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Understand the differences between single-tenant versus multi-tenant cloud architecture so you can build cost-effective applications.
When operating in the cloud, one of the key decisions to make is about which type of architecture to adopt for your business and customer data. This is because choosing cost-effective architecture is key to building profitable SaaS software.
Single-tenant and multi-tenant cloud environments are the options to consider. Both types of architecture have security and privacy implications. There’s also the issue of cost, which differs significantly depending on the architecting model you adopt.
In this article, we’ll compare multi-tenant vs. single-tenant cloud architecture and how to build more cost-effective applications irrespective of the model you operate.
What is a multi-tenant application vs. single tenant?
Single-tenant cloud architecture is one where a single software instance and its supporting infrastructure/database serve only one customer. In a single-tenant environment, all customer data and interactions are separate from every other customer. Customer data is not housed in the same database and there’s no sharing of data in any way.
A multi-tenant architecture is one where a single software instance and database serves multiple customers (i.e. tenants).
The real estate analogy is often used to explain single-tenant vs. multi-tenant cloud architecture. In a single-tenant cloud, each customer lives alone in a single apartment building which has its own security system and facilities and is completely isolated from neighboring buildings.
In multi-tenant cloud architecture, tenants live in different apartments inside a single apartment building. They share the same security system and communal facilities. But each tenant has a key to their respective apartments so their privacy is guaranteed within their apartment. However, the activities of fellow tenants are more likely to have an impact on their comfort in the building.
Most startups opt for a multi-tenant setup, which means having one big database that houses all the customer data. With the right security systems in place, customer data stays private. While customers cannot see each other’s data, they do live in the same database, and the same computer processes all of the data; so, it’s not segmented in any way.
The benefits associated with single-tenant cloud architecture include:
Some disadvantages of single-tenant cloud architecture are:
Some of the benefits associated with multi-tenant cloud architecture are:
While multi-tenant cloud architecture is usually the best approach for most consumer-facing applications, it is not without its disadvantages, which include:
A single tenant architecture may be suited for specific industries or sectors where there are strong privacy and security concerns around customer data. Good examples are the healthcare and finance industries.
In the healthcare industry, for example, applications must meet HIPAA requirements when dealing with patient information. So each hospital may need to have its own data center onsite to ensure compliance. The same applies to certain types of financial data.
Most consumer-facing applications are best built as multi-tenant applications. The cloud itself is multi-tenant. Cloud service providers such as AWS use the same hardware for various customers under the covers. While each customer has a different Amazon account, the same computers process customer information.
One of the major trade-offs with multi-tenancy is cost visibility. Since all your customer data is housed in one database, it’s difficult to figure out the cost of servicing each customer individually.
A lack of visibility into your costs per tenant (i.e., per customer) makes it difficult to make critical pricing decisions because you have no idea what your costs and margins are for each customer or customer segment.
So, how do you tease apart your multi-tenant architecture to understand your costs per tenant? This is where CloudZero comes in.
CloudZero’s cloud cost intelligence platform lets you have the best of both worlds when managing customer data in a multi-tenant environment. You do not have to manage all your customers separately but you can still decipher your cost per customer.
CloudZero automatically allocates cost per tenant and delivers granular metrics for your SaaS business. CloudZero pulls in your AWS events, normalizes the data, and allows you to correlate cost with other types of metrics.
Request a demo to see how CloudZero helps you break down costs in a multi-tenant architecture, giving you the insight you need to run your business better.