Azure Multitenant App: Choosing Dedicated Databases for Each Tenant

Building a multitenant application on Azure means serving multiple customers (tenants) with a single application instance. A key architectural decision is how to store each tenant's data. Dedicated databases, one for each tenant, offer enhanced security, easier backups, and customization options. Let's explore how this approach works using various Azure database services, including Azure Cosmos DB, Azure SQL Database, Azure Database for PostgreSQL, and Neon Serverless Postgres. Discover which approach is best for your needs!

Why Dedicated Databases are Ideal for SaaS

Dedicated databases provide the isolation and flexibility needed for complex SaaS applications, especially those with enterprise clients. This approach helps with:

• Data isolation: Each tenant's data is completely separate.
• Scalability: Each tenant can scale their database independently.
• Customization: Tailor features and schemas for individual tenants.
• Compliance: Meet specific data retention and regulatory needs.
• Tenant Deletion: Easily remove a tenant's data without impacting others.

Azure Cosmos DB: Dedicated Databases for NoSQL Multitenancy

Azure Cosmos DB, a NoSQL database, offers several multitenancy approaches. With each tenant in their own Cosmos DB database, you gain:

• Isolation: Complete data segregation.
• Scalability: Independent throughput (Request Units or RUs) provisioning for each database.
• Global Distribution: Leverage Cosmos DB's distributed nature.

Each tenant gets their own database, providing the best isolation and allowing for independent scaling. Provision RUs at the database level, isolating performance and costs. Great for highly scalable apps, but can be more expensive for small tenants.

Pros:

• Excellent for highly scalable, globally distributed applications.
• Adding new tenants is seamless and doesn't cause downtime.

Cons:

• Higher costs for small tenants because of reserved Request Units.
• No SQL-like structure, which might be a hurdle for relational purists.

Azure SQL Database: SQL Power with Tenant Isolation

Azure SQL Database offers fully managed SQL Server in the cloud which can be a great option for a multitenant app. You can assign each tenant a dedicated schema or create a separate database. Using Elastic Pools, you can efficiently host multiple databases while sharing resources to reduce costs.

How it works:

• Create a new Azure SQL database for each tenant.
• Group databases into an Elastic Pool to share CPU and memory resources.

Pros:

• Strong data isolation for each tenant.
• Familiar SQL environment.
• Elastic pools save costs by sharing resources.
• Elastic pools protect from the Noisy Neighbor problem.

Cons:

• Slower database creation (30–60 seconds).
• Cost increases without proper Elastic Pool usage.
• Managing updates across databases can be challenging.
• No native autoscaling—requires manual configuration.

Azure Database for PostgreSQL: Flexible and Scalable

Azure Database for PostgreSQL gives you multiple options: Single Server, Flexible Server, and Hyperscale (Citus). Deploy a separate PostgreSQL server per tenant for maximum isolation, or use dedicated schemas for per-tenant customization and data management. Each approach provides the ability to achieve multitenancy with PostgreSQL.

How it works:

• Create separate databases inside a single PostgreSQL server for each tenant.
• Utilize separate PostgreSQL servers for better isolation.

Pros:

• Mature relational database with numerous extensions.
• Hyperscale (Citus) for large-scale, shared-schema workloads.
• Flexible schema versioning and backup strategies.
• Shared infrastructure can be cost-efficient for small tenants.

Cons:

• Managing numerous schemas or databases on a single server becomes complex.
• Server provisioning takes time (30+ seconds).
• PostgreSQL Flexible Server has limitations in autoscaling and zone redundancy.

Neon Serverless Postgres: Instant Provisioning and Cost Efficiency

Neon is a serverless Postgres solution that separates storage and compute, making it ideal for multitenant SaaS applications. With Neon, each tenant gets their own project for complete isolation and scalability. Addresses PostgreSQL's traditional limitations like idle connections.

How it works:

• Each tenant/user is assigned their own Neon project (project-per-user pattern).
• Each project has isolated storage, compute, and roles.

Pros:

• Instant database provisioning (< 1 second).
• Scales to zero = excellent cost efficiency.
• Supports CI/CD via branching for feature testing.
• Ideal for micro-SaaS or flexible pricing tiers.
• No infrastructure management – serverless by design.

Cons:

• Newer product with expanding features.
• Availability in Azure regions is still growing.

Key Factors Compared

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 (shared server)	Low (pay-per-use)
Customization per tenant	High	Medium	High	Low
Scaling	Manual or pool-based	Auto-scaling	Manual	Auto-scaling, serverless

Multitenancy Considerations in RAG Applications

For Retrieval-Augmented Generation (RAG) applications, robust multitenancy is critical. Guarantee data isolation and avoid the "noisy neighbor" problem. Neon, with its project-per-tenant model, isolates each tenant's data and AI workflows, simplifying performance and cost management.

Choosing the Right Azure Database

Selecting dedicated databases per tenant offers the customization, security, and scalability required for successful SaaS ventures. Azure furnishes an extensive array of tools, spanning from Cosmos DB and Azure SQL to cutting-edge solutions such as Neon, to realize this design. If rapid provisioning, economy, and a serverless architecture are critical, Neon is a compelling option. For standard relational tasks, Azure SQL or PostgreSQL stand as dependable, well-connected options within the Azure ecosystem. Regardless of the selection, Azure presents the adaptability to bolster your multitenant SaaS application across all phases.