Just when the battle between on-demand and on-premise CRM seemed to settle down a bit, a new one opens up: single-tenant architecture versus multitenancy.
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When Oracle Corp. announced the latest version of Siebel On Demand in February, the company relit a coal believed extinguished since the early days of online delivery. The release -- officially known as Oracle's Siebel On Demand-Single Tenant, Enterprise Edition (STEE) -- appeared to resurrect the concept of single-tenancy.
According to Oracle executives, each customer of the new product would access a fully dedicated database, middleware, and application instance of STEE, running on a server at Oracle's Austin, Texas, facility reserved solely for that company. This would seem to flout otherwise accepted practices in on-demand CRM, where multitenancy has been the buzzword for several years.
The idea behind multitenant application delivery is that a vendor's entire customer base runs on the same instance of the software, while single-tenant deployments provide a single instance for each customer, typically on a dedicated server. The term coined for single-tenant deployment -- when it was fashionable in the late 1990s -- was application service provider (ASP). Today's multitenant companies prefer the term software-as-a-service (SaaS).
Oracle contends that it is offering customers a number of choices that have been absent from the marketplace. One area where Oracle clearly departs from the expected norm is with price: STEE goes for $70 per user, per month, and includes Oracle's business intelligence stack. This contradicts other vendors' previous claims that multitenant deployments cost less, and that those savings were passed on to the customer; Salesforce.com, perhaps the strongest proponent of multitenant SaaS, charges $125 per user, per month, for its own Enterprise Edition and $65 per user, per month, for its Professional Edition, one step down.
"Multitenancy has never provided the customer with any direct benefit whatsoever," says Anthony Lye, senior vice president of Siebel CRM On Demand. In addition to the apparent lack of expense, Lye notes that STEE provides advantages that multitenant systems can't. One of these is the ability for customers to schedule maintenance around their own convenience.
"Most SaaS vendors provision some weekly downtime in their service contracts for maintenance, whether they use it or not; typically this is on the weekend," Lye says. "But a company like [Oracle customer] GMAC does a lot of business on the weekend, especially Saturday, and can't afford downtime when customers are financing car purchases." Single-tenancy, he says, allows Oracle customers to schedule maintenance whenever the work makes the most sense for their businesses.
Lye also claims greater ease in guaranteeing data security and overall system availability via Oracle's 20,000-server data center. "If one machine goes down, 99 still run; there are no systemwide service outages," he says. Most security breaches, he says, occur through phishing -- and rather than exposing every customer, a single-tenant system exposes only the one compromised company and its server.
Security may be a straw-man issue, however. "Oracle believes that there are some concerns among [its] customer base about commingling data...[and] some client concerns about security and sharing of environments," says Ray Wang, a principal analyst with Forrester Research. "The plus side: Oracle is providing another deployment option. The negative side: Customers still have mostly unwarranted security concerns about SaaS."
The single-tenant option does have Doubting Thomases -- many of them offering multitenant products of their own. "The ship sailed on single-tenancy a long time ago -- multitenancy is clearly the way the industry is going," says Bruce Francis, vice president of corporate strategy for Salesforce.com. "All the most-successful, best-integrated companies are multitenant. All the innovation happens with multitenant providers."
While Francis is quick to note that Oracle is a powerful company run and staffed by very smart people -- Salesforce.com founder Marc Benioff was there for 13 years -- he also says it's built on selling licenses of installed software and may find it hard to change old instincts. "The market closed on ASPs in the late '90s," Francis says. "The basic question now is, 'Are you going to invest in a model that has essentially already failed?' "
Can Oracle singlehandedly make single-tenancy a viable option again? Oracle's grid computing -- which combines computer-processing power across multiple machines, adding inexpensive servers as needed -- "opens up a lot of options for companies wanting to try on-demand computing," says Denis Pombriant, founder and managing principal of Beagle Research Group, a CRM consultancy. "[It] gives Oracle the ability to let some customers use single-tenant solutions while others take advantage of multitenant solutions," Pombriant writes in his company's blog. "This 'have-it-your-way' approach may mean the weakening of the multitenant argument in favor of on-demand computing, but, in reality, that argument has been weakening for some time."
In an effort to unite on-demand and on-premises CRM, Oracle takes responsibility for product integration -- a move that looks particularly appealing for partner channel management.
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