How To Build a Multi Tenant SaaS Application Successfully

There is growing interest in multi-tenant architecture today because of an increase in cloud computing and SaaS business models. While SaaS delivers software applications over the Internet, multitenancy allows multiple users to share resources, thereby speeding up and streamlining scaling. It optimizes public cloud use, reduces costs, and provides consistent access. Plus, when new features are added, everyone benefits in a multi-tenant system, unlike single-tenant systems where updates benefit only one client. Tech giants like Microsoft, Salesforce, Oracle, IBM, and others are also building their applications using SaaS multi-tenancy architecture.

So, how can you build a multi-tenant SaaS application? If you’re looking for best practices and key considerations to create a multi-tenant SaaS application successfully, then you’re in the right place! We’ll cover everything and help you choose the best multi-tenant SaaS architecture for your business. Additionally, you’ll gain actionable insights from our SaaS project for ESG Investment Compliance. Let’s get started!

Table of Contents

• What is Multi-Tenant SaaS Architecture?
• Advantages of SaaS Multi-Tenancy Architecture
• Key Considerations to Create a Multi-Tenant SaaS Application Successfully
• How to Build a Multi-Tenant SaaS Application?
• Best Practices for Developing Multi-Tenant SaaS Applications
• How Rishabh Software Can Help You Build a Multi-Tenant SaaS Platform?
• Frequently Asked Questions

SaaS multi-tenancy architecture is a preferred software development approach that allows multiple customers to safely use the same software and infrastructure. The SaaS provider hosts the app on a shared platform and is responsible for handling app maintenance, updates, and security. Tenants (customers) can access the service through the internet via a web browser or mobile app.

Ever wondered how platforms like Slack, Salesforce, AWS, and Zendesk serve multiple organizations? They don’t create unique, custom cloud software for each customer. These platforms don’t build separate environments for each organization. Instead, they use a multi-tenant architecture on any preferred cloud platform for their SaaS applications. For instance, on Slack, businesses have their own URLs. This architecture allows SaaS providers to serve many customers with a single infrastructure, while customers enjoy hassle-free access without worrying about installation or maintenance.

Types of Multi-Tenant SaaS Architecture

Multi-tenancy is crucial in cloud computing to ensure efficient service delivery across different models. However, the tenancy model you choose will greatly affect the performance, cost-efficiency, scalability, and success of your SaaS application. Here are the different multi-tenant models to consider:

• Database-per-tenant: This setup allows the application to scale either vertically by adding more resources to a single node or horizontally by adding more nodes. Each tenant has a dedicated database and databases in the same resource pool, making it easier for vendors to manage resources and move tenant databases as and when needed.
• Single multi-tenant database: This architecture type includes tenant identifier columns, distributing storage and computational resources among all users. It reduces costs per tenant, but a heavy workload from one tenant might affect the service performance of others.
• Sharded multi-tenant databases: Sharding spreads tenant data across multiple databases. As workloads grow, heavily populated shards can be split into less congested nodes. Sharded databases can also join elastic pools for enhanced scalability and operational management.
• Hybrid-sharded multi-tenant databases: This configuration allows tenants or groups to switch between dedicated and shared databases to serve the different resource needs of various tenant groups.

Selecting the right multi-tenant SaaS architecture depends on your specific requirements. If high data separation and simpler database management are your priorities, Database-per-tenant is a good choice. For a more cost-effective solution with some potential performance compromises, a Single Multi-Tenant Database might work best. Sharded Multi-Tenant Databases are ideal if you expect high workloads and need robust scalability. If you require adaptable resource allocation, Hybrid-Sharded Multi-Tenant Databases offer a versatile solution. Assess your performance needs and scalability goals to determine the most suitable model for your SaaS application.

A multi-tenant SaaS architecture offers many business benefits, including resource usage, scalability, cost savings, security, and data processing efficiency. Knowing these advantages is vital for enterprises that want to create a multi-tenant SaaS application in 2024.

Cost-Effective Infrastructure:

Due to its ability to allow multiple tenants (customers ) to share common infrastructure and resources from a single instance, multi-tenant SaaS providers can accomplish economies of scale. Thus, multi-tenant SaaS platforms lower the overall cost of maintenance, upgrades, and updates.

Efficient Resource Use:

Multi-tenant SaaS apps distribute storage and computing power effectively. They use load balancers, sharding, and tiered isolation to ensure resources are used optimally, preventing performance issues.

Flexible Resource Scaling:

Multi-tenancy allows instant resource adjustments. Users can change their subscriptions, add services, or adjust storage without affecting the overall infrastructure.

Streamlined Maintenance and Upgrades:

SaaS solutions built using multi-tenant environments enable instant updates for all customers at once and eliminate the hassle of managing each tenant individually.

Simplified Setup and Migration:

Cloud platforms offer scalable infrastructure and vendor tools that make the migration process smooth, so you can host and build a multi-tenant SaaS app much faster and cost-effectively.

Customization and Integration Support:

APIs allow companies to customize SaaS apps and integrate with third-party tools easily, enhancing the user experience.

Swift Onboarding:

Multi-tenant SaaS platforms enable quick self-service setup. New users can configure preferences and start using the app immediately, streamlining onboarding and support.

Edge Computing Capabilities:

Multi-tenant SaaS solutions can integrate edge computing to process data closer to its source. This reduces latency and improves real-time decision-making, which is beneficial for IoT applications and environments.

To build a multi-tenant SaaS app successfully, businesses must address specific challenges and considerations. Understanding these aspects ensures a secure and scalable implementation that ensures customer satisfaction.

Tenant Isolation:

In a multi-tenant setup, users share servers and databases, which can risk data security. Effective isolation depends on your authentication and separation methods. Commonly used isolation models include:

• Virtualization Model: Divides tenants into isolated clusters. This model is costlier and more common in single-tenant apps.
• Pool Model: Shares infrastructure and resources based on demand.
• Bridge Model: Combines virtualization and pool models, sharing databases or servers while using isolated microservices.
• Tiered Model: Offers isolation based on subscription levels, with premium tiers providing more separation.

Authorization:

Managing authorization for large organizations with many users requires robust systems capable of handling numerous backend processes.

Resource Strain:

Shared environments can lead to resource strain, where one user’s high usage affects others. To prevent this, use scalable architecture, load-balancing mechanisms, and performance monitoring tools.

Analytics:

Tracking performance in multi-tenant setups is complex due to data spread across databases. Use various architectural patterns to capture and analyze metrics such as memory usage, active tenants, activity spikes, and financial data. With the right metrics, you can determine the best times for resource allocation and enhance performance, fix bottlenecks, and resolve user experience issues.

Onboarding Process:

New user training and support are crucial for effective use of the application. Provide thorough documentation and support to handle diverse user needs and skill levels.

Tenant Configuration:

Managing different tenant settings, like custom branding and integrations, within a shared environment requires a flexible and modular approach. Define configuration parameters to balance customer needs with a scalable infrastructure.

Creating a scalable, high-performing, and secure multi-tenant SaaS app involves several key steps:

1. Design Your Infrastructure

When building a multi-tenant SaaS application, design your infrastructure to match workload estimates, resource needs, and security requirements for multiple tenants sharing the same system. Consider answering these questions:

• What data privacy and compliance regulations must your app meet?
• What critical performance and business metrics should you track?
• How will you handle spikes in tenant activity?
• How frequently will you update the software?
• How many tenants and tiers will your app support?
• What storage and workload will each tenant or tier require?
• Should you isolate databases and resources for premium clients?
• What level of customization will you offer to different tenants?
• How will you manage data sharing based on user locations?
• Will you use advanced backup and restoration solutions?

2. Define Policies for Tenant Management

Identify the needs of different tenant types, from those needing shared databases to those requiring isolated environments with extra resources. Create policies to manage these needs effectively. Use a centralized policy management model to optimize performance and manage updates. Consider database management tools like DynamoDB for organizing tenants.

3. Choose Your Cloud Platform

Select a cloud platform that supports multi-tenant architecture. On-demand cloud computing platforms like AWS and Microsoft Azure are popular choices due to their robust architecture, and comprehensive features  designed for high availability, scalability, and data security:

Amazon Web Services: AWS offers powerful solutions for multi-tenant SaaS applications:

• Amazon ECS: Suitable for microservices with limited customization.
• Amazon EKS: Offers better security and customization with separate Kubernetes clusters.
• Amazon Serverless Computing: Provides scalable architecture with extensive customization options.

Microsoft Azure: Azure also provides robust solutions for multi-tenant SaaS apps:

• Azure Kubernetes Service: Manages Kubernetes clusters, providing strong security and customization options similar to Amazon EKS.
• Azure App Service: Supports app hosting with built-in scaling and customization, suitable for various tenant needs.
• Azure Functions: Enables serverless computing, offering scalable solutions with extensive customization and integration options.

Apart from being an AWS Select Tier Partner, Rishabh Software is also a Microsoft Gold Partner. We offer specialized consulting and app development services for both AWS and Azure to help you effectively build and manage your multi-tenant SaaS application.

4. Apply Authorization Mechanisms

Authorization requires efficient management due to high resource demands. Use a third-party service for managing user rights and handling authorization in multi-tenant environments.

5. Implement Domain Routing

Configure your sign-in URLs based on security needs:

• Logical URLs: Separate tenants by name (e.g., saas.example.com/companyname).
• In-app Redirects: Direct users to login pages for authentication.
• Cryptic URLs: Use unique identifiers (e.g., saas.example.com/company=12345689).

Follow these key practices to build a multi-tenant SaaS platform that is secure, efficient, and offers a flawless user experience:

Enable Customization and Third-Party Integrations

Users often want to customize their experience and integrate with their preferred tools. Design your app to support third-party integrations through APIs. This could include enterprise platforms, security tools, customer portals, and payment gateways.

Ensure Compliance

Follow security standards, local laws, and industry regulations. For instance, FinTech apps must adhere to PCI DSS and GDPR for the EU, and UK-GDPR for users in the UK. Consult experts early in development to ensure your app meets all legal and security requirements.

Manage Upgrades and Versioning

Implement a clear and smooth process for app upgrades and versioning. Provide release notes and documentation to inform tenants about changes. Allow flexibility in scheduling upgrades to minimize disruptions.

Verify Cloud Provider Access Controls

Ensure that cloud providers have strong systems for managing employee access to resources that handle customer applications and data. Providers should demonstrate that their access control processes are effective and secure.

Implement Data Loss Prevention

DLP helps protect tenant data from being lost or stolen by attackers. It also prevents sensitive data from being downloaded to personal devices and controls both intentional and unintentional data sharing and exposure.

Define Service Level Agreements

An SLA outlines what tenants can expect from your SaaS app, including features, uptime, cybersecurity, and updates. Optimize SLAs by:

• Creating agreements based on subscription tiers and extra features.
• Using analytics to understand resource usage patterns and balance resources accordingly.

Prioritize designing a scalable SaaS application to adjust resources effectively between tenants and customer groups.

Whether you want to scale your growing business application or launch a new enterprise software solution, our expertise ranges from custom solution design and implementation to seamless scalability and performance optimization. Our cloud application development services ensure your multi-tenant SaaS platform integrates effortlessly with third-party services, while our cost-effective development approach accelerates time-to-market. To demonstrate the effectiveness of our approach, let’s explore a real-world project.

Success Story: Multi-Tenant SaaS Implementation for ESG Investment Compliance

Our client, a leading European FinTech firm, needed a scalable, automated solution for ESG investment compliance to streamline data extraction, scoring, and reporting.

Challenges:

• Lack of enterprise-grade features and scalability in initial POC
• Manual data entry errors impacting data integrity and efficiency
• Siloed ESG data management hindering transparency
• Non-compliance with ESG risks affecting financial stability and reputation

Solution:

Our team leveraged proven expertise in AI/ML and cloud development to deliver a robust, serverless platform using AWS Lambda, Node.js, and DynamoDB. The solution included:

• Serverless Architecture
• Automated ESG Scoring
• Hybrid Development Model
• User-Friendly Interface

Results:

• 85% improvement in fund manager satisfaction
• 80% reduction in manual efforts
• 70% reduction in ESG-related risks
• 90% reduction in ESG reporting complexity
• 85% increase in operational efficiency

Read our detailed case study on the Development of AI/ML Powered SaaS Solution for ESG Investment Compliance to learn more.

We have demonstrated technical expertise, strategic vision, and practical implementation skills to build secure and scalable multi-tenant infrastructures. These optimized the app performance while reducing costs, simplifying maintenance, and accelerating scalability.

Q: How is multi-tenant architecture different from single-tenant architecture?

Multi-Tenant:

• Multiple customers share one application and infrastructure.
• Data is isolated but stored in a shared database.
• Cost-effective and scalable.

Single-Tenant:

• Each customer has a separate instance of the application and database.
• Offers better customization and security.
• More expensive and complex to maintain and scale.

Q: What are some successful examples of multi-tenant SaaS applications?

• Salesforce: CRM platform serving multiple organizations.
• Google Workspace: Productivity tools for various businesses.
• Slack: Communication platform used by numerous organizations.

Q: Why is multi-tenant architecture indispensable for SaaS applications?

• Cost Efficiency: Shared resources lower the costs.
• Scalability: Easily accommodates more users.
• Maintenance Simplification: Updates deployed across all tenants simultaneously.
• Resource Optimization: Efficient use of resources for better performance.