Something I push very hard in my consulting engagements is for clients to understand how underlying economic interests shape their uses of and success with technology. I'm not an economist, but grasping the concept that motives of self-interest propel most interactions with staff and vendors is so key to managing a working IT organization that without pushing that to the center of the table, many of my other recommendations and arguments make little sense.

This is hardly a unique condition in IT, of course, but for whatever reason it seems to be less understood or accepted than it is in, say, building maintenance. Technology is complex enough that it tends to cause those who understand it to over-focus on it, and shut down the brains of those who do not, leaving them in a terribly vulnerable position to the volumes of marketing tripe launched their way by vendors.

Those of us closer to the sidelines have more room to debate this sort of thing, and such is the conversation that has been occurring of late regarding the importance of multi-tenancy as a component of SaaS operations.

Michael Krigsman has taken the time to assemble some of the logic behind this thought and pin down an actual SaaS executive to force him to explain his economic rationales.

Ironically, having done so much spade work outing SaaS economic drivers, Krigsman concludes:

For cloud software customers, vendor architecture should ideally make no difference at all. Rather than worrying about vendor economics, it would be best if customers could focus only on features, functions, costs, business fit, and so on.

Realistically, however, enterprise buyers must consider vendor reliability, health, and sustainability as important elements of the buying decision. The connection between multi-tenancy and vendor performance in the software as a service market is therefore a key factor for buyers to understand and evaluate.

This mirrors my own take on the matter. It would be nice, of course, if one could do just that, and those are certainly aspects to consider when adopting a new system. Unfortunately, those are also the areas in which the marketing distortion field is likely to focus most heavily, and each of those considerations will be informed heavily by the economic situation of the vendor. If you understand accurately what that situation is, then you have an extraordinarily valuable tool with which to evaluate their other claims, particularly important in this young field where track records of performance in these areas are necessarily limited.

It's important to interpret what you know about the economics appropriately, however. While the emphasis on the beneficial aspects of multi-tenancy to the customer receive most of the attention, they have other impacts which may not be as favorable compared with more traditional vendor motives. For instance, while several commenters Krigsman quotes note that multi-tenant SaaS vendors have tremendous incentive to provide system up-time, where single-tenant solutions do not, that incentive can trump other things that you may consider important, such as features, customization, or flexibility. Many SaaS vendors in fact trumpet their abilities to customize, but as these customizations run into predictability and stability (as they will in some of the less well-architected solutions) what do you will think will win? It may not necessarily be the must-have component you were hoping for. SaaS vendors will align themselves with the majority of their customers. Whereas many on-premises vendors found that customization was an on-going money bucket, and made good business out of catering to individual customers on a case-by-case basis, SaaS vendors probably won't. That will be fine for customers that are able to adapt their processes to the base offering; for others, it's not as clearly a win.