Single-Tenant vs. Multi-Tenant Architecture: Breaking Down the Key Differences

SaaS applications and services are at the core of today’s businesses, and a quick glance at the market indicates that this trend isn’t going to stop anytime soon. Gartner forecasts that SaaS spending will reach $197 billion in 2023, up 17.9% from last year, with another 17.7% growth expected in 2024 to $232 billion.

Furthermore, the average number of SaaS applications used by organizations worldwide reached 130 in 2022, up from 80 in 2020 and just 16 in 2017. As the number of SaaS products and vendors continues to grow, one of the most important decisions they need to make is how to seamlessly and successfully deliver their software to their customer base.

Today, delivery models are centered around two types of architectures: single-tenancy and multi-tenancy. Let’s dive into the specifics.

Single-Tenant and Multi-Tenant Architectures: A Primer

Under a single-tenant architecture, a single customer, also known as a tenant, utilizes a dedicated app instance and retains a majority of the control when it comes to customizing the software and its infrastructure. Since the tenants operate independently, they enjoy an increased level of flexibility than they would with shared infrastructure. This gives them more control over things like security, backup capabilities, and software reliability.

Meanwhile, as the name indicates, multi-tenant architecture differs in the fact that multiple customers have access to the same instance of the software provider's product. Customers may have limited levels of customization options, such as basic business rules or the look and feel of the user interface. Still, they usually won't have deeper access to the infrastructure or application code.

While users within a multi-tenant architecture can make their own individual configurations, they typically can’t do so to the same degree as they would be able to under a single-tenant architecture.

At a high level, multi-tenant architectures integrate tenants physically but separate them logically, meaning a single instance of the software can serve multiple customers while running on a single server. Under this delivery model, customers share the same codebase since they're sharing the same environment. This means reduced costs for all sides involved and also better scalability.

That said, the security implications mean that multi-tenant architecture should be supplemented with robust identity management, specifically strong authentication flows that include MFA, SSO, or even passwordless methods.

Single-Tenant Architecture: Strengths and Weaknesses

Not surprisingly, single-tenant and multi-tenant architectures each have their own benefits and disadvantages. For example, the advantages of a single-tenant architecture include:

• Better Security: Users of a single-tenant environment usually have a higher level of security because their data is physically separated from that of others. This eliminates the possibility that one user will accidentally access someone else’s data due to configuration errors or cybercriminal activity.
• Easier Backup and Migration: Since each system is run on one dedicated SaaS instance, users have more control over backup and recovery because the instance can be assigned to a dedicated backup system. This also makes migration between environments much easier.
• A High Level of Control: Single tenancy gives users increased control over the entire environment, which provides more flexibility when it comes to customized configurations and new software versions or updates.

On the flip side, some disadvantages of single tenancy include:

• Higher Maintenance Costs: Single-tenancy can be expensive for SaaS providers, and those costs are often passed on to end customers. This makes it extremely important to accurately understand the cost-per-customer to weigh the economic tradeoffs of adopting this approach.
• Lower Scalability: Scaling single-tenant environments is challenging because the architecture doesn’t efficiently use shared resources.
• Fewer Updates: SaaS users under single tenancy often won’t receive all software updates, particularly if they conflict with individual customizations or components.

Multi-Tenant Architecture: Strengths and Weaknesses

Generally speaking, the advantages and disadvantages of multi-tenancy are the inverses of single-tenant architectures. First, a look at the benefits of multi-tenant environments:

• Lower Costs: Costs-per-user are lower with multi-tenancy because all of the resources are shared, just like the costs.
• Improved Maintenance: Since updates are applied to the entire system, they affect all users, meaning system upgrades and ongoing maintenance aren’t handled by individual end-users. This ultimately frees up resources for end customers without sacrificing crucial maintenance and updates.
• Highly Efficient Usage: Using a shared resource model results in optimized resource usage and efficiency.
• Easier Setup and Onboarding: Multi-tenancy generally gives users a more seamless experience since the environment is mostly identical for all customers (outside of optional configuration settings). This makes it easier for new customers to get up and running relatively quickly.

Meanwhile, the disadvantages of multi-tenancy include:

• Lower Availability of Resources: If one customer experiences increased workloads, it could affect other clients that share the same resources — a phenomenon often referred to as the “noisy neighbor problem.”
• Higher Security Risks: Data stored in multi-tenancy cloud apps aren’t typically controlled by the user, which inherently adds risk because it means they need to rely on the SaaS provider’s data security systems and processes. If a breach targeting the SaaS provider or even one SaaS customer occurs, it could impact multiple users.
• Increased Fragmentation: The duplication of components could result in wasted resources as more tenants are added. If each customer uses its own SQL database, for example, it would significantly deplete resources.

Choosing the Right Architecture for Your SaaS Application

When navigating between single-tenant or multi-tenant architecture, there are six main factors you need to take into consideration. These include:

1. Speed and Performance

Since multiple customers share resources when using a multi-tenant architecture, speed and performance could be impacted for individual tenants. That said, modern mapping and resource distribution can alleviate this risk by optimizing the use of resources for more efficiency and improved performance. This could come with an associated cost, however — some vendors offer improved performance under service-level agreements (SLAs) at a higher price.

Single-tenancy can be more straightforward since the main factors that impact performance are the demands placed on the app, infrastructure, and overarching hardware that supports the environment.

2. Security and Dependability

With each customer’s environment isolated under single-tenant architectures, there is a significantly lower chance that one customer’s data will be accessed by another customer. If and when cyberattacks or accidental breaches do take place, the damage caused is less likely to affect other users. This can be a big consideration for businesses operating in the defense, healthcare, finance, insurance, and banking industries.

Meanwhile, multi-tenancy offers much more limited isolation between customers, although isolation can be increased if each customer uses its own database. And since a multi-tenant architecture creates more access points, it gives attackers more opportunities to identify and exploit vulnerabilities, which could eventually affect multiple users.

3. Setup and Maintenance

From a cost perspective, multi-tenancy is typically the better option because management and maintenance costs are shared among multiple tenants. In most cases, SaaS vendors handle the bulk of general maintenance, requiring less effort from customers when it comes to initial setup or updates.

Single-tenant architectures isolate customers, meaning they’re on the hook for their own management and maintenance costs. This could make setup, maintenance, and customization more resource-intensive and, in some cases, slow down operations. If a SaaS vendor does maintain new single-tenant instances for each new user, those costs are almost always transferred to the customer, leading to an overall higher subscription price.

4. Scalability and Efficiency

Single tenancy gives users more transparent and predictable scalability because each has its own application instance and can scale at any time by changing sizing or launching additional instances.

Since resources are shared in a multi-tenant architecture, the vendor can utilize them more effectively and shift computing resources when and where they are needed. This means that a customer’s environment is ultimately scalable even if they don’t always have full visibility into how or why it is achieved.

5. Backup and Restore Capabilities

Multi-tenant architecture usually executes backup and recovery at the system level, as opposed to the individual tenant level; individually backing up data could require complex procedures for users. As a result, some vendors may not be able to meet the data security requirements of enterprise customers.

Again, a single-tenant architecture gives customers a higher level of control over backups and recovery. Still, they may need to pay for and manage their own security system and process. This does generally make things easier; however, backups include the data structure and underlying code of a single instance, allowing for the easy restoration of previous versions.

6. Customization and Control

Similar to the above, single-tenant architecture gives customers more control of the environment and configuration they’re working in, including the underlying operating system, regular updates, and planned maintenance schedules. It may come at a price, but this gives them more flexibility when it comes to managing their own environments.

Conversely, multi-tenancy gives users less control over their environments, and they usually don’t have the option to decide which software updates are applied. Most features are universal across customers, although a few remain open to tenant customization.

The Final Verdict

There is no easy answer for organizations deciding between single-tenant and multi-tenant architectures. The reality is that the final decision requires careful consideration of factors, including business goals, security requirements, regulatory issues, and available resources.

In general terms, a single-tenant architecture works well for organizations with unique requirements when it comes to configuration, performance, and security. For example, most enterprises fall into this camp. These customers are often willing to pay more and have the manpower and knowledge they need to put in additional effort to set up, configure, and manage their environments.

For smaller and more nimble organizations that want to get up and running quickly, a multi-tenant architecture may be the way to go. This path comes with lower costs and maintenance overhead, although they need to understand that they’ll sacrifice a certain amount of control over things like customization, performance, and security.

You’ll need to cover all crucial bases like user management, authentication flows, billing and subscription management, and more. Managing roles and permissions also becomes extremely important, especially while going down the multi-tenant route.

As always, making a final decision involves doing the proper research and identifying how each architecture meets the specific needs of the business. In the end, finding a suitable balance between cost and flexibility will give most organizations the best chance at success. Pick wisely!