Take the bus or the car… multi-tenant versus single-tenant software

May 19, 2013

A BusIn today’s world of the “Cloud”, I frequently find myself explaining the difference between multi-tenant and single-tenant software, where both are hosted or delivered through the Cloud.

I like to illustrate the difference by comparing it to the difference between a bus and a car.

A bus, like multi-tenanted software, is shared by many customers in order to reduce the cost per customer. It is driven by one driver, a trusted professional who dictates the path and direction forward. There is little flexibility in timing or journey per customer, because they all share the same bus and it can only be in one place at a time. The main benefit of a bus is cheaper travel at the cost of inflexibility.

Black Cabs
Compare this to single-tenanted software, which is like a car. A car is flexible as it can take you on the journey you want at the time you want. People who ride in cars instead of buses can dictate their own journey and schedule. Travelling by car is generally more expensive than travelling in a bus, but the benefit is flexibility.

Cars can be privately owned where you can drive them yourself, or they can be taxi-cabs which are driven by a trusted professional under your instructions as a customer. Taxi-cabs are similar to hosted single-tenant software, driven by a professional under your instructions, whereas private cars are similar to single-tenanted systems, run on-premise and controlled directly by the customer.

Obviously buses, cars and taxi-cabs all have their place in the world and each is better suited to different types of users for different purposes.

In the world of accounting and business management software, where my business Enprise operates, multi-tenanted software is generally better suited to smaller or simpler business requirements, where low cost is more important than flexibility. Single-tenant software is generally more suited to mid-sized and larger businesses that need more control and flexibility with their systems.

I notice that many multi-tenanted business management systems available on the market today are not that much cheaper than similarly specified single-tenant systems, in fact many work out to be more expensive. To my mind this is clearly a case of over-pricing and the vendors in question only get away with this due to the “smoke and mirrors” and hype surrounding the “Cloud”. I advise customers to look carefully at running costs compared to flexibility when choosing between single-tenant software such as MYOB EXO or SAP Business One and multi-tenant software such as NetSuite.

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