Azure Multitenant App: Choosing the Right Dedicated Database for Each Tenant

Building a multitenant application on Azure means serving multiple customers (tenants) with a single application instance. A critical decision is how to handle each tenant's data, and using dedicated databases offers compelling advantages. Learn the best database options for your SaaS app.

Why Use Dedicated Databases for Azure Multitenant Applications?

A dedicated database architecture isolates each tenant's data in its own database. This approach offers benefits like:

• Enhanced Security: Data is physically separated, minimizing the risk of cross-tenant data breaches.
• Simplified Backups & Restores: Backing up and restoring data for a single tenant is much easier.
• Customization: Tailor database schemas and features to meet individual tenant requirements.
• Easy Tenant Deletion: Removing a tenant's data is as simple as deleting their database.
• Scalability: Scale each database based on the specific need of each tenant.

This is especially beneficial for B2B SaaS, apps with specific compliance, or those with enterprise customers requesting control over their data.

Azure Cosmos DB: Dedicated Cosmos DB Databases for NoSQL Multitenancy

Azure Cosmos DB is a NoSQL database service, ideal for applications requiring high scalability and global distribution. When using Azure Cosmos DB with a dedicated database, you provision throughput (Request Units or RUs) at the database level, which is shared across all containers within that database. Each tenant's data remains isolated.

• How it works: Provision RUs and create a dedicated database per tenant for isolation.

Pros:

• Excellent horizontal scalability and global distribution.
• Adding new tenants is seamless with no downtime.

Cons:

• Can be costly for small tenants due to reserved RUs.
• No SQL-like structure.

Cost: Charges are based on provisioned throughput and storage. Be mindful of potential cost implications for low-traffic tenants.

Azure SQL Database: Elastic Pools for Relational Multitenancy

Azure SQL Database is a fully managed SQL Server database in the cloud. To achieve multitenancy, you can create a separate database for each tenant and efficiently manage costs using Elastic Pools. Elastic pools allow you to share resources like CPU and memory among multiple databases, optimizing costs when tenant usage varies.

• How it works: Create an Azure SQL database per tenant and group them into an Elastic Pool.

Pros:

• Strong tenant isolation.
• Familiar SQL environment for developers.
• Cost-effective with Elastic Pools.

Cons:

• Slower database creation (30-60 seconds).
• Cost can increase without proper Elastic Pool management.
• No native autoscaling compared to Cosmos DB.

Cost: Elastic pools are efficient if tenants have varying, low usage. Otherwise, you'll pay for each database individually.

Azure Database for PostgreSQL: Schema-Based or Database-Based Isolation

Azure offers managed PostgreSQL database services. You can isolate tenants using separate schemas within a shared database or deploy separate databases within the same PostgreSQL server. For maximum isolation, deploy a separate PostgreSQL server for each tenant.

• How it works: Create separate databases inside a PostgreSQL server or use entirely separate servers.

Pros:

• Mature relational database with extensions.
• Hyperscale (Citus) option available for large-scale workloads.
• Flexible schema versioning and backup strategies.

Cons:

• Managing many schemas or databases on a single server can become complex.
• Server provisioning takes time (30+ seconds).
• Autoscaling and zone redundancy limitations in Flexible Server mode.

Cost: Cost-effective for many tenants inside shared servers, but costs increase as you scale beyond that model.

Neon Serverless Postgres: Instant Provisioning and Cost-Effective Isolation for SaaS

Neon is a serverless Postgres solution designed for modern cloud applications, separating storage and compute. This unique architecture makes it highly suitable for multitenant SaaS applications using the dedicated database per tenant model.

• How it works: Assign each tenant their own Neon "project" with isolated compute and storage.

Pros:

• Instant database provisioning (less than 1 second).
• Scales to zero when inactive, maximizing cost efficiency.
• Supports modern CI/CD via branching.
• Serverless architecture eliminates infrastructure management.

Cons:

• Newer product, still evolving in features.
• Not yet available in all Azure regions.

Cost: Significantly lower than Azure SQL or Cosmos DB, especially for micro-SaaS or apps with many free-tier users.

Quick Feature Comparison for Multitenant Database Options

Feature	Azure SQL	Cosmos DB	PostgreSQL (Azure)	Neon
Type	Relational	NoSQL (JSON)	Relational	Relational
Provision Speed	~30–60 sec	~5–10 sec	~30–60 sec	< 1 sec
Cost for Small Tenants	Moderate (elastic pool)	High (RU reservation)	Moderate	Low (pay-per-use)
Customization	High	Medium	High	Low
Scaling	Manual or pool-based	Auto-scaling	Manual	Auto-scaling

Multitenancy and RAG: Isolating Tenant Data

When using Retrieval-Augmented Generation (RAG) with AI, multitenancy is crucial. RAG accesses private data for better context in AI apps. Neon allows you to give each tenant a private database project to achieve stronger data isolation.

Final Thoughts: Find The Best Azure Database for a Multitenant Architecture

Choosing dedicated databases for each tenant is a practical strategy for SaaS providers that require flexibility, security, and customizability. Whether you want the performance characteristics of the Cosmos DB database, or the relational strengths of Azure SQL, make the right decision for your apps. Neon could be a great choice for fast provisioning, cost-effectiveness, and serverless design.

Azure will give you the freedom to handle your multitenant programs effectively at any level!