Residential Tenancy Is Straightforward-Cloud Tenancy, Not So Much

You have two major options if you're looking for a place to live: own or rent. The pros and cons are fairly straightforward and break down as follows:

Rent Own
(Garage, laundry room, elevator, etc.)
Shared Not shared
Fees Rent and utilities only Mortgage, utilities, repairs, maintenance fees, taxes …

In a simple world, cloud computing would consist of “renting” everything, and opening an Internet browser to start using the business software you need. But in practice, it's a bit more complicated.

Multitenancy, Single-tenancy, and How They’re Combined

In practice, you have the option of

1. Sharing both the application and the database with other tenants (multitenancy)
2. Using your own application instance and a separate database, stored and managed by a third party provider (single tenancy)
3. Sharing the application, but not the database (hybrid)
4. Sharing the database, but not the application (hybrid)

Single-tenant application Multitenant application
Single-tenant DB Your database and your application are separated from those of other tenants. You will not be automatically upgraded to the latest version of the software with everyone else. This can be a disadvantage if you do not want to manage software upgrades, and can also be a more expensive option, since you are not sharing resources with other tenants. All tenants use the same application and upgrade at the same time, but they have separate databases. In this scenario, backup plans may vary for each customer, and are therefore more expensive.
Multitenant DB Each customer has a separate instance of the application, but all customers share the same database. This provides you with more flexibility when it comes to modifying the solution, as long as you don’t need to make changes at the database level. Considered by purists to be the "true" software-as-a-service model, this scenario provides the greatest theoretical savings, since everything is shared between tenants. Note that even though the database is shared, data is kept separate.

Which Option Is Right for You?

If you need to make changes to your solution and want to control upgrades, you’ll need a separate application instance. If you are a financial institution and security is extremely important, a separate database is likely a better option. But you need to be careful about the perceived advantages versus the real advantages of single/multitenancy. Although the risk of someone else accessing your data may appear to be higher when you're sharing the same database, it really all depends on the security measures adopted by the vendor and the data center provider. In other words, a multitenant database can be more secure than a single-tenant database.

Ideally, the vendor should give you several options and clearly explain the pros and cons of each option. If only one option is offered, it would make sense to compare it to similar solutions provided via different delivery models.

Above all, in order to avoid confusion, ask vendors what you’re going to be sharing with other tenants and what will be kept separate.  Also, ask for references and try to understand how other companies similar to yours are managing data and applications in the cloud.
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