Multi-Tenant SaaS: Benefits and Best Practices

What Is a Multi-Tenant SaaS Application?

A multi-tenant architecture is a cloud-oriented application architecture that involves a single instance of the application but serves multiple clients or organizations. The basic idea of ​​this SaaS architecture design is simple: have a single codebase that runs for all clients with the same data structure, but the data layer is separated into different workspaces by each organization.

With a SaaS application that uses a multi-tenant architecture, the software and web development teams will need to implement and support a single codebase and not multiple copies. In this way, we can update the SaaS application simultaneously for all organizations, and it will be easier to manage the server infrastructure.

Some classic examples of the use of multi-tenant architecture are Salesforce, an industry standard in providing CRM services; Netflix, a popular streaming service; Slack, a business communication software; and other giants like Hubspot, Office 365, Box, Zoho, and Zendesk.

In this article:

What Is a Single Tenant SaaS Application?

A single-tenant SaaS application is a cloud computing model where each client or customer has their own independent instance of the software and the underlying infrastructure. In a single-tenant environment, the software and its supporting infrastructure are dedicated to a single customer. This means that each customer’s data, application, and server are isolated from those of other customers, providing a higher level of security, privacy, and customization that can be important for certain user cases

In a single-tenant SaaS setup, the service provider manages, updates, and maintains separate instances of the software for each customer. This architecture allows for changes to be made to one instance without affecting others. Additionally, because the resources are not shared with other tenants, clients may experience better performance and have more control over the upgrade cycles and maintenance windows of their SaaS applications.

However, single-tenant SaaS also has some drawbacks. The dedicated nature of the resources means higher costs for both providers and clients, as the economies of scale achieved with multi-tenant architectures are not possible. Dedicated resources may not be fully utilized, leading to inefficiency. Because each instance must be updated individually, it can be slower to roll out new features and updates. Finally, managing multiple separate instances can be more complex and time-consuming for providers.

Single Tenant SaaS vs. Multi-Tenant SaaS: What Are the Differences?

The primary difference between single-tenant and multi-tenant SaaS architectures lies in how resources, software, and infrastructure are shared among clients.

• Resource sharing: In multi-tenant SaaS, resources such as databases and application servers are shared among multiple clients. In contrast, single-tenant SaaS provides dedicated resources for each client.
• Customization: Single-tenant environments offer more room for customization since changes can be made without impacting other users. Multi-tenant architectures, however, may limit customization in favor of standardization across tenants.
• Performance and security: Single-tenant architectures can offer enhanced security and performance as each client’s data and applications are isolated. Multi-tenant setups, while efficient and scalable, require more sophisticated data isolation techniques to ensure security and can sometimes suffer from “noisy neighbor” issues, where one tenant’s heavy usage affects others.
• Cost: Generally, single-tenant SaaS solutions are more expensive due to the need for dedicated resources for each client, while multi-tenant solutions are more cost-effective due to the shared nature of the resources.

Benefits of Multi-Tenant SaaS Architecture

Using a multi-tenant approach for SaaS architecture can help organizations scale their software more easily and manage a large client base more efficiently.  Key benefits include:

Ease of implementing updates

One of the most significant benefits of using a multi-tenant application architecture is updating the application platform for all the clients at once. In the past, updates had to be installed on every client’s computer on which the application was installed. It is now possible to do this for all users at the same time. Customers prefer software that provides frequent and streamlined updates without any effort on their end..

Automated customer onboarding

Using the multi-tenant architecture, SaaS providers can develop a fully automatic customer onboarding process—the user registers, makes the payment, a tenant is added in the software, and the user receives an automated email with their access data.

Long-term cost savings

Multi-tenant architectures help reduce costs in several ways. It allows more efficient usage of resources as the application scales, ensuring a lower cost per tenant. In addition, onboarding, maintenance, and support become much easier and require less manpower on the provider’s side.

How Does Data Isolation Work in Multi-Tenant SaaS?

If you have a single instance of software, you need to consider how to separate the data between different tenants. There are three common strategies to solve this problem: foreign key, segregated schema, and segregated database.

Multi-Tenancy with Foreign Keys

This is the simplest way to separate data from our different tenants. Each table involved in the application has a foreign key to a tenant’s control table with this strategy. Thus, all data from all the tenants is kept in the same database, segregated by this foreign key. When a user accesses the application, the application checks the tenant linked to the user and shows data from tables whose rows had the foreign key linked to the user’s tenant.

The advantage of this strategy is that its implementation is straightforward and cheap—it only involves foreign keys and filters. However, this strategy has two downsides: 

• Performance will suffer if there are large volumes of data or a large number of tenants. 
• The database is unique for all tenants—if one of the tenants performs an operation that strains the database, all the other tenants will suffer from the slowdown. 

Therefore, this strategy is not recommended for applications with a large volume of data or tenants.

Multi-Tenancy with Segregation via Schema

The database instance is still shared among all the tenants in this strategy. But here, each tenant has its own schema. The application is the same for everyone, but that application instance has multiple sets of isolated application tables for each tenant.

The advantage of this strategy is that its implementation is straightforward and cheap—it only involves foreign keys and filters. However, this strategy has two downsides: 

• Performance will suffer if there are large volumes of data or a large number of tenants. 
• The database is unique for all tenants—if one of the tenants performs an operation that strains the database, all the other tenants will suffer from the slowdown. 

Therefore, this strategy is not recommended for applications with a large volume of data or tenants.

Multi-Tenancy with Segregation via Schema

The database instance is still shared among all the tenants in this strategy. But here, each tenant has its own schema. The application is the same for everyone, but that application instance has multiple sets of isolated application tables for each tenant.

The main advantage of this strategy is the isolation of data from different tenants, which reduces the possible impact that a tenant can have on other tenants of the application. For example, accidental deletions would be restricted to the tenant/schema that caused it due to the use of different schemas. This method is an inexpensive strategy as it is based on a single database instance. However, it has a slightly more complex implementation. 

Multi-Tenancy with Segregation via Database

Each tenant has a dedicated database instance in this strategy—the application can simultaneously connect to multiple databases.

The main advantage of this model is that isolation is now “physical”, with each tenant having their own unique database instance. This further mitigates the chances of one tenant’s operations impacting the experience of other tenants. The performance gain in this strategy is also noticeable since there are isolated database instances for each tenant. 

However, this strategy is significantly more complicated to implement: the application will have to connect to multiple databases simultaneously according to the user accessing the application. In addition, you will need to provision a database instance for each tenant, which makes this the most expensive strategy among the three we discussed.

Best Practices to Build a Multi-tenant SaaS Application

Setting Resource Quotas on Resource Consumption

To efficiently manage resource utilization in a multi-tenant SaaS environment, it’s essential to implement resource quotas for each tenant. Resource quotas help ensure that no single tenant can monopolize system resources, leading to a fair and balanced distribution. Here’s how to effectively set and manage resource quotas:

• Define resource limits: Identify key resources that need limits, such as CPU usage, memory, storage, and bandwidth. Determine appropriate usage thresholds based on typical tenant needs and overall system capacity.
• Implement monitoring tools: Use monitoring tools to track resource consumption in real-time. Solutions like AWS CloudWatch, Prometheus, or custom monitoring scripts can provide insights into how each tenant is utilizing resources.
• Dynamic quota adjustment: Allow for dynamic adjustment of quotas based on tenant subscription plans. Higher-tier plans can have higher resource quotas, incentivizing upgrades and providing a scalable solution for growing tenants.
• Automated enforcement: Implement automation to enforce quotas. For instance, set up alerts and automatic throttling when a tenant approaches their resource limit. Tools like Kubernetes offer built-in support for managing resource limits per tenant.
• Transparent communication: Inform tenants of their resource usage and quotas through a dashboard. Transparency helps tenants manage their consumption and plan for upgrades if needed.

Tenant-Aware Application Design

Creating a tenant-aware application design involves tailoring your application architecture to recognize and respect the multi-tenant nature of your SaaS platform. Here are key considerations:

• Data partitioning: Use data partitioning techniques, such as schema-based or database-based segregation, to ensure each tenant’s data is isolated. This enhances security and performance.
• Tenant context handling: Ensure that your application can handle tenant-specific contexts. For example, every request should be processed in the context of the tenant making the request. This might involve passing a tenant ID through your application layers.
• Configurable business logic: Allow business logic to be configurable on a per-tenant basis. This could include custom workflows, role-based access controls, and feature toggles.
• Scalable architecture: Design your application to scale horizontally. Multi-tenancy often leads to varying loads, so your architecture should handle scaling efficiently to maintain performance and reliability.
• User interface customization: Provide options for tenants to customize their user interfaces. This could range from simple theming options to more complex feature sets, ensuring each tenant can tailor the application to their needs.

Develop Versioning Policies

Versioning policies are crucial for maintaining stability and consistency in a multi-tenant SaaS application. Here are steps to develop effective versioning policies:

• Semantic versioning: Adopt semantic versioning (e.g., MAJOR.MINOR.PATCH) to clearly communicate changes. Major versions indicate breaking changes, minor versions introduce new features, and patch versions include bug fixes.
• Backward compatibility: Ensure backward compatibility whenever possible, especially for minor and patch versions. This minimizes disruptions for tenants during updates.
• Deprecation strategy: Implement a clear deprecation strategy for outdated features and versions. Inform tenants well in advance of any deprecations and provide a migration path to newer versions.
• Testing and rollback plans: Rigorously test new versions in staging environments before rolling them out. Prepare rollback plans to quickly revert to previous versions if issues arise.
• Tenant opt-in/opt-out: Allow tenants to opt-in to new versions or features, providing them control over their update cycles. This is particularly useful for major changes that might require tenant adaptation.

Monitor Metrics at Both the Global and Tenant Levels

Effective monitoring is essential for maintaining the health and performance of a multi-tenant SaaS application. Here’s how to set up a comprehensive monitoring system:

• Global metrics: Monitor overall system health indicators such as CPU load, memory usage, disk I/O, and network traffic. Use these metrics to gauge the general performance and capacity of your infrastructure.
• Tenant-specific metrics: Track metrics on a per-tenant basis. This includes resource usage, response times, error rates, and transaction volumes. Tenant-specific metrics help identify and address issues affecting individual tenants without impacting others.
• User experience metrics: Monitor end-user experience metrics like page load times, transaction success rates, and user interaction times. These metrics provide insights into how tenants and their users perceive the performance of your application.
• Anomaly detection: Implement anomaly detection to identify unusual patterns in metrics that could indicate potential issues. Machine learning models or rule-based systems can help flag these anomalies.
• Dashboards and alerts: Create real-time dashboards for both global and tenant-specific metrics. Set up alerting mechanisms to notify your team of critical issues, allowing for prompt intervention.

Implement Tenant-specific Logging and Auditing

Tenant-specific logging and auditing are vital for ensuring security, compliance, and operational transparency in a multi-tenant SaaS application. Here’s how to implement these practices effectively:

• Separate log streams: Maintain separate log streams for each tenant. This simplifies log management and ensures that tenant-specific data can be easily retrieved and analyzed.
• Detailed audit trails: Implement detailed audit trails that record significant actions performed by tenants and their users. This includes login attempts, data modifications, and configuration changes.
• Compliance and security: Ensure your logging and auditing practices comply with relevant regulatory requirements such as GDPR, HIPAA, or SOC 2. This often involves retaining logs for a specified period and ensuring they are secure and tamper-proof.
• Access controls: Restrict access to logs and audit trails to authorized personnel only. Implement role-based access controls (RBAC) to enforce these restrictions.
• Log analysis tools: Use log analysis tools like ELK Stack (Elasticsearch, Logstash, Kibana) or Splunk to parse, search, and visualize logs. These tools can help in quickly identifying and resolving issues.

Multi-Tenant User Management for SaaS with Frontegg

In a nutshell, Frontegg’s PLG-centric and end-to-end user management platform is multi-tenant by design. 

By developing the platform to the essential requirements of the B2B SaaS, we know that each tenant has its own configurations, user sets, and security settings. This is why Frontegg allows each environment to hold segregated sets of tenants, assign users to each one of them, and hold a separate configuration for each one of them in a way that doesn’t affect the neighboring tenants in any way or form.

In the complex B2B world, each customer requires fine grained control on each configuration. That requires professional products to keep pace with these requirements and develop a multi-tenant capable infrastructure from day 1. Frontegg just makes it easier.