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HRMS SaaS Architectures—Multi-Tenant Versus Single-Tenant—Which Is Best?

Guest alan sifferman
  Do HR software systems have to be multi-tenant programs to be software as a service? It's unclear to me if this multi-tenant feature is important or a distraction.
  Chuck Chuck Schaeffer
    The short answer is No, however, this is a common question and deserves a longer answer.

There is a standing debate about the merits, advantages, disadvantages and differences between multi-tenant software as a service (SaaS) and single tenant SaaS architectures.

Multi-tenant SaaS HRMS (human resource management software) vendors promote the multi-tenant shared architectural delivery model and claim that it provides efficiencies in terms of equipment and software utilization, IT management, cost savings and scale, and that such operational and cost benefits are extended to their customers. This argument is in large part true.

Single tenant (also called isolated tenancy) SaaS HRMS vendors claim that only when every customer operates with their own individual database is performance, security, privacy and integration flexibility best maximized. This may be a valid point depending upon the particular HRMS.

So which is better? It depends on who you ask or which HR software reviews you read. Or more importantly, it depends upon your company's business objectives, IT requirements and HRMS partner.

In reality, many companies adopting SaaS HRMS systems do so in order to rid themselves of the IT maintenance and management with human resource software systems; and frankly don't care much about SaaS architectures. In fact this single-tenant versus multi-tenant argument seems to have been created and promoted by SaaS vendors jockeying for competitive advantages. It's been my experience that most SMBs (small and midsize businesses) do not care whether their HRMS application is single-tenant or multi-tenant — as they are far more concerned about the HR software's ability to achieve their business objectives, HR processes and user preferences. As long as the HRMS software achieves their business goals, is constantly available and secure, most small businesses have no concern about the theoretical or practical differences of various SaaS technology architectures.

However, I have noticed a difference, albeit minimal, with larger or enterprise companies. Some IT managers and CIO's at larger companies take a more purist view of SaaS and favor multi-tenancy as they believe it better maximizes the HR application and the delivery platform. This is a valid point as multi-tenancy achieves more IT management and economic efficiencies as the entire stack, including hardware, operating system, database and HR application operate in a shared services model. From a software vendor perspective, I think there can be no doubt that a multi-tenant HR application is more efficient and economical, however, whether those economies and cost savings get passed to customers in the form of lower subscription fees or superior services varies by vendor.

Other IT professionals and enterprise companies take a more practical view and give favor to an single tenant delivery model as they believe increased physical segregation delivers increased information security, data privacy, integration capability and software customization flexibility. It should be understood that the single tenant model does not mean that every customer is operating with individual hardware. In fact, most single tenant HRMS systems leverage a shared infrastructure model for hardware (using database clusters and web server farms) and provision an individual database or database instance for each HR customer. I have clearly noticed a preference by some organizations such as federal governments, financial services companies and other information security sensitive companies for the single tenant SaaS model.

While the majority of SaaS HR systems are multi-tenant, it's likely that market factors may influence the growth of one model over the other as we move forward. If cost pressures elevate, something very likely to happen as SaaS HR apps mature, the multi-tenant model will become increasingly popular. If compliance issues such as Sarbanes Oxley (SOX), privacy issues such as HIPAA or information security move even further to the forefront, AND the single tenant model can prove true security benefits, it may take precedence for many organizations. The bottom line is that there is no one best answer that serves all interests. Varying SaaS architectural strategies and opinions will favor one model over the other based upon technology philosophy, personal bias, perceived security and/or vendor marketing. End

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Guest Gene Perelli
  Putting aside the philosophical differences and benefits to the SAAS software vendors, are there other important benefits or drawbacks between single tenant and multi-tenant saas for customers?
  Chuck Chuck Schaeffer
    There are other differences they may be relevant depending upon your circumstances. Multi-tenant SaaS vendors claim they can innovate and advance their software products at a faster pace as every customer is on the same platform and can be upgraded with new features or capabilities in mass. This is theoretically true, and practically true for the majority of HR software vendors. Almost all SaaS HR vendors upgrade their Human Resource systems multiple times per year. The value and significance of each vendor upgrade is a matter of debate and varies by supplier.

Isolated tenancy vendors claim that forcing all (multi-tenant) customers to upgrade in mass at a vendor designated time, whether their customers want those upgrades or not, removes control from the customer and may cause issues with system integration, software customization or simply delivering a new user interface or feature sets to users without advanced notice or training. Some analysts have referred to the multi-tenant mass upgrade process as "throwing the Frankenstein switch." Most single tenant software vendors deliver (most but not all of) their new capabilities without actually activating them, thereby letting the customer turn them on when they are ready.

Guest Howard Berns
  It seems to me that if you need to customize your HR software the single tenant SaaS is better.
  Chuck Chuck Schaeffer
    Possibly, but not necessarily. The standalone nature (at the database level) of single tenant SaaS generally supports more freedom or fewer constraints for HR software customization. However, most multi-tenant SaaS HR providers have supplied their HR software with platform as a service (PaaS) toolkits that impost layers of abstraction or metadata schemas for significant changes related to HR software customization. These PaaS toolkits provide a highly visual interface for software customization and the layer of abstraction between the UI and source code allows for customization without losing upgrade options or technical support from the vendor.

Guest alan sifferman
  I cannot take what the HR vendors say is the best, as they have their own vested interests. How do other industry experts or analysts sound off on this issue?
  Chuck Chuck Schaeffer
    A Gartner report dated June 4, 2010 and titled 'Public Cloud Infrastructure Helps SaaS Vendor Economics' suggests that single-tenant SaaS apps can achieve many of the multi-tenant advantages by moving their application delivery to a public cloud (such as Amazon EC2 or Microsoft Azure). While this research report does not deminimize the efficiencies of multi-tenancy, it does state that single tenant SaaS programs running on a public cloud may be advantageous to customers with more complex software customization requirements or for customers that want more control with the software upgrade process. While the report notes the undisputed efficiencies of a completely shared infrastructure, it also states clearly that some companies have operational requirements, such as increased flexibility for their upgrade windows or more advanced disaster recovery commitments, that a multi-tenant model may be unable to support.

Guest sanjay k.
  Single tenant SaaS is bad for the cloud industry. It consumes more resources and is less efficient.
  Chuck Chuck Schaeffer
    Your point has some merit on a technology basis, however, SaaS is far less about technology and much more about changing the procurement, delivery, consumption and management of business software applications from the customer's perspective. If you ask customers whether they prefer their own autonomous environment or a shared environment, most will take their own dedicated space—which begs the question, how can giving customers what they want be bad for the SaaS market?

Guest anonymous
  Do any HR vendors offer both single-tenant and multi-tenant HR software?
  Chuck Chuck Schaeffer
    None of the SaaS HR market share leaders offer both as it would simply defeat the efficiency benefits of their multi-tenant models.

Guest Howard Berns
  Are there multiple types of multi-tenancy?
  Chuck Chuck Schaeffer
    Yes. Multi-tenant simply means sharing computing resources among tenants. Because there are multiple computing resources and services — hardware, operating systems, databases, applications and even network components — which can be shared in varying combinations, there are varying degrees of multi-tenancy. Gartner defines five levels of multi-tenant architectures as Shared-Nothing, Shared Hardware, Shared Processing, Shared Database and Shared Everything.

Guest Len Warren
  A software sales rep I'm in discussions with says if the HR application is not multi-tenant it's not software as a service. The sales guy emphasizes this point like its all important but I don't know if I really care. Am I missing something?
  Chuck Chuck Schaeffer
    Hard to say. To be sure you should understand the business differences from the technology and determine whether any of them are relevant to your business objectives or operating requirements. For most HR software buyers, this is a technology argument that takes a distant back seat to other more pressing HR software selection criteria. I think like many deep seated technology arguments, whether single tenant versus multi tenant, or Java versus .NET, or Oracle versus SQL Server, or countless other comparative alternatives, there is no one best answer for all. There are advocates for each side and more often than not when vendors make blanket statements their vested interests comes into play.




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