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More companies are implementing risk management information systems (RMIS) as the landscape continues to face new threats from climate change, political unrest and economic uncertainty while also considering lessons learned from the early days of the COVID pandemic.
In fact, a 2022 report from Redhand Advisors estimated that 84 percent of organizations were expected to increase their spending on risk management in 2022, an average YoY increase of 8 percent.
However, with the growing RMIS landscape, it can sometimes be hard to identify which solution is right for your organization’s needs. That decision can start with determining the framework build– single-tenant or multi-tenant.
What is the difference between single-tenant and multi-tenant?
When it comes to RMIS, single-tenant refers to a system built to serve a single client or organization. A multi-tenant system, on the other hand, is structured so that it can serve multiple clients or organizations at the same time.
You can view it similarly to single-tenant versus multi-tenant housing. Someone living in a single-tenant home will have more freedom to customize the house. Someone in a multi-tenant situation, such as an apartment building, will have more limitations placed on them because of building requirements and lease agreements.
Likewise, in a single-tenant RMIS, the client has exclusive access to the resources and infrastructure of the system, giving them control over the configuration and management of its infrastructure. A multi-tenant system, however, means that the infrastructure and features are built to accommodate all clients utilizing the platform, and resources are shared.
What Are the Pros and Cons of a Single-Tenant v. Multi-Tenant RMIS?
Despite recent advancements in RMIS technology, there is no best “one-size-fits-all” approach to selecting RMIS software. Depending on how they plan to implement and utilize its features, what works for one organization might not work for another.
So what aspects of single-tenant versus multi-tenant software should risk management teams consider? They should keep in mind the following:
Enhanced customization. Because a single-tenant platform is not a one-size-fits-one solution, organizations can work with their provider to customize certain features they will utilize. For example, the workflow setup and what their teams’ overall UI experience will be like.
Customization also opens the door for greater control and flexibility should needs change. One thing to note, though, is that this level of customization does traditionally come at a higher cost.
Improved security. When an organization does not share the same server as other users of the same platform, a security breach is more easily contained and does not affect the RMIS provider’s entire client network. Eliminating server sharing can help prevent data breaches like the one that SolarWinds’ clients experienced in 2020.
Lower cost. Developed to serve multiple organizations, multi-tenant systems are typically less expensive to implement. As a result, clients can benefit from the developer’s lower infrastructure costs.
Rapid deployment. Due to the “off-the-shelf” nature, multi-tenant solutions are often easier to deploy quickly because there’s less customization to build before rolling it out.
Performance issues. Because multiple clients share the same infrastructure, an outage affects all users, even if it originated with one. Due to shared server usage, there’s also the risk of slow load times or lagging during high-use periods.
The Future of RMIS is Multi-Tenant
The truth is, most organizations think they need a more custom set-up than they do, and that’s why multi-tenant provides a great opportunity. So long as the provider is focused specifically on your area of expertise and your needs, these solutions offer everything you need in a streamlined, cost-effective package.
The trick when selecting a RMIS vendor is to determine if their goals and direction for their product offering(s) align with your business goals. Rather than looking to succeed at everything, all at once, you want someone looking to be the best at what you are looking for. Vendors in this space are pursuing one of two strategies: build a multi-tenant platform to accommodate the entire risk and insurance continuum or build and support a multi-tenant platform specific to the RMIS space. Consider your long-term goals and find the vendor that aligns with where you want to be not only now, but in three to five years.
Finding the Right RMIS Solution
The great thing about the fast pace of technology innovation in recent years is that it’s resulted in a large marketplace of RMIS solutions for risk managers and their teams to consider. Whether an organization is looking for a single-tenant or multi-tenant solution, there’s something out there that fits everyone’s needs.