Single-tenant vs multi-tenant CRM: Which is best for you?
It’s a question many project leaders will ask in the early stages of implementation – how do you choose between single- and multi-tenant CRM?
To do this, some definitions are necessary. Gartner’s classification of multi-tenancy is a good place to start:
“Multi-tenancy is a reference to the mode of operation of software where multiple independent instances of one or multiple applications operate in a shared environment. The instances (tenants) are logically isolated, but physically integrated.”
In layman’s terms, this means your customers’ data will reside in a database alongside the data of any other company using the same CRM provider, but each dataset remains separate.
By contrast, single-tenant CRM offers you your own autonomous database, and with it the protection of your own physical server for your data to reside.
It’s widely regarded that multi-tenant CRM is more progressive, and this has been the mantra that Salesforce has long built its success on, often at the expense of single-tenant providers, such as Oracle, accused of being pretenders to the throne of multi-tenant’s modus operandi – cloud computing.
The difference between multi-tenant and single-tenant doesn’t boil down to the simple debate of cloud vs on-premise, however.
Whilst Salesforce’s CEO, Marc Benioff once described Oracle’s single-tenant CRM as ‘false cloud’, the reality is that both can offer the benefits of off-premise tenancy, and both options have benefits and pitfalls.
“The difference between these two CRM architectures is tightly tied to an ongoing debate over the definition of cloud computing. Some people are passionate about single-tenant CRM, while others think that anything but multi-tenant CRM is 1990s computing,” says Steve Chipman, CRM and marketing automation strategist for CRM Switch.
“[But] by association, any CRM solution that runs on its own physical or virtual server in a data centre and calls itself cloud CRM would also qualify as “the false cloud” by Benioff’s standards.”
Chipman says that, putting aside the debate around semantics, the benefits of multi-tenancy are far-reaching:
“From a CRM end-user’s perspective, these differences aren’t necessarily evident in day to day usage of the application, but they can come into play in other ways, such as cost, performance and reliability,” he says. This, he states, will predominantly relate to the following:
- Hardware: The cost of “resource pooling” through multi-tenancy CRM almost always leads to savings in terms of hardware and power.
- Elasticity: The ability to increase and decrease the capacity of use without any drastic provision changes.
- Upgrades: By proxy, upgrading all customers in one action is markedly more efficient and effective than having to upgrade individual customers iteratively.
Glen Stoffel, general manager of Europe for consultancy, Bluewolf, an IBM Company, says multi-tenancy offers users the opportunity to innovate at a faster pace than when using single-tenancy options.
“Think about your customers’ expectations as being the last best experience they had. In that scenario you have an innovation paradox, where you have to be able to rapidly evolve in order to live up to a consumer’s expectation.
“In that situation you have to ask yourself – do I feel like I can keep pace with the last best experience vs a multi-tenant environment? If you look at the speed at which innovation is happening around various multi-tenant providers vs the single-tenant piece, you have to say there’s no contest.”
However, multi-tenant CRM does present some drawbacks for its users, as Chipman outlines:
“One limitation is that there has to be API governors in place – limits to the number of API calls by each customer over a defined time period. As a multi-tenant vendor, you can’t have a given customer on a multi-tenant CRM instance make, say, millions of API calls per a minute, as this can affect the performance for other customers on the same instance. Single-tenant CRM proponents will tell you that API limits do not exist with their solution.
“Oracle’s Larry Ellison once referred to Salesforce as the “roach motel of clouds”. While it is actually possible to get your data out of a multi-tenant CRM solution like Salesforce, it may not be a SQL Server or Oracle backup file that can easily be transferred to another environment. Instead, it’s likely to be a collection of CSV files that need to be migrated into another system.”
The difference between multi-tenant and single-tenant doesn’t boil down to the simple debate of cloud vs on-premise
Ellison’s roach motel analogy may be overblown, but there are some commonly accepted deficiencies for multi-tenant CRM, specifically in relation to data security and privacy.
“In a multi-tenant architecture, multiple customers' data co-exist in the same infrastructure and run the same shared instance of software,” says a blog from Colby Mahan, senior technical support analyst at Infor. “The data is separated logically and secured, but no modifications or customisations may be made to the shared underlying structure. This would be comparable to an apartment building where each tenant has access to only their part of the building, but some resources and services are shared.
“There are benefits to both options, but if you concern is around security and performance – a single-tenant instance is preferred and is most similar to what you are accustomed to with an on-premise system.”
Of course, for many organisations, the argument of whether to choose single- or multi-tenant CRM may not wield a decision over single- or multi-tenant at all.
“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,” says CRM expert, Chuck Schaeffer on CRMSearch.
“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”
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Chris is Editor of MyCustomer. He is a practiced editor, having worked as a copywriter for creative agency, Stranger Collective from 2009 to 2011 and subsequently as a journalist covering technology, marketing and customer service from 2011-2014 as editor of Business Cloud News. He joined MyCustomer in 2014.