ERP in the cloud ‘multi tenant’ or ‘single tenant’ (cq hosting)?

The use of software "in the cloud" has now really penetrated the market for business software applications. Not only for financial- and CRM software, but also for ERP software. In fact, nowadays it is even "a must" to be able to offer ERP software in this way. At Quartess we see that almost without exception our new clients want to start using Infor Cloudsuite Industrial in the "multi-tenant" cloud. Fortunately, our partner and supplier Infor Inc started to follow this path years ago, which means there is a lot of experience today.

The choice for cloud has a number of well-known advantages:

• The software has a subscription license model instead of a one-time investment; 
• No investment in own servers (hardware) and supporting operating software required; 
• No more responsibility for the technical side of the ERP application;
• The application is accessible anywhere, using the internet and a web browser. 

Yet one cloud is not the other. And the benefits to be achieved are therefore not the same. Basically there are 2 different forms: "multi tenant" or "multi tenancy" and "single tenancy" or "hosting".

What is "multi tenant"?

Wikipedia describes "software multi tenancy" as: "a software architecture in which a single copy (instance) of the software runs on a server that serves different tenants. A tenant is a group of users who have common access, with specific rights to share the software instance"

With a 'multi tenant' architecture, the ERP software application is designed to provide each tenant with a special section of the application, including data, configuration, management of the users, the individual functionality of the tenant and non-functional properties. This makes immediately clear why "multi tenant" sets strict requirements for the technical design of the software and that the architecture determines the possibility of being able to offer software in the "multi tenant" cloud at all.

In all cases, the software runs in an external data center, equipped with all physical and software protections.

The image shows an apartment building as a metaphor for "multi tenant": 1 building with shared facilities, but also each apartment with its own front door. What is happening in apartment A is not visible in apartment B or C.

What is "single tenant"?

In the case of "single tenancy" (hosting), the ERP software application is installed on 1 or more specific (possibly virtual) servers for 1 specific company. The servers are placed in an external data center instead of in an own local server room (the so-called "on-premise" installation). All facilities must be realized for this single company. In the image, "single tenancy" is similar to "the house"; all facilities are required, just like in the apartment building, but it is all specifically set up for "that single resident". Think of the central heating installation, the air treatment installation, etc.

Advantages of "multi tenant"

There are clear advantages for a "multi tenant" ERP system. These become particularly visible when we look at aspects such as costs, performance, the environment, safety and reliability.

• Hardware and energy usage - In a single tenant environment, a company's physical or virtual server must be individually equipped (processor power, memory, hard disk space, operating system, security) to deliver maximum performance. However, these performances are certainly not demanded all the time, in most cases hardly ever as research has shown. However, the energy consumption is relatively high even when the server is not used to the maximum. A multi-tenant environment serves multiple customers, allowing for "sharing & balancing" to be done. This leads to much more efficient use of the required hardware. As a result, considerably less energy consumption and therefore better for the environment
• Scalability -. As a company grows and the number of users increases, the specific server capacity must be expanded in a single tenant environment. With all the associated consequences in terms of costs, supporting software, security and, again, energy consumption. In a "multi tenant" environment, growth can be absorbed much more easily. If more server capacity is required, it will most likely be available in any case because "1 of the many neighbours" running on the same server will need slightly less capacity at that time. More efficient use of servers is the result, which translates into lower hardware costs and considerably lower energy consumption.
• Simple and fast upgrades - If there are thousands of companies working with as many separate ERP systems in single tenant environments, this means thousands of individual updates upgrades with a new software version. Reason why companies, even in a single tenant environment, are lagging behind with updates and use of new versions and possible issues are resolved less quickly. It is simply a huge amount of work. With many customers on a single, "multi-tenant" environment, this is a single upgrade, which is by definition carried out by the supplier and done regularly. In the case of Infor, for example 1x per month. Companies automatically have the most recent version of the software. Without being forced to use the latest functionality. Research from Aberdeen showed that companies which use a recent version of their business software, perform better compared to the ones working with old (er) versions. But safety is also at stake. Finally, a possible security issue can also be solved by means of an update.
• Back-ups, protection and redundancy - In a multi-tenant environment, all of this is centrally arranged so that it meets the highest requirements and certifications. For example, Infor works with Amazon Webservices (AWS) data centers that comply with ITAR and HIPAA standards. Data is continuously mirrored between 3 "availability zones" within 1 region, resulting in very high and guaranteed availability of the application. With a single-tenant, all of this needs to be set up, monitored and maintained for each individual company (.. the thousands of individual servers). "Multi tenant" thus offers higher reliability and availability.

From the end user's point of view, these differences are not necessarily obvious in the day-to-day use of the ERP application. However, he / she will notice that the application remains up-to-date and therefore attractive to work with. For the 'millennium generation' this is an often mentioned and important aspect with regard to 'enjoyment at work'

Disadvantage 'Multi tenant'? 

Having to work with the completely standard application without the possibility to optimize the solution for the specific processes of an organization is often mentioned as a disadvantage of 'multi tenant'. This drawback applies maybe to some ERP applications. However not to Infor Cloudsuite Industrial (Syteline) ERP. Due to Infor's 'industry focus', the application offers extensive functionality for the specific segment (niches in the manufacturing industry). Customizations are therefore less necessary. But at the same time, the very flexible development framework if desired. And all of this is retained with upgrades.

Conclusion: "Multi tenant" is a requirement for modern ERP

There are clear advantages when an ERP application can be used "multi-tenant". When choosing a new ERP system, the technical suitability for "multi tenant" (the application architecture) should therefore be an important criterium. "Multi tenant" offers benefits for the client, for the cloud provider and for the environment. In addition, an application that does not have the correct architecture cannot be made suitable for "multi-tenant" easily or quickly. Also good to be aware of !

Sources: Infor, Wikipedia, Salesforce, Quartess