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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.
Table Of Contents
In SaaS, a single-tenant architecture is where a single instance of the software application, and its supporting infrastructure, serves a single customer (tenant).
The single instance of the software runs on a dedicated cloud server for just this one customer. So there is no sharing it with any other customer of the SaaS provider.
Credit: TechTarget - In a single tenancy model, all the VMs are dedicated to a single customer’s usage. The SaaS provider manages the infrastructure (hypervisor and host hardware).
Single tenancy in cloud computing also means:
A multi-tenant architecture is where a single software instance and its supporting infrastructure are shared among two or more customers (tenants) at the same time.
While each tenant's data is isolated from the other tenants', each customer shares a single database, software application, and SaaS server with the others.
Credit: TechTarget - In a multi-tenancy model, a customer uses just one instance out of several. The SaaS provider controls the underlying infrastructure.
Multi-tenancy in cloud computing means that:
There’s one more.
In the mixed tenancy approach, a hosting provider deploys one or more portions of the application as dedicated for each client, with the rest shared among all customers.
Credit: Microsoft - Mixed tenancy provides some dedicated and some shared components at the same time.
There is an increasing trend among hosting providers to offer a sweet spot between single-tenancy and multi-tenancy. Using this model, customers can benefit from the scalability and cost benefits of a multi-tenant architecture while enjoying the isolation and dedicated resources of a single-tenant architecture.
The real estate analogy is often used to explain single-tenant vs. multi-tenant cloud architecture.
In a single-tenant cloud architecture, 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.
That level of cost intelligence has helped companies like Drift and Demandbase save over $3 million and 36% on annual AWS costs. Demandbase used the savings report to attract $175 million in financing. You can too.
Cody Slingerland, a FinOps certified practitioner, is an avid content creator with over 10 years of experience creating content for SaaS and technology companies. Cody collaborates with internal team members and subject matter experts to create expert-written content on the CloudZero blog.
CloudZero is the only solution that enables you to allocate 100% of your spend in hours — so you can align everyone around cost dimensions that matter to your business.