Choosing Between Single-Tenant and Multi-Tenant SaaS Architectures: A Guide

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Key Takeaways

• SaaS Tenant: The customer or user of the application, working within their own isolated portion or instance of the software.
• Single-Tenant Architecture: Offers enhanced data isolation, advanced data security, complete control over customization, and reliable performance.
• Multi-Tenant Architecture: Provides cost-efficiency and scalability by allowing multiple customers to share common infrastructure and resources.
• When choosing between multi-tenant and single-tenant SaaS, evaluate your priorities such as control, security, scalability, and cost.

The SaaS market is set to reach $819.23 billion by 2030, growing at an annual rate of 13.7%. Whether you're considering custom software development or switching from one database type to another, understanding the pros and cons of single-tenant vs. multi-tenant architectures is crucial.

Levisoft boasts over 8 years of experience and has delivered more than 50 solutions with various architecture types. This article will define single-tenant and multi-tenant architectures, list their pros and cons, and explain how to migrate from isolated infrastructures to scalable multi-tenancy environments.

Single-Tenant Database Design

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A single-tenant architecture is where each client (tenant) has an isolated application, database, and supporting infrastructure. This setup allows for complete customization and individual management, typically seen in private cloud environments and enterprise-grade SaaS services.

Examples:

• Oracle Cloud: Hosts segregated compartments with isolated resources requiring manual upgrades.
• SAP S/4HANA Single Tenant Edition (STE): A cloud offering with customizable configurations, available on AWS, GCP, and Microsoft Azure.
• ServiceNow: Offers isolated instances for each customer to streamline and automate business processes.

Single-Tenant SaaS Architecture Pros

• Advanced Data Security: Dedicated servers with the ability to implement proprietary security measures.
• Complete Control: Full customization around business needs and individual software upgrades.
• Reliable Performance: Isolated cloud environments ensure stable performance unaffected by other clients.

Single-Tenant SaaS Architecture Cons

• Higher Cost: Requires extra server resources and maintenance.
• Slower Scaling: Provisioning new resources takes time and effort.
• Complex Onboarding: Setup tailored to individual needs can be intricate.
• Complex Maintenance: Each instance requires individual updates and patches.
• Increased Risk of Data Silos: Isolated data can hinder cross-client insights.

Multi-Tenant Database Design

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A multi-tenant architecture is where multiple customers share software instances and supporting infrastructure. Providers can use different strategies for tenant isolation, including shared databases, dedicated databases, sharded databases, and hybrid-sharded databases.

Key Security Measures

• Tenant-specific data configurations
• Role-based access control
• Encryption
• Authentication and authorization
• Firewalls and network segmentation
• Intrusion Detection and Prevention Systems (IDPS)
• Compliance with standards like SOC 2, ISO 27001, or HIPAA

Examples:

• Salesforce: Offers isolated customizations for different tenant requirements.
• Microsoft 365: Provides unique, separate experiences for each customer while allowing for management restrictions.
• Slack: Uses a multi-tenant architecture to manage team communications securely.

Benefits of Multi-Tenant SaaS Architecture

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• Resource Distribution: Efficient use of resources through load balancers.
• Fast Scaling: Quick scaling due to shared infrastructure.
• Automated Maintenance: Included in the subscription, easing operational burden.
• Lower Cost: Cost-effective resource management.
• Compliance Management: Adherence to major regulatory standards.
• Easy Onboarding: Simple setup processes.
• Migration: Less need for re-architecture during platform transitions.

Disadvantages of Multi-Tenant SaaS Architecture

• Limited Customization: Standardization may limit custom options.
• Data Security Concerns: Shared infrastructure heightens potential security risks.
• Performance Variability: Resource sharing can affect performance during peak usage.
• Data Portability: Complex data extraction for migration or backup.

Comparing Single-Tenant vs. Multi-Tenant Architecture

Should You Choose Single-Tenant or Multi-Tenant SaaS?

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Single-Tenant SaaS:

• Ideal for large enterprises needing full control and robust security.
• Suitable for sectors like healthcare and FinTech that manage sensitive data.
• Great for B2B businesses requiring complex workflows and ERP tools.

Multi-Tenant SaaS:

• Perfect for startups and medium businesses seeking an affordable solution.
• Suitable for companies needing easy configurability and scalability.
• Beneficial for companies adjusting scaling expenses often.

Hybrid Approach:

• Combines elements of both architectures to balance customization, efficiency, and cost.

How to Implement Multi-Tenant Database Architecture

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Use on-demand cloud platforms like AWS for building multi-tenant SaaS applications:

• Amazon ECS (microserver architecture): Loosely coupled for independent scaling and deployment.
• Amazon EKS (Elastic Kubernetes Services): Customizable SaaS configurations with tenant isolation.
• Amazon Serverless Computing: Cost-effective and fully scalable, paying based on resource usage.

Important Components

• Authorization (Identity) Server: Verifies user affiliations and roles, issuing tokens for access control.

• Domain Route: Design proper URLs for multi-tenant SaaS. Options include logical, keyable, cryptic addresses, or access restriction based on session validity.

Migrating from Single-Tenant to Multi-Tenant

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Choose between:

• Silo Migration: Minimal restructuring.
• Layered Migration: Phase-wise tier optimization.
• Service-by-Service Migration: Incremental restructuring and optimization.

Company Experience

At Levisoft, we offer certified SaaS development in various markets, including healthcare, retail, fintech, risk management, supply chain, and logistics. Our dedicated team can help you migrate your infrastructure or build a multi-tenant architecture from scratch.

Case Studies

• Biotech Enterprise SaaS Development: Increased sales by 65%, user loyalty by 75%, and new customer acquisition by 30% with a multi-tenancy solution for remote device management.
• Accounting Multi-Tenancy SaaS: Developed a multi-tenant solution with customizable reports and document templates, achieving a 30% conversion rate from a free demo to a paid plan.

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Conclusion

Choosing between single-tenant and multi-tenant architectures involves trade-offs. Consider factors like resource usage, budget, partition (isolation) model, and cybersecurity. Levisoft’s IT outsourcing services can guide you through the selection and implementation process, helping optimize your resources efficiently.

Get in touch with Levisoft today to see how we can support your next SaaS project.