Enterprise Software for Multi-Tenancy: What is it and Why Do You Need It?

A multi-tenancy architecture supports different companies using the same shared application and database. Let’s talk about how this is different from single-instance software and how to choose the right architecture design for your business.

Sharing is caring!

by Matias Emiliano Alvarez Duran


Multi-tenancy is a way of designing software so that multiple companies can use the same application and database. Why? To share resources and therefore save on costs. 

Using multi-tenancy software is similar to working in a big office building. Each door is a different company. The only way to know what happens inside is by getting a key and a badge. However, all workers share the elevator, the lobby, water and electricity, and the parking lot.

Single tenancy is the opposite. Every business has access to one unique application that feeds from its unique database—like being the only company that operates within the building. 

If you’re thinking about buying or custom-building enterprise applications and need to define your architecture design, this article is for you. We’ve compiled a list of concepts and use cases for you to determine whether you need enterprise software for multi-tenancy or single tenancy. 

Ready to build your own custom software with a team that cares about your processes? We’re not code monkeys, we care about you

Table of contents

What is multi-tenancyenterprise software?
How does multi-tenant software work?
Single-tenant vs. multi-tenant business software
Why do you need enterprise-level multi-tenant software?
Why you should consider team augmentation to develop your custom software
Do you need a multi-tenant enterprise-level software solution?
Frequently asked questions about enterprise software for multi-tenancy

What is multi-tenancy enterprise software? 

Multi-tenancy enterprise-level software is a type of application that uses a single instance to serve multiple users. All customers use the same application and get their own individual multi-tenant environment. 

This type of software needs a strong tagging system to automate data visibility depending on who’s accessing the app. 

Salesforce is an example of multi-tenancy enterprise software. It’s a customer relationship management (CRM) platform that uses a shared data source to provide answers to different individual users. All the companies that use Salesforce are essentially using the exact same application. But they only have access to information regarding their company and customers.

Salesforce and most enterprise resource planning (ERP) systems are multi-tenant applications that support multiple customers at the same time.

How does multi-tenant software work?

Multi-tenancy works by sharing services and resources across various clients. If it’s a multi-tenant cloud, it means multiple clients share cloud computing resources that can be held in a private cloud or public cloud. Shared resources include:

  • Computing: Central processing unit (CPU) power, storage, and memory.

  • Networking: Computer data and hardware devices accessible remotely from enterprise intranet or local area network (LAN).

  • Storage: Places to allocate physical or cloud storage space.

There are different types of multi-tenant applications. 

  • One instance, one database. There’s a single instance of the software that connects to the same database. So all tenants connect to one single data source. 

  • One instance, multiple databases. There’s a single instance of the software for all tenants, but each customer connects to its own database.

Single-tenant vs. multi-tenant business software

Single-tenant software supports only one or no organizations at all. Each company is independent of the rest and accesses a unique application that’s connected to its standalone database. Examples of single-tenant software include:

  • Custom-made internal solutions

  • Intranet websites

  • SAP on-premise

Multi-tenant software uses an architecture design to support multiple organizations and users within the same infrastructure. These types of applications can use one shared database with different levels of access and visibility per client. Or, follow a more hybrid architecture where users all access the same app, but have their data hosted in their personal database. 

Multi-tenant apps are commonly used in enterprises. For example: 

  • QuickBooks

  • Slack

  • Office 365

  • Google Drive

  • Most enterprise resource planning (ERP) systems

Single tenancy tends to be a more suitable practice for meeting specific security requirements. For instance, if you’re a bank that needs to send and retrieve data from the mainframe to each individual user’s home banking app using Cobol. You won’t use a commercial, multi-tenant solution. While multi-tenant applications have strict security rules to avoid data leakage between organizations, it’s riskier than building a single-instance custom-made solution.

Your software architecture can be single- or multi-tenant according to how many companies can use the same resources.

Single-tenant architecture only serves one company

When we talk about tenants, we’re usually referring to the client (or company) using the application. In the office building example, each tenant is a company made up of multiple employees that have an access key. 

Single-tenant architecture is meant to be used by one company, but within that it can hold several users with different levels of access. What makes single tenancy unique is that you avoid any possibility of information leakage caused by an infrastructure mistake. With this model, your customer's data is isolated and more secure. 

Single tenancy also allows for greater customization as you need to set up a new database and interface every time you get a new customer. However, developing and maintaining this architecture  can be more complex, time-consuming, expensive, and harder to scale. 

Multi-tenant architecture serves multiple companies

Using a multi-tenant architecture allows you to serve different companies using a shared app and database. Or using one app with multiple databases in a more hybrid model.

That means that you can save costs in storage, computing, and networking resources as you share them between different tenants. The only issue with multi-tenancy is that it could potentially cause tenant data breaches (but it’s very unlikely). 

In the office building example, the building has multiple floors with different companies working on each one. Employees all gain access through the main door and share a kitchen and office supplies. But they can only enter the offices on their own floor… unless some gets hold of a key they’re not authorized to use!

Multi-tenancy is also less customizable per customer but allows for more scalability and is easy to set up. Most software as a service (SaaS) products have a multi-tenant architecture since it makes it easier to host multiple instances on the same app. 

Why do you need enterprise-level multi-tenant software?

If you need to buy or develop software for your enterprise-level company, you should consider multi-tenancy first. This is, of course, if you don’t have any highly-specific security or customization requirements. In those cases, you should consider single tenancy. 

There are several benefits to multi-tenancy architecture:

You’ll save money

Multi-tenancy allows you to split the cost of shared resources between your clients (see above). 

You’ll also spend less money on developers as you essentially only need to maintain one enterprise application. You might need to hire more customer service representatives, but you can always find alternative ways to reduce those costs by:

  • Creating walkthroughs and troubleshooting guides

  • Building comprehensive chatbots

  • Outsourcing customer service 

It’s easy to deploy (more scalability)

Since all of your customers use the same application it is easy to deploy and give access to additional users in no time. It should be a breeze to share the software logic too, since you’ll just be able to use the same documentation every time. 

Your software is already prepared to support several organizations without any changes. If you have a multi-tenant SaaS product, you can add tags for the different access tiers. That way, if your infrastructure is strong enough, you’ll always be able to keep growing without exponentially increasing your operations.

You’ll save time

You won’t need to create or duplicate the code source every time you get a new customer or make upgrades. Plus, multi-tenancy applications are built in an effective way. It’s easier to maintain them. Your developers will spend less time on maintenance tasks. 

You can easily multiply your efforts

You’re always working on the same application. So, if one client requests a new functionality or an improvement, you can share it with your other customers without any hassle. This will improve customer satisfaction. 

Why you should consider team augmentation to develop your custom software

You should consider augmenting your development team if you want to…

  • Develop custom enterprise-level software with a single- or multi-tenancy architecture 

  • Build your next multi-tenant SaaS application 

  • Strengthen your infrastructure and get rid of legacy code

… and don’t have the in-house team to do it internally. Or, you have it, but your developers don’t have the expertise or bandwidth to develop new solutions. 

You might be worried about hiring an external team of developers and letting the project become a black box. However, an advantage of custom enterprise software development with NaNLABS is that you’re not just outsourcing the work. Instead, you get a group of developers to integrate with your company culture  and become proactive, solution-oriented team members. 

We’ve worked with several clients as an augmented team or as consultants. We’ve developed many different software applications and we’re committed to keep turning ideas into functional, eye-catching platforms.

Ready to build your own custom software with a team that cares about you and your processes? We’re not code monkeys, we care about you. 

Do you need a multi-tenant enterprise-level software solution?

If you have strong enterprise security requirements and need high levels of customization, you have two options: 

  1. Custom enterprise software development: building a solution from scratch using a single tenancy architecture

  2. Buy off-the-shelf software: ask the service provider to install it as a single-instance solution (you can do this with SaaS enterprise software as well). 

You should go for a multi-tenancy architecture design if you:

  1. Are developing software to sell it as a SaaS product and want it to be scalable and easy to maintain

  2. Want to build a custom solution for your enterprise that you might patent and sell to similar companies

  3. Need to solve an internal issue fast and are looking for SaaS solutions online and don’t have massive security regulations

If you’ve decided to develop your custom solution, consider augmenting your team with developers from NaNLABS. Get a team of experts to work on your software requirements for you—and with you.

Ready to build your own custom software with a team that cares about your processes? We’re not code monkeys, we care about you

Frequently asked questions about enterprise software for multi-tenancy

  • What is a multi-tenant application?

    A multi-tenant application is a platform that has an infrastructure that can support several tenants (users) at the same time. 

    All tenants have access to an individual interface that connects to the multi-tenant database, but each user’s data is private and inaccessible to other companies. 

  • What’s the difference between multi-tenant and multi-instance?

    The difference between multi-tenant and multi-instance is where and how your data is stored. These are two different types of multi-tenant cloud architectures. A multi-tenant architecture uses a shared database to support all users. Multi-instance architectures, on the other hand, make each user owner of their individual and private database. 

  • What’s the purpose of multi-tenancy?

    The purpose of multi-tenancy is to grant access to different companies to the same application and database. Multi-tenancy is also more cost-effective than a single tenancy. 

    Multi-tenancy is easier to maintain. Plus, you can share updates requested from one large client with all your different users and wow your customers without much additional effort. 

  • What are the three multi-tenancy models?

    The three multi-tenancy models are:

    • Shared. The application connects to a shared database and uses logic to choose a particular tenant.

    • Isolated. The application connects to a database and uses logic to choose a particular schema that serves each tenant.

    • Hybrid. Certain information can be shared in one database (like users), but the sensible data is stored in isolated database

More articles to read

Previous blog post



5 Enterprise Reporting Software Tools (+ How to Choose One)

Read the complete article

Next blog post



Is SaaS Enterprise Software the Answer? 3 Ways to Get the Best Solution For Your Business

Read the complete article