Just a while ago, I was talking to my colleague karthik, who is the SaaS guy in my office on what’s his take on multi-tenancy and whether it is a pre-requisite or a fundamental ingredient for an ISV to go the SaaS route. He first disagreed and then agreed as well on the importance of multi-tenancy. Here are the excerpts of my discussion with Karthik, though not verbatim

Yours truly: Karthik, is multi-tenancy a must for offering SaaS?

Karthik: The rule says multi-tenancy is necessary for SaaS. But like every other rule, this one can also be broken.

Yours truly: Then how exactly do you offer SaaS if the architecture is not going to be multi-tenant?

Karthik: If it is a new product, going the multi-tenant route is probably the best solution to offer it as SaaS. But then if you are looking at re-architecting your existing application/solution, then it involves a lot of efforts and you need to have deeper pockets towards going the multi-tenant way. There is no straightforward solution that would allow you to change your on-premise solution to on-demand solution.

Yours truly: If multi-tenancy is not a pre-requisite, then how else do you think that it can be offered?

Karthik: Primarily, multi-tenancy involves servicing multiple customers through a single instance. Even the posterboys of SaaS have more instances towards scaling up to the volume of their customers. They mainly replicate the instances and offer. Considering this, an ISV which is trying to explore the SaaS route and they may or may not succeed as well as they have done in selling their on-premise solutions. They can adopt a middle path, wherein they can offer SaaS solutions through separate instances for every customer of theirs and see if it does really work, before investing their time and dollars in moving towards the SaaS route.

Another alternative to this would be, you can look at appliance solutions offered by rpath (www.rpath.com) that allows for just enough stuff to be preloaded and in turn that would improve/increase the efficiency of the offering.

Yours truly: What about economies of scale for the ISV that wants to offer the SaaS offering, if they have to choose the middlepath that you are suggesting?

Karthik: Well… Economies of Scale will not be in favour of the ISVs if their customers are going to buy only a handful of user licenses, in which case the best route would be to go the multi-tenancy way. But then, before deciding to plunge towards moving their offerings to SaaS, they can choose either this middle path or rpath. I am in no way suggesting that rpath is a straightforward alternative to SaaS. It is just a contrarian view of looking at things. rpath has its own advantages that allows for freedom in an ISVs professional services endeavors.

Yours Truly: Thanks much, I am planning to add this conversation in my blog.

Karthik: Go ahead… [I am not mentioning the other things he said to me on this]