The choice between a single-tenant solution and multi-tenant solution is more than a technical one. The choice is ultimately a strategic business decision. Organizations must go beyond technical specifications and look to the business value derived from their architecture. The technology elements will always be important (scalability, operational efficiency, software development life cycle management, etc.), but organizations should be starting with the business need in mind and seeking out the appropriate technology versus the opposite. In the end it is about using the technology to meet business goals and objectives.
It is time for technology to meet in the middle with strategic business planning when it comes to the option of multi-tenancy or single-tenancy. With single-tenant architecture each customer gets their own instance of software that runs in an isolated environment. On the other hand, multi-tenant architecture allows all customers to be served from the same instance of the software and infrastructure. So why is this important to the bottom line?
Business Strategy & the Single-tenant Model
Although a single-tenant model may look like a wise business decision at first glance, there are many important items to consider. A single-tenant model requires a substantial increase in resources with a growing customer base. As the organization grows they will need to invest in more hardware, software, and employees to serve their customers. A single-tenant model will turn an organization into their hardware vendor's best friend, as the capital expenses are constantly multiplying.
Not only does CapEx skyrocket, so does OpEx. As the number of hardware systems increase so does power consumption, rack space cost, administration fees, monitoring expense, and difficulty of upgrades. Time and complexity of upgrading is much greater for single-tenant models, while multi-tenant solutions are extremely agile. All release engineering steps have to be duplicated for every single customer. The single-tenant model clearly makes growth a difficult process, and no organization wants that.
The single-tenant architecture also prevents organizations from entering the small and medium enterprise (SME) market, as single-tenant models only work with small numbers of very large customers. This architecture is not practical with many SMEs because of the costs associated with deploying multiple instances. Using single-tenant architecture will not support sales into the SME market, which makes up an exponential percentage of the economy.
Business Strategy & the Multi-tenant Model
Multi-tenant solutions foster the exact opposite. They are positioned to scale and grow with the customer base without the hassle of purchasing more hardware and hiring more resources. This not only reduces operating costs, but also makes it easier to provide better pricing for customers. Some notable benefits include:
- Faster time to market
- Easy upgrades for customer
- Lower CapEx & OpEx
- Higher Organization Efficiency
- Low costs when adding additional customers
Organizations who continue to view this type of a decision as a technical one are missing the mark. Multi-tenant models generally provide all the same security and better functionality than single-tenant models. Organizations shying away from this architecture are going to have an incredibly difficult time scaling and meeting customer demand. It is easy for organizations to continue making decisions on a technical level, but in the long run that could be detrimental to growth. It is important to go beyond the technical details and into the definition of true business value.