of multitenancy, but freeing up the vendor from having to support multiple versions of the software helps accelerate the pace of innovation.

    2) Usage transparency. Talk to any product manager who works on a multitenant SaaS application or platform. You’re able to see how the service is actually being used, when and by whom. The customer relationship with the ISV fundamentally changes and the quality of software also improves when you know what’s critical and what’s not.

    3) Community. I like how Joe put it above: “multi-tenancy provides more than just economies of scale to the vendor, it provides economies of transparency to the customer.”

    Darren

  7. Kishore

    Unfortunately, I don’t agree at all that multi-tenancy is only a vendor-side issue. It is a VERY strong customer-side issue – the problem is, it is not ARTICULATED properly. Multi-tenancy is what gives SaaS solutions 24/7 uptime, since there’s no way for a vendor to provide access to one customer and NOT to another in a multi-tenant environment. If something goes bump, EVERYONE is down; now, that’s serious incentive for the vendor to ensure continuous access via clustering, hot-standby, whatever. So when customers are evaluating vendors, I think it is critical to ensure that multi-tenancy is at the core of the offering; else, their specific “instance” may be down and the vendor is not that concerned, since other customers are still up and running.
    Now, I will admit that my own explanation above is not well-articulated enough, but that does not take away from the fact, IMHO, that multi-tenancy is the only way (today) to ensure 24/7 uptime. Likening it to the “Intel inside” idea, it’s like comparing a diesel engine with a petrol engine – one is cheaper than the other, but if you want to go from 0 to 60 in 3 seconds, aren’t you going to look under the hood?
    It is unfortunate that some (most?!) vendors focus on the tech side of things – we’ll all learn, soon enough!
    I’ve blogged about this earlier here, if that’s of interest: http://blog.impelcrm.in/?p=132

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