How to Build & Scale a Multi-Tenant SaaS Application: Best Practices

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Key Takeaways

• With a SaaS multitenant application, multiple customers or tenants can share a single software instance running on a cloud infrastructure.
• It provides efficient resource use, easy maintenance, customization, rapid scaling, cost-effectiveness, and swift onboarding.
• When building a multi-tenant SaaS platform, consider customization, compliance, support, upgrades, and onboarding.

The SaaS market is booming due to the need for affordable and scalable software solutions. With their help, businesses access applications without costly infrastructure and expand usage as needed. In 2021, the global SaaS market was valued at $215.1 billion. It’s expected to reach $1298.92 billion by 2030, with a CAGR of 19.7%. Companies like Microsoft, Salesforce, Oracle, and IBM lead the market, using a multi-tenant architecture.

Now, how will your business benefit from implementing a multi-tenant SaaS app? What challenges may you face? And how to build such software optimally? This article will answer all these questions.

Acropolium is a SaaS software development company with 14+ years of successful project experience and 137 delivered solutions. We’ll share some of our knowledge about multi-tenancy for SaaS applications. Also, you’ll learn about our biotech and accounting projects. So, let’s dive in!

What Is Multi-Tenant Data Architecture?

What is multi-tenant SaaS? It’s cloud infrastructure where software instances and supporting infrastructure serve multiple customers (tenants). Users share databases and compute resources, but their data is isolated.

Most subscription-based cloud SaaS solutions rely on a multi-tenant architecture. Some examples of these services include the following:

• Corporate and single-user email apps (Yahoo, Gmail, Outlook)
• Cloud storage services (Google Drive, OneDrive, Dropbox)
• Website platforms (Shopify, Wix)
• Communication apps (Slack, Skype, Trello)

SaaS: Multi-Tenant vs. Single Tenant — What to Choose?

Now, let’s compare multi-tenancy to single-tenant architecture.

Single-tenancy in SaaS refers to a cloud environment where every customer has a separate software instance, database, and a set of computing resources. The tenant’s data is fully isolated and inaccessible to other users. But customers should manually maintain and upgrade their environment.

Single-tenant architecture relies on on-premise or private cloud environments. However, platforms like Amazon Web Services (AWS) and Oracle Cloud offer dedicated infrastructure for single-tenant SaaS apps as a premium option.

In other words, a single-tenant SaaS architecture resembles a private house in the suburbs. It’s secure and self-sufficient, but the infrastructure and maintenance price quickly goes through the roof.

Multi-tenancy, on the other hand, is like an apartment in a residential building. The security depends on the vendor’s isolation strategy. But the infrastructure is cheaper, scalable, and easier to manage.

Key Benefits of SaaS Multi-Tenant Cloud Architecture

Now, it’s time to look at the most compelling business advantages of SaaS multi-tenancy architecture

Efficient Use of Computing Resources

The multi-tenant architecture ensures customers get enough storage and computing power to handle their workloads.

Take the single-tenancy model. Every tenant uses separate nodes and databases, meaning underutilized resources or degraded performance. In contrast, multi-tenancy allows storage, CPUs, and memory sharing between thousands of customers.

In addition, you can use load balancers, sharding, and tier-based isolation strategies to allocate available resources. This approach ensures optimal performance for every client.

Easy Maintenance and Upgrade Management

Companies can update software for multiple customers at once in multi-tenant environments. You don’t manage every tenant separately. Instead, you roll out new features and updates to the central application or codebase, applying the changes to all users.

Convenient Setup and Migration

Building a multi-tenant SaaS app requires less time and capital than an isolated single-tenant infrastructure. For instance, on-demand cloud computing platforms (AWS and Oracle) make building and hosting applications much cheaper. That’s thanks to their scalable infrastructures.

Additionally, it’s easier to transfer apps between infrastructures if they are based on a multi-tenant SaaS app architecture. Vendors like Amazon provide tools to help companies migrate their existing apps to the new environment.

Customization and Third-Party Integration Support

Companies can make their SaaS app highly customizable thanks to APIs (application programming interfaces). As a result, your customers enjoy third-party app integration without waiting for you to deploy on their infrastructure, as in the case of a single-tenant architecture.

Fast Scaling of Resources

When implementing a multi-tenant SaaS framework, you build multiple scaling strategies without infrastructure implications. That’s because tenants share software instances and databases. Your app can instantly redistribute resources as users change their subscription model, add services, or adjust their storage size.

Cost-Effective Infrastructure

As mentioned, a multi-tenant SaaS platform requires fewer upfront expenses and maintenance costs. You may also make the most of available resources and quickly scale them for customer tiers or individual clients. Consequently, you’ll spend less money on your cloud infrastructure.

Rapid Onboarding

Multi-tenant SaaS platforms often provide self-service capabilities. Therefore, new users can register, configure their preferences, and use the application immediately. The standardized deployment simplifies the onboarding process, eliminating each customer’s need for complex installation procedures or individual software setups.

Also, with such a SaaS platform, support resources focus on a single software version instead of spreading across multiple customized installations. It enables quicker response times and efficient issue resolution, providing timely assistance during the onboarding process.

Multi-Tenant Architecture Challenges: How to Design a SaaS Application?

Multi-tenancy architecture involves some complications. More specifically, you may face particular limitations during app development. Here’s what you should consider when planning to create a multi-tenant SaaS application.

Tenant Isolation

Users share servers and databases in multi-tenant environments. In theory, this makes the data inside the app less secure. But in reality, your tenant’s privacy depends on your authentication mechanisms and SaaS tenant isolation strategies.

So, how can you separate tenant data in your environment? Popular types of isolation include the following:

• Virtualization model. Virtualization means dividing tenants into clusters with isolated infrastructure sources. Silo-based isolation has the highest maintenance costs and is more typical for single-tenant SaaS apps.
• Pool model. Users share the infrastructure and resources based on the database load and resource consumption.
• Bridge model. It combines virtualization and pool models. For instance, tenants share a database or server while using isolated microservices.
• Tiered model. Isolation relies on the customer’s subscription tier. For instance, free plans offer a single shared infrastructure. However, upgrading to a premium tier gives access to isolated environments and additional resources.

Remember that your isolation strategy affects your environment’s scalability. But we’ll talk about that later, so stay tuned.

Authorization

Your tenants could be large enterprises with hundreds of employees, each with a separate user profile in the same account. Thus, be ready to invest in a service capable of processing thousands of backend processes for authorization.

Resource Strain

Users in shared cloud environments may monopolize CPU, memory, and storage, leaving other customers with fewer resources. It creates the so-called resource strain or “noisy neighbor” effect.

Companies prevent this outcome by building a SaaS application with modern, scalable architecture and load-balancing mechanisms. Additionally, you need reliable performance monitoring and analytics tools.

Analytics

Gathering performance metrics in multi-tenancy is more complex than in isolated infrastructures. Why? Because a single tenant’s data locates in several databases.

There’s a way out, though. You can build a multi-tenant SaaS app using different architecture patterns. This way, you’ll capture and analyze resource consumption from multiple sources.

Some of the essential metrics for multi-tenant environments include the following:

• Memory and storage usage
• Active tenants and user groups per subscription tier
• Periods of increased activity
• Expenses (per tenant and subscription tier)
• Revenue (per tenant and subscription tier)

With the right metrics, you’ll know when and what resources to allocate to improve performance, identify bottlenecks, and fix user experience issues.

Onboarding Process

Onboarding new users involves providing training and support to ensure they can effectively utilize the multi-tenancy application. In such architecture, catering to different tenants’ diverse needs and skill levels is often challenging.

Your developers should create comprehensive onboarding materials, documentation, and support channels. This way, you’ll address multiple users’ needs while managing the support load efficiently.

Tenant Configuration

A multi-tenant solution involves managing different tenants’ individual configuration settings and preferences within a shared environment. Each user may have unique requirements, like custom branding, specific integrations, or varying data retention policies.

To address this challenge, adopt a flexible and modular approach. Implement well-defined configuration parameters and options. With their help, you balance meeting customer needs and maintaining a scalable, shared infrastructure.

How to Build a Multi-Tenant SaaS Application

Developing a scalable, high-performing, and secure multi-tenant SaaS app requires the proper methodology and toolset. To help you out, we broke the process down into the steps below.

1. Plan the SaaS Infrastructure

Develop your infrastructure based on estimated workload, resource usage, security (isolation), and, most importantly, customer needs.

How do you estimate those metrics? Try answering the following questions:

• How many tenants and tenant groups (tiers) should your application support?
• How much storage and workload does every tenant (and tier) need?
• Should you isolate databases and resources for premium clients?
• Should you share data based on user locations?
• How often do you need to apply software updates?
• Do you want to implement advanced data backup and restoration solutions?
• What performance and business metrics are the most critical?
• How do you want to react to spikes in tenant activity?
• How much optimization and customizability should you offer for different tenant categories?
• What data privacy and compliance regulations should your app meet?

2. Develop Tenant Management Policies

SaaS applications serve customers with various needs. Some clients may opt for shared databases and fewer resources. Meanwhile, others will pay for isolated databases and extra computing power. It’s up to you to cluster requirements and develop personas for every tenant type.

We recommend using a centralized tenant policies management model. With this approach, you optimize performance, add features, and roll out software updates to different user groups.

Looking ahead, you’ll need a tool to organize customers inside your SaaS effectively. So, look at database management solutions early on. For example, DynamoDB is a flexible and easy-to-use option for most multi-tenant applications on AWS.

3. Choose a Cloud Computing Platform

Cloud computing platforms provide infrastructure and toolsets for creating a multi-tenant architecture-based app. Let’s look at some of the options from AWS:

• Microservices (Amazon ECS). Microservices architecture consists of loosely coupled (inter-dependable) components. With this reasonably priced option, teams create, scale, and deploy code independently but with limited customization. Also, you can’t migrate the ECS setup to other SaaS infrastructures without a fundamental rework.
• Elastic Kubernetes Services (Amazon EKS). EKS isolates tenants in separate clusters (Kubernetes) for additional security. This option also offers advanced customizability compared to ECS, albeit at a higher infrastructure price.
• Amazon Serverless Computing. It’s a fully scalable architecture with efficient resource allocation. Although Serverless is the most complex option, it allows for nearly unlimited customization and third-party integrations.

4. Implement Authorization Mechanisms

As mentioned above, authorization and authentication are resource-heavy processes. Imagine this: your system has to verify credentials and check affiliation, rights, and domain rules. Then, it can either deny access or issue an access token to the backend app to enter the database. Now, picture this process taking place a couple of thousand times a minute.

Organizations save resources with a third-party service with dedicated servers to control authorization. Unluckily, most solutions are overpriced or lack features. That’s why Acropolium made AcroSSO for our clients. This backend authorization management tool helps easily manage user rights in a multi-tenant SaaS environment.

5. Set up Domain Routing

Set up a sign-in URL for your SaaS application based on your security requirements. Here’s what you can go with:

• Logical URLs separate tenants by name (for example, saas.acropolium.com/companyname)
• Cryptic URLs separate addresses with unique identifier numbers (such as saas.acropolium.com/company=12345689)
• In-app redirects send users to login pages for authentication

Now, let’s see how to make your app even more appealing to more users.

Best Practices for Multi-Tenant SaaS Application Development

We talked about the significance of research and planning before. Now, let’s look at some practical features valuable for SaaS platforms across industries.

Allow Customization and Third-Party Applications

Users want to personalize their experience with their usual business tools. For instance, your clients might integrate enterprise management platforms, additional security tools, customer portals, and payment gateways. To achieve that, design your app allowing third-party integrations through APIs.

Ensure Compliance

Adhere to security standards, local laws, and industry-specific regulations. For example, FinTech software should follow PCI DSS and GDPR to operate in the EU. However, it must comply with UK-GDPR to serve users in the UK. Making compliant and secure software requires industry-specific expertise and legal knowledge. Therefore, consider consulting with a reliable company at the early stages of web development.

Localize the Tenant Experience

Localization is critical for apps targeting a global audience. Your app’s user interface will benefit from supporting multiple languages, time zones, and metrics (for example, temperatures). Also, remember to convert to the local currency.

Set up Customer Support

Support is a necessary but often overlooked part of a SaaS application. Consider creating a reliable customer portal with self-service features, a knowledge base, and a support tickets management system. Thankfully, plenty of third-party solutions help build and automate support processes.

Upgrades and Versioning

Upgrades and versioning are critical for multi tenant applications. It’s essential to have a clear process for releasing revisions. It should also be smooth and not cause disruptions. With communication through release notes and documentation, tenants understand the changes. Also, ensure users have flexibility in scheduling upgrades.

Tenant Onboarding and Support

Establish a straightforward and user-friendly approach to ensure a successful onboarding process. Tenants quickly get started thanks to clear instructions and self-service options. Providing comprehensive documentation and accessible support channels ensures timely assistance during onboarding and ongoing usage.

Service Level Agreements (SLAs) in Multi-Tenancy

An SLA is a legal document that shows how much your tenants can expect from your SaaS application. It includes features, uptime, cybersecurity, isolation mechanisms, and software updates. Also, it involves your liability for failing to provide these services.

Here’s how to optimize your SLA for your application:

• Based on subscription tiers. Provide separate agreements for every subscription plan, extra feature, and isolated microservices.
• Based on business metrics. Tenants never use resources equally. With the proper analytics mechanisms, you can identify usage patterns. This way, you balance CPU and memory usage for specific user groups inside the subscription tiers.

But to effectively adjust resources between individual tenants and customer groups, prioritize designing a scalable SaaS application.

Building a Multi-Tenant SaaS Application with a Scalable Design

Database isolation is the foundation of scalable design. You can separate your customers in a multi-tenant architecture using the following strategies:

• Shared. Users share a database. Identifier columns separate their information. It’s easier to add resources to the database to optimize the workload. But some tenants can monopolize resources, creating the previously mentioned “noisy neighbor” effect.
• Dedicated. Every tenant has a separate database. You can move these databases between resource groups to optimize performance.
• Sharded. A single tenant’s data is spread across multiple databases in movable shards. The scaling happens when moving these shards to a more performant infrastructure.

Smaller companies benefit from shared databases at the initial stages. But as your user base grows, you may want to adopt a hybrid approach and scale resources between user groups.

Acropolium Expertise

Acropolium offers multi-tenant web and application SaaS development tailored to your business objectives. Our expertise includes seamless integration of third-party tools, including external services, billing options, and interfaces. We have a solid track record in various industries like healthcare, fintech, retail, supply chain, logistics, and risk management. Here are several related projects we worked on.

In one case, our client asked us to create a biotech enterprise SaaS for remote device management and quality control. We automated team workflow and improved client-to-client and client-vendor communication, cutting workforce expenses. As a result, our solution increased sales by 65% and attracted 30% more customers. Moreover, it boosted their loyalty by 75%.

Also, we built accounting automation bespoke software with multi-tenant access, customizable reports, and different payment methods, including Stripe. In just five months, our dedicated team created an MVP with an easy setup and capability to conduct, track and pay transactions. It allowed us to reach a 30% conversion rate from free to paid option.

Conclusion

The multi-tenancy model is the optimal choice for subscription-based SaaS applications. Compared to single-tenancy, multi-tenant architecture is cheaper to maintain and faster to scale. Hopefully, our strategies and tips will help you build a multi-tenant SaaS app even faster.

But if you need more than theory — partner with Acropolium and try our SaaS development IT outsourcing. Our vetted specialists will build a secure and scalable multi-tenant infrastructure for your application with a subscription-based option. Plus, we will improve performance, simplify maintenance, and reduce the expenses of your cloud environment. Contact our agency if you want to talk business!

Sources of Information

• Researchandmarkets.com - Global SAAS Market Size
• Grandviewresearch.com - SaaS Market Size, 2023 Report