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).
