Multi-facets of the Multi-Tenant Architecture

January 30, 2008 at 12:27 pm 6 comments

There has been a lot of talk around Software-as-a-Service (SaaS). Many ISVs are exploring SaaS to achieve increased revenues and expand their customer base. With the advent of increased bandwith, customer demand, competitive pressures and increasing need for innovation, many ISVs are looking at alternative delivery models for their packaged software products (know as on-premise software models). 2008 is touted as the year that SaaS will take off. Whether that is true remains to be seen, but I thought I’d write an article on SaaS and the real underlying thought process that an ISV needs to go through when considering a SaaS strategy for their legacy product(s).

Multi-tenancy is a word that you’ll hear often in this space. What does it mean? Think about how a normal software application is designed to be consumed/used. It is expected to be installed within the domain of one company, where multiple users will use it to create/store/retrieve data, etc. Now what if you want to create this product once and have it used via the web by any company with any number of users? The design needs to change to accommodate this usage style. All of a sudden, you need to consider if you will have a single instance of your product with multiple back end databases (one per company) or individual instances of your product tied to individual databases. A multi-tenant architecture in the SaaS world basically means one instance of your product serving multiple companies and multiple users within each company. There is a difference between users and tenants SaaS which is important to understand – think of a tenant as a company or a team – basically a collection of users. A user on the other hand is an individual person or system that is interacting with the product. Multi-tenant is not a new concept by any means. It is just that as SaaS gains popularity, it has become a buzz word thanks to marketing hype. However, the implications of designing a multi-tenant architecture from the ground up vs. augmenting a legacy architecture to make it multi-tenant are real and can be quite complicated. Also worth noting that your SaaS solution does not have to be a multi-tenant solution. You can keep it single tenant, but there are associated costs and headaches with it that you need to be aware of.

The intent of this article is not to provide a detailed introduction to what SaaS is. There are lots of articles on that online. My real interest in SaaS lies in carving out a detailed strategy to implement complex SaaS solutions, something which is lacking in the industry today. There are not a lot of articles that detail the different areas that an ISV needs to think about before jumping into implementing a full blown SaaS solution. This article will aim to address this. However, one article cannot do justice to the complexities involved in designing a SaaS solution, but it’s a start I guess. So what are the core areas in my mind that an ISV needs to focus on when building out their SaaS strategy? There are four areas that need attention:

  • Business implications – Is my current business model conducive to SaaS? Have I conducted a market opportunity assessment? What financial models can I pursue for my new SaaS products? What about organizational and cultural issues and how will these impact my team and product development? What is my go-to-market strategy?
  • Technical implications – How do I achieve my multi-tenant architecture? Via software or hardware? Using Virtualization? How will my product scale to this new model? What architectural considerations need to be explored? How will SaaS impact my product lifecycle? What will my database design look like and how will it impact my data model? How will I handle subscriptions? What about security and how will I isolate my data in the database to keep customer data secure? Which encryption methods to use? What will my SaaS infrastructure look like?
  • Operational implications – Once I offer my software as a service, I now have to take on the burden of ensuring that the systems are up, otherwise no one will really want to use my software anymore. So as a service provider, the risk now shifts to the vendor from the customer of ensuring high availability and uptime. Along with this comes the onus of ensuring operational excellence.
  • Sales and Marketing implications – For companies (especially ISV) that are thinking of implementing a SaaS strategy, this is a vital piece of the puzzle. The reason being that the SaaS model changes the way an ISV will do business. The ISV will move from becoming a product company to a service company down the SaaS path. Coupled with the fact that SaaS opens up new customer channels and revenue models, the ISV needs to factor in how to capitalize on that and have a marketing plan handy to make the SaaS model work for them. A SaaS model causes a “revenue trickle factor” – what I mean is that the ISV no longer gets a fat paycheck everytime a customer now buys their product but realizes the revenue over a course of time (depending on which SaaS model they adopt), so this needs to be factored in to the sales and marketing plan to ensure that they make up for the trickle factor by signing up more customers to justify the cost of the infrastructure and management.

In subsequent posts, I will get into the details SaaS, especially around the area of giving guidance around how to implement a SaaS strategy, what to look out for, best practices, SaaS economics, the main technical challenges of SaaS and much more. Stay tuned!


    Entry filed under: SaaS. Tags: , , , , , .

    The Marketing (Business)-IT divide Web 3.0 and The Virtual Generation – Marketing Take Note!

    6 Comments Add your own

    • 1. sganesan  |  February 28, 2008 at 7:08 pm

      Excellent article…
      I was wondering if you know books/links/blogs that talks about how to personalize the SaaS user experience. I see so many articles around SaaS architecture, data model but couldn’t find one on how to develop a front-end (methodology, components etc,.) for multi-tenant applications..
      Once again, thanks for the posting…helped me a lot.

    • […] to SaaS is that you no longer get a big fat paycheck when you sign up a customer. As I mentioned in my previous post on SaaS, there is a trickle effect with SaaS revenues – they start at lower levels than traditional OP […]

    • 3. Suman Chaudhuri  |  March 1, 2008 at 12:50 am

      Hi there,

      You bring up an excellent point – that of customizing the user experience for SaaS applications. A front end for a SaaS application needs to provide a highly customized UI to allow your customers to be able to make the UI their own and to customize the menus, look and feel, etc. The challenge is how do you allow them to do so in a multi-tenant, single instance version. The answer is via meta-data. Meta-data driven UI will enable you to create the baseline UI and then allow the customer to build on top of that to extend and customize it to your needs.

      Then there is the notion of RIA/Web 2.0 and how that plays into SaaS. I plan on writing a whole article on meta-data driven UI and it’s place in the SaaS architecture, but I hope this gives you some insight into what you were asking about.

    • 4. sganesan  |  March 17, 2008 at 5:20 am

      Suman-Thanks for the comment and i look forward to your article. I was aware of the fact that metadata plays a huge role in personalzing the user interface for the tenant in SaaS but i am looking for more details on that topic. Hoping to see your article soon in this forum.

    • […] those of you that are not familiar with multi-tenancy, please visit this post that I have made on that topic. From a perspective of lower costs in terms of infrastructure and […]

    • 6. Narayana  |  June 7, 2008 at 7:28 am


      can you provide the URL’s on your writings on implementing SaaS ?


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