Discover when to use SaaS architecture over on-premise environments — and 10 best practices you can use for efficient SaaS architecture design.
As an engineer, engineering supervisor, or CTO, you are responsible for making architectural decisions that help your team create innovative products and optimize technology costs.
The type of architecture you select affects how much control you have over data, infrastructure, and customization options. The Software-as-a-Service (SaaS) model is one of the major architectures you can use to deliver services to customers — anytime and anywhere.
In addition, SaaS eliminates the maintenance work that comes with locally installed software, such as purchasing, installing, and maintaining it. However, what is SaaS architecture and why are more companies switching from on-premises to hosted applications?
Let's begin by defining SaaS architecture and how it works, irrespective of your role and then cover 10 best practices to ensure efficient and cost-effective SaaS architecture design.
Table Of Contents
SaaS architecture refers to a method of software delivery, in which a vendor hosts an application on a remote server for an organization before delivering the app’s capabilities to that organization’s end users over the Internet.
This model allows multiple companies or organizations to share a single model and a single configuration. This means that these organizations access the same hosted application, including the same hardware, operating system, network, and other components.
An organization can use the architecture as-is. Or, its engineers can employ an Application Programming Interface (API) to customize the SaaS with in-house or third-party tools in order to meet its software needs.
Users are required to pay a recurring subscription fee to access the "ready-made" SaaS solution. They do not purchase a full copy in advance or install the software on every computer locally. In addition, the SaaS vendor handles all technical issues, including hardware, updates, data storage, middleware, and infrastructure security.
SaaS differs from both Infrastructure-as-a-Service (IaaS) and Platform-as-a-service (PaaS):
Examples of IaaS include Amazon Web Services (AWS), Digital Ocean, and Microsoft Azure.
Examples of PaaS include Red Hat OpenShift, AWS Elastic Beanstalk, and Force.
In both, the cloud service takes care of many backend tasks such as platform- and infrastructure-level security, updates, backups, server software, and operating systems.
In a single-tenancy model, a single instance of the application and its supporting components (database and infrastructure) are dedicated to serving a single customer/user/tenant. However, a multi-tenancy model refers to a single SaaS application instance and its supporting framework serving multiple users, customers, or tenants at the same time. It is also known as a 'one to many' SaaS architecture.
You can learn more about the advantages and disadvantages of single-tenant and multi-tenant cloud architectures here.
Next, we’ll focus on why you’d want to use SaaS architecture to deliver services instead of using an on-premises approach.
On-premises architecture uses local hardware or a local data center to host a third-party application. You are responsible for provisioning technical requirements for the app, such as data storage and updating both the hardware and software.
You are also responsible for designing and developing supporting infrastructure, such as networking and databases.
With SaaS architecture, the vendor handles these often time-consuming tasks on your behalf. So you can spend less time creating infrastructure from scratch or fixing issues yourself, and more time optimizing the features that your customers actually use and want.
Here are some of the advantages SaaS architecture:
SaaS architecture allows you to create cost-effective software that won't turn your finance team's blood cold. Although it offers many of its benefits "out of the box", there are some best practices you'll want to follow to make sure you always run an optimal SaaS environment.
Here are some actionable tips and best practices for SaaS architecture.
Some developers swear by the monolithic architecture approach. The thinking is that if you layer a monolithic application, you can build, patch, or change it without affecting the entire application.
If you're not planning on creating a full production environment, using a monolithic approach could make sense. However, opt for a microservices architecture if you anticipate growth since making changes later is often tricky.
Microservices architecture helps structure decoupled applications into a collection of data and services. You can write, deploy, test, and patch each service independently.
You can also focus each microservice on a single business offering. Take the most successful streaming service, for instance. Netflix uses different microservices for billing, analyzing watch histories for movie recommendations, identifying devices to optimize viewing experiences, and adding copyright markings to all files.
Using microservices, different teams can manage independent services, code each in a different language, and deploy each on different infrastructure. For these reasons, using a microservices architecture facilitates scalability, continuous development (CI/CD) practices, and isolating problematic areas without changing an entire application or shutting operations down to fix it.
Users should be able to manage your SaaS solution themselves, so they aren't forced to hire specialists. You need to allow internal or external users to customize a SaaS solution based on their own needs without writing code.
Provide easy-to-use APIs in your SaaS architecture so users can customize the platform more flexibly. Don't forget to provide thorough documentation as well. By allowing them to integrate the tools they already use or want to use, they can reap more value from your SaaS architecture. You can also host popular bots by default — such as Slack.
You can share computing resources between multiple customers by leveraging a multi-tenant architecture. There are fewer instances of resource underutilization in a multi-user environment than in a single-tenant environment.
There are two ways to implement a multi-tenant approach:
Suppose you have heavy users whose workload hogs most of your resources. In that case, you may need to use a single-tenant approach. Such users may degrade other tenants' user experiences in a multi-tenant environment.
If you are unsure which users take up the most resources, you can use a cost intelligence solution like CloudZero to monitor which customers cost you the most to support.
You can even track costs daily per customer per feature.
With CloudZero cost per customer visibility, you can decide if you should raise your service fees to afford a single-tenancy approach or to remain profitable.
Most organizations opt for a monolithic or on-premises architecture out of concern for losing control over their data. Data breaches are such a major concern that more organizations than ever plan to invest in cybersecurity to prevent costly breaches.
Making Role-Based Access Control (RBAC) a core component of your SaaS architecture can help improve data security. RBAC is a data access control method that restricts different users from accessing and changing data that does not directly relate to their role in an organization.
RBAC lets users designate administrators, vendors, end-users, contractors, etc. Setting roles by job competency or authorization is also possible.
Ensure you build your SaaS application with compliance regulations built-in if you offer a vertical SaaS architecture, an application for a specific industry. Keep in mind that while some policies are industry-specific, others apply across the board, such as the General Data Protection Regulation (GDPR).
As your SaaS application grows in popularity, it should be able to scale. A growing business generates increasing transactions, queries, and metadata.
This requires that you design the SaaS architecture to autoscale easily and handle the increasing load without deteriorating performance. You can achieve this by ensuring the SaaS architecture supports seamless horizontal and vertical scaling.
Develop a SaaS solution that is highly available. Users of SaaS solutions seldom tolerate downtime. They know that lengthy service outages reduce customer satisfaction, resulting in losing customers, business, and their competitive edge.
SaaS application users also expect to receive properly tested updates and assistance whenever they contact you with a problem.
Vendor lock-in refers to the unfortunate situation where an organization finds moving from one vendor to another is extremely difficult. One way to ensure your SaaS application puts users’ vendor lock-in concerns to rest is to make it supports standard integration APIs, so users are free to connect the solution with other SaaS or on-premises applications.
That way, users can add capabilities to the SaaS application instead of switching to another vendor. This multi-service approach can enable users to innovate without continually changing vendors.
A multi-tenant architecture is often an economical approach, but costs can quickly accumulate as you add more users. The approach can make this easy to overlook because a single database manages data for multiple tenants, reducing visibility per tenant.
Tracking the SaaS costs you incur is essential to ensure that your architecture decisions don't eat into your margins over time.
If your cost visibility is good, you can tell a lot more than the total number of instances you spin up in a given period.
With a tool like CloudZero, you can track SaaS architecture costs by customers, products, teams, and units within your company. You can determine who your most profitable customers are with CloudZero since it shows your cost per customer.
In addition, you can see which customers you spend the most on so you can adjust your SaaS pricing to maintain healthy margins.
It also allows you to see what feature takes up the bulk of your cloud budget. Based on how much your customers use it, you can either keep it as is or decommission it to satisfy the Rule of 40.
You can still use CloudZero to calculate how much you spend on supporting internal and external users.
You can plan and allocate your SaaS architecture budget more accurately when you know the mean cost per customer over time.
Then, you can determine how SaaS costs change as your customer base grows. Therefore, your engineering team can be well equipped to predict when they may end up going over budget, thereby avoiding overspending.
Additionally, finance can tell where and how cloud spend is going to measure ROI over time more effectively.
Using CloudZero, you can implement multi-tenant architecture without worrying about losing cost visibility. Our cloud cost intelligence platform helps engineering and finance align on cloud costs and gain better visibility into their SaaS COGS, unit costs, and cost per customer.
CloudZero also enables teams to drill into cost data from a high-level down to the individual components that drive their spend — and see exactly what cloud services cost them the most and why.
With cloud cost intelligence, you can make informed engineering and cloud architecture decisions that ensure profitability. 
to see how CloudZero can help you measure costs within multi-tenant and SaaS environments.
