Multi-tenancy

After visiting the Cloud Forum a few weeks ago [ref: cloud forum 2011] I remained with the question what multi-tenancy actually means. Multi-tenancy is a relatively new software architecture principle in the realm of the Software as a Service (SaaS) business model. It allows to make full use of the economy of scale, as multiple customers - "tenants" - share the same application and database instance. All the while, the tenants enjoy a highly configurable application, making it appear that the application is deployed on a dedicated server. The major benefits of multi-tenancy are increased utilization of hardware resources and improved ease of maintenance resulting in lower overall application costs. [ref: Multi-Tenant SaaS Applications: Maintenance Dream or Nightmare? (pdf), a report by Cor-Paul Bezemer and Andy Zaidman].

Basically multi-tenancy is the only proven SaaS delivery architecture that eliminates many of the problems created by the traditional software licensing and upgrade model, so it’s extremely valuable to know whether the cloud provider uses a multi-tenant architecture. Multi-tenancy ensures that every customer is on the same version of the software, the 1 in 0 - 1 - ∞: 0 investments, 1 version, ∞ scalability. See also the following whitepaper [ref: 10 Critical Requirements (pdf)].

As said before multi-tenancy results in lower overall application costs, together with the dramatic drop of infrastructure costs over the last five years the price is basically the main reason why everyone is now so convinced Cloud Computing will work.
Factors for driving companies toward the Cloud are

• Cost-savings - smaller in-house IT staff, less software licensing, less hardware and having an easy and inexpensive way to store a redundant copy of their data.
• Ease of management, customers no longer have to worry about software upgrades, hardware upgrades, migrations, or any of the management that comes with running a datacenter.

Barriers preventing some companies from moving to the Cloud are

• Trust - if a company loses it's data, it is very likely that this company will go out of business.
• Losing their IT staff - many companies see their IT staff as a competitive advantage against other competitors in their field.
• Lack of knowledge about Cloud Computing.

Basically Cloud Computing is not just the next step, but more a paradigm shift. To illustrate this a quote from the book The Big Switch by Nicholas Carr:

A hundred years ago, companies stopped generating their own power with steam engines and dynamos and plugged into the newly built electric grid. The cheap power pumped out by electric utilities didn’t just change how businesses operate. It set off a chain reaction of economic and social transformations that brought the modern world into existence. Today, a similar revolution is under way. Hooked up to the Internet’s global computing grid, massive information-processing plants have begun pumping data and software code into our homes and businesses. This time, it’s computing that’s turning into a utility.

Updated November 6, 2012 with the proper reference to the used definition of multi-tenancy.