There is only ONE attribute that differentiates a SaaS application from all other types of applications. That attribute is multitenancy. Multitenancy (multi-tenancy) can be an intimidating word, but all it really means is that the underlying database uses a single schema (model) for all customers. Data is separated logically (as opposed to physically) and there is typically a single code set. Below are illustrations of this concept.
But what about the fact that SaaS applications are browser based and hosted? Well, other single-tenant applications can have those same attributes, so they are not differentiators. In fact, in one of my prior companies, we had trouble with competitors claiming they were “browser based” and “hosted”. We tried to differentiate ourselves based on the fact that we were multitenant (multi-tenant), but it was difficult when our competitors threw around terms that are often used to describe SaaS applications.
So, what is the most popular multitenant application? Well, probably Facebook. Millions of people log in to the same database (yes there might be multiple servers hosting a huge database but you know what I mean). There is a single database schema (i.e. structure) for all customers and a single code set. Each person has his/her own little customized page and can make changes without affecting other pages. This is a classic SaaS application.
Since multitenancy is THE differentiating factor for SaaS applications, we are going to spend a lot of time on the subject in the SaaS Fans blog. And, have no fear SaaS fans. Multitenancy offers such as compelling advantage to software vendors/ISVs that it merits its own unique software classification (i.e. SaaS).
2 Responses to “There is Only One SaaS Differentiator”
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June 13th, 2009 at 11:42 am
Hi Matt,
Question, how do you differentiate between a multitenant and a multi-instance architecture implementation and in your opinion is this considered a software as a service (SaaS) implementation, and why. Now this is not an easy nor simple question to respond to, I am interested in your thoughts around this topic. I look forward to hearing from you soon, and if interested, I have provided my Linkedin.com profile for your review, I look forward to your future postings and would enjoy an opportunity to discuss.
Kind regards,
Harold
972-464-1038
HaroldCHeardJr@Gmail.com
http://www.twitter.com/haroldcheardjr
June 13th, 2009 at 10:56 pm
Hi Harold,
Thanks for your comments. I’ll probably devote an entire blog entry to this topic soon. However, I can offer a little insight right now. By “multi-instance” I assume you are referring to an architecture where the same (or similar) schema is used with multiple instances of a database? In other words, each customer has its own database.
In my opinion, multi-tenant applications hold an advantage over multi-instance applications in the following ways:
1. You only have to upgrade a single database and code set
2. Data aggregation, data mining, and trend analysis are simplified if all customer data lies in a single database (data needs to be treated by vendors as an extremely valuable asset – more on this later)
3. Cheaper to host and maintain
I would not consider a multi-instance architecture SaaS because it’s not multi-tenant. You see, with a multi-tenant application you actually store all of your customers’ data in the same tables but you “attach” the data to each customer via a Customer ID or another identifier. In a multi-instance architecture you don’t need to have a Customer ID at all. While this certainly simplifies development, you lose all of your multi-tenancy benefits. Multi-tenancy DEFINES SaaS and is, in fact, the only real differentiator. Everything else is just a web application.