Multi-Tenant Versus Single-Tenant CRM Architectures

Q

Are CRM multi-tenant architectures better than single tenant?

The short answer is sometimes yes and sometimes no. So, this question deserves a longer answer.

There is a long standing debate about the merits, advantages, benefits and differences between multi-tenant and isolated tenant software as a service (SaaS) architectures.

Multi-tenant cloud CRM vendors such as Salesforce and Microsoft Dynamics 365 embrace and promote the multi-tenant shared architectural services model and claim that it provides efficiencies in terms of IT management, cost savings and scale, and that such operational and cost benefits are extended to their customer relationships. This argument is in large part true.

Isolated tenancy (also called single tenancy) cloud CRM vendors such as Oracle (Siebel) or SugarCRM claim that only when every customer operates within their own autonomous database is performance, security, privacy and integration flexibility truly maximized. Also a valid point.

So which is better? It depends on who you ask. Or perhaps more importantly, it depends upon your company's business objectives and IT requirements.

In reality, a large proportion of companies adopting SaaS CRM systems do so in order to rid themselves of the IT management and maintenance with customer relationship management software systems; and frankly don't care about SaaS delivery architectures. In fact this argument seems to have been created and fueled by SaaS vendors looking for competitive advantages.

It's been my experience that almost all SMBs (small and midsize businesses) don't care whether their CRM app is single-tenant or multi-tenant — they are far more concerned about the apps ability to achieve their business objectives, business processes and user preferences. As long as the CRM app achieves their business goals, is constantly available and secure, most SMBs have no concern whatsoever about the theoretical or practical differences of various SaaS technology architectures.

I have noticed a difference, albeit minimal, with enterprise organizations interest in tenancy. Some IT managers at larger organizations take a more purist view of SaaS and prefer multi-tenancy as they believe it better leverages the application and the delivery platform. This is a valid point as multi-tenancy achieves more IT management and economic efficiencies as the entire stack, including hardware, operating system, database and application operate in a shared services model.

From a software publisher perspective, I think there can be no doubt that a multi-tenant application is more efficient and economical, however, whether those economies and cost savings get passed to customers in the form of lower subscription fees or superior services is quite unclear.

Other IT managers and enterprise companies take a more practical view and give preference to an isolated tenancy model as they believe increased physical segregation provides increased information security, data privacy, integration flexibility and software customization. It should be understood that the isolated tenancy model does not mean that every customer is operating with individual hardware.

In fact, most isolated tenancy CRM systems leverage a shared infrastructure model for hardware (using database clusters and web server farms) and simply provision an independent database or database instance for each CRM customer. I have clearly noticed a preference by some (not all) organizations such as federal government bureaus, financial services companies and other information security sensitive organizations for the isolated tenancy model.

While the majority of SaaS CRM systems are multi-tenant, it's possible that environmental factors may influence the growth of one model over the other going forward. If cost pressures elevate, the multi-tenant model may become increasingly popular. If compliance issues such as SOX, privacy issues such as HIPAA or information security move even further to the forefront, the isolated tenancy model may gain preference for some organizations.

The bottom line is that there is no one best answer that serves all interests. Varying architectural strategies and opinions will favor one model over the other based upon technology philosophy, personal bias, perceived security and/or vendor marketing.