When talking about Cloud ERP options, you often hear references to tenancy and most often multi-tenancy. What does this mean? And if you are choosing a cloud ERP solution why should you care? In this two-part blog, I will explore what tenancy really means, how it has changed over the years, and how a modern ERP system, Cloud ERP, has taken advantage of technology advancements to provide a more elastic approach to the tenancy concept.
Cloud ERP solutions first came into real viability about 15 years ago.
As shown in this summary here, Cloud ERP solutions offered a number of benefits over the traditional on-premise ERP solutions. Some of these most commonly cited include: abolition of local hardware, local database and network software, and reduction of IT personnel desired to support this on-premise environment, scalability, and the potential for a lower Total Cost of Ownership (TCO).
In order to distribute these benefits, these preliminary solutions were delivered in a multi-tenancy environment. Tenancy has to do with how your data is stored and used by the application as well as how an application is used by several customers. Multi-Tenancy is an architecture in which a single illustration of a software solution or a database serves multiple customers. A customer is considered a tenant; much like an apartment building has multiple tenants sharing the same environment. Multi-tenancy is a common approach used by cloud ERP providers.
Historically, there were a number of multi-tenancy benefits being touted. Many of these are shown in the graphic. But these tenancy benefits were at times only superficial and perhaps more of a benefit to the software publisher than the customer utilizing it. And in some cases, the true benefits to the customer were exaggerated. In addition, there were some limitations or downsides to this multi-tenant move toward that needed to be considered. These include such things as:
But that was then. Technology as it always does continue to evolve. And many of the technological limits that led to a multi-tenancy approach are no longer a restriction. This has led to more flexibility in your tenancy options. You will still find the full multi-tenant options where everything is run on shared, virtualized, multi-tenant resources and a provider hosts your solution on a subscription basis. But in addition to this option, you are now seeing both Hybrid Cloud and Private Cloud models that offer a different set of benefits and capabilities. See the graphic here that explains some of these options available.