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.

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.