Multi-Tenancy is a concept of software architecture where a single instance of the application software runs on a Software as a Service basis on the vendor's servers, serving multiple client organizations (tenants). Multitenancy is contrasted with a multi-instance architecture where separate software instances (or hardware systems) are set up for different client organizations. With Multi-Tenancy a software application provides per-tenant data isolation to that each Tenant Organization see only its own data.

Multi-Tenancy is widly recognized as being the primary method for developing true SaaS systems and is used by most of the pure SaaS vendors.  Vendors using Multi-Tenancy only have one copy of the system to support and therefore can execute (in the cloud) with maximum velocity and agility.  Pseudo SaaS systems use hosting and/or Virtualization to simulate the Multi-Tenancy capability and do not posess the same velocity and agility capabilities.

In business applications, Multi-Tenancy is enabled by a database extensivity mechanism, which enables each Tennant organization to extend the the database, independently of the other tenants.  This confers great customizability upon the SaaS application.

Multi-Tenancy applications often derrive further customizability by incorporating workflow facilities which are customizable on a per Tenant basis.  The workflow facilities enable the System Administrators of Tenant companies to alter the behaviour of the system to suit the Tenant organization's business processes.

Multi Tenancy applications also tend to contain very flexible Access Control options, enabling the System Administrator of each Tenant company to configure the application to suit the Tenant Organization and the roles within the Tenant application.

Multi-Tenancy SaaS applications are expected to be highly available (99.5%+) , highly performant (500ms round trip times) and highly secure.  This requires great attention to detail at all stages of the design, development and operational process.  Multi-Tenancy SaaS vendors have to earn a reputation for high availability , performance and security.