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Multi-tenancy, the Holy Grail of SaaS. Do Customers Care?

Two recent posts by Enterprise Social Software  vendors Jive and Atlassian set up a huge debate amongst my fellow Enterprise Irregulars.  Here’s the money-quote from Jive:

It’s not so long ago that it felt embarrassing to say the words "SaaS" and " single-tenant" in the same sentence. For years, it’s been an industry mantra that it’s  simply impossible to have a scalable SaaS business without multi-tenancy.

Both Jive and Atlassian went single-tenant. That’s a red flag with many SaaS purists.  But there’s more then just tenancy. What if customer data stays behind the firewall, while the application is still provided over the web?  Is that still considered SaaS?    Do customers really care about such issues, or do they look for innovation in features and services?

And a bonus: the #1 SaaS icon supposedly delivers on-premise, if the deal is big enough…

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