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SaaS: How Many Ways to Achieve Multi-Tenancy ?
SaaS vendors are either multi-tenanted, or they’re not, right? Some would even go so far to argue that if you aren’t running a multi-tenanted operation that you shouldn’t even be considered as a SaaS vendor. But it turns out that there is some disagreement on what multi-tenancy is and there may actually be a spectrum of levels of multi-tenancy.
In Phil Wainewright’s blog at ZDNet, Phil describes the “many degrees of multi-tenancy”.
First degree multi-tenancy is like Salesforce.com. All parts of the application infrastructure are shared by all customers: the hardware, the application software and server, and the database tables and schema. Technically though even Salesforce does not abide by this definition of multi-tenancy since their database has grown so large that even their underlying Oracle database can no longer support it — it is partitioned into eight identical systems globally, each supporting a different groups of customers. Upgrades and maintenance happens coincidentally across all systems.
Second degree multi-tenancy is where the vendor hosts many clustered multi-tenanted copies of the application. The same application software and data schema are replicated. The advantage of the approach is that rather than spend a lot of money on a single high-horsepower hardware server, many smaller commodity servers can work to service the application. Some vendors who use this approach depart further from the pure SaaS model, by allowing customers to decide when they wish to upgrade.
Lesser degree multi-tenancy is an approach advocated by Oracle. Oracle hosts software for customers in a way that is unique to each customer. The schemas for different customers may not be the same because of customizations. Customers still share some components of the server infrastructure so some limited amount of quantities of scale can be achieved. Upgrades in this kind of environment are much more difficult, and often coordinated simultaneous rollouts for all customers is not possible or can be extremely complex.
If you can tie your pricing to something like storage where there will continue to be annual growth, you have an excellent way to grow your business without having to do any more selling. How many Pricing Axes is optimal?