Serverless is the new Multitenancy

Multitenancy was the single biggest technology breakthrough in SaaS. Consider this, with over 100,000 customers a company like Salesforce would need 100,000+ servers and databases to serve their needs essentially wiping out its margins.

Multitenancy not only allowed for higher gross margins, it made it viable to serve small and medium businesses with world class software — at a profit.

Multitenancy was not just a new architecture but also changed the way we thought of paying for enterprise software — not by number of CPUs or servers but by users and usage. Similarly, serverless compute is both a new way of building apps and also a new way of consuming and paying for it.

Serverless takes the promise of multitenancy to a whole new level. Serverless compute is a computational model where no dedicated server or VM needs to be up and running as the platform activates and then shuts down the processing scaling it as needed. You truly pay for only what you need.

AWS Lambda

Multitenancy won, everyone else lost

In the first decade of SaaS, companies like Salesforce and Netsuite were hardcore proponents of multitenancy while legacy vendors portrayed it as a compromise, often calling it “risky comingling of customer data”.

The number 1 leader in enterprise applications software, SAP invented its own architecture called mega-tenancy to compete with multitenancy. While the leading database vendor, tried to sell virtualized private databases and other innovations as an alternative. Today, these companies have acquired likes of Ariba, Concur and Netsuite for tens of billions of dollar and committed to the winning architecture — multitenancy.

Serverless Architecture

With serverless architecture, we are seeing a whole new range of applications emerging. When it comes to IOT, mobile apps and realtime big data, serverless architecture can be a huge advantage.

Amazon Lambda is seen as a clear leader in this space while other products like PubNub Blocks and Azure Functions are also buiding on the same idea. In a few years, every cloud platform will have to support some form of serverless architecture.

Just like the move to multitenancy, you can’t take your existing code and just make it serverless, you have to rethink your applications and rewrite to use these new frameworks.

As Ron Miller points out in this previous Techcrunch article:

While this approach to programming isn’t a magic bullet by any means, it’s a new tool for developers who might not need a more traditional server set up, and it gives them options when they are designing the program and deciding how to deploy it.

Making the Impossible, Cheap and Possible

Multitenancy allowed SMBs to get enterprise grade applications for CRM (Salesforce), accounting (NetSuite), marketing (Marketo), hiring (SmartRecruiters) etc. at prices they could afford.

With the deluge of data especially real-time data, it is cost prohibitive for many use cases to process it and act on it. Serverless computing makes it much more inexpensive by charging you only for the fraction of the time it takes to run your functions.

Over the next 10 years, I look forward to new applications being unleashed by this new architecture and business model. What Salesforce and NetSuite sized companies will this new architecture make possible?

Originally published on Techcrunch.

Disclaimer: Anshu Sharma is an investor in PubNub, a former executive at Salesforce and an all around unapologetic optimist on public cloud. His opinions reflect these and many other biases.