If you’re running a B2B SaaS company that operates across multiple regions and needs to stay HIPAA-compliant, managing your Postgres setup can be a real headache. You need to keep customer data isolated while avoiding performance issues caused by shared resources, all while ensuring your architecture can scale as you onboard more customers.

Managing a multi-tenant design like this with traditionally managed Postgres solutions like AWS RDS is challenging. If you’re using RDS, chances are you’re hosting all your customers’ data in the same instance. Over time, that instance grows larger and larger, turning into a major bottleneck for your team as maintenance and scaling become increasingly difficult.

Good news: Neon can help. Instead of cramming multiple customers into a single database, Neon makes it easy to give each customer their own region-specific, dedicated project. This ensures simpler compliance management, better performance, and smooth scalability up to hundreds of thousands of customers.

The Challenges of Multi-Tenant Architectures in B2B SaaS

Many SaaS companies rely on a shared database model where all customers are tenants within the same instance. While this setup works for some, it comes with significant challenges. Companies that come to us are often struggling with these three problems:

Compliance risks

When multiple customers share a database, ensuring strict data isolation, something that’s crucial for HIPAA and other regulatory requirements, becomes much harder. This challenge is even greater for companies operating in multiple regions (e.g., the U.S. and Europe) and dealing with highly regulated industries, where laws like GDPR and HIPAA mandate strict control over where and how data is stored.

How is this often solved in AWS RDS?
Many companies try to mitigate this by manually partitioning data within a shared database, implementing row-level security, or creating separate schemas for each customer. Others spin up separate RDS instances for regions.

The problems with this solution:

• RLS and schema-based isolation still share the same database. Any misconfiguration or bug can expose one customer’s data to another. This setup requires expert DBA maintenance at scale.
• Spinning up multiple RDS instances is expensive and requires extensive infrastructure management. Each instance must be provisioned, monitored, and backed up separately.
• Data residency requirements become difficult to enforce without strict per-region database isolation.

Noisy neihghbor bottlenecks

In a shared database model, all customers are competing for the same resources. If one customer runs a particularly heavy query or batch job, it can slow down performance for everyone else. This is known as the “noisy neighbor” problem, where a single tenant’s usage impacts the experience of others.

How is this often solved in RDS?

This is often mitigated by caling up the RDS instance to handle increased load. Sometimes, rate limits are set per customers to prevent excessive resource consumption. Read replicas could also be used to distribute some of the workload.

The problems with this solution:

• Vertical becomes increasingly cost-prohibitive and inefficient.
• Query limits can frustrate customers who temporarily need more resources, leading to a poor user experience.
• Read replicas help with read-heavy workloads but don’t solve the problem of write-heavy applications or background jobs affecting primary database performance.

Complex database management

When all customer data is mixed within a single database, managing backups, restores, and audits becomes complicated. If one customer needs a point-in-time recovery, the entire database might need to be restored, affecting all tenants. Auditing access and tracking down data issues can also become a challenge when everything is intermingled.

How is this often solved in RDS?

Some companies work around these issues by tagging customer-specific data for easier filtering in logs and audits, implementing logical backups and partial restores using custom scripts.

The problems with this solution:

• Restoring a single customer’s data often requires restoring a much larger database, potentially causing disruption for all tenants.
• Schema-based separation still shares the same underlying infrastructure, meaning any database-wide issue (e.g., corruption, downtime, or security misconfiguration) affects all customers.

How Neon’s One-Project-Per-Customer Approach Fixes This

Instead of putting all customers in a single database, Neon lets you spin up a separate project for each customer. Each project has its own dedicated Postgres instance, which means:

Better compliance and security

Neon’s isolation model makes it much easier to stay compliant with HIPAA and other regulations. Since each customer operates in their own dedicated environment, there’s no risk of accidental cross-tenant data access. Audits also become simpler—there’s no need to sift through mixed data, as each customer’s records are neatly contained within their own project. Neon’s built-in encryption and security features further align with compliance needs right from the start.

No more noisy neighbors

With Neon’s approach, customers don’t compete for database resources, so a single tenant’s heavy workload won’t impact others. Performance remains consistent. Each customer scales independently based on their needs, ensuring efficient scaling and predictable uptime, free from shared resource contention.

Scaling globally is straightforward 

For companies expanding globally, Neon’s architecture makes it easy to comply with regional data laws. Customer data can be deployed in specific locations as needed, ensuring adherence to local regulations. Scaling is easy: when new customers come on board, a new project can be spun up instantly in the region of choice without disrupting existing ones. This also optimizes costs by allowing resources to be allocated based on actual customer usage rather than over-provisioning a single shared database.

Per-customer data management and restores

Since each customer gets their own project, managing backups, restores, and upgrades is far simpler than in a shared database model. If a customer needs a restore, their data can be instantly recovered independently without affecting anyone else. When a customer offboards, their data can be securely removed without impacting other tenants, ensuring clean and efficient data lifecycle management.

Why Managing Thousands of Projects is Easy with the Neon API 

Managing thousands of projects might sound overwhelming, but this is where Neon’s unique API makes a huge difference. Unlike traditional managed databases, where provisioning and managing instances at scale is complex and expensive, Neon is built from the ground up for programmatic deployment at scale.

Here’s what makes Neon’s API stand out:

Automated project and database provisioning

With Neon’s API, you can automatically create, configure, and manage thousands of Postgres databases without manual intervention. Each Neon project corresponds to a fully isolated database environment, allowing you to deploy region-specific databases for customers instantly.

Example: If you onboard a new customer, you can programmatically create a new Neon project in their preferred region, ensuring compliance with data residency laws like HIPAA and GDPR.

Enforcing per-project resource quotas

One of the biggest challenges of managing multi-tenant environments is controlling resource consumption across customers. With Neon, you can enforce strict quotas at the project level:

• Set max compute uptime per billing cycle
• Restrict max CPU usage to prevent individual customers from overloading your infrastructure
• Cap data storage and transfer limits to align with different pricing plans

Fine-tuned compute scaling for cost efficiency

Neon’s API provides granular control over compute settings, allowing you to fine-tune how each database scales. You can set auto-scaling limits by defining the minimum and maximum vCPU per project. Autosuspend (scale-to-zero) timeouts can be configured to automatically pause idle databases, reducing unnecessary compute costs. Additionally, resource utilization can be optimized based on customer tier, e.g. allowing lower-tier databases to scale down aggressively.

Fleet-wide monitoring & usage tracking

For SaaS platforms managing thousands of isolated databases/projects, monitoring real-time usage is crucial. Neon’s API provides detailed consumption tracking across all projects:

• Track total active compute time across all databases
• Monitor total CPU and storage usage to optimize scaling decisions
• Get real-time insights into data transfer and write activity

How Does This Compare to AWS RDS Postgres?

As we saw at the beginning of the post, if you’re using AWS RDS for Postgres, you’re likely managing a large instance with multiple databases inside it. While this works at a small scale, it quickly becomes a challenge as you grow:

• Scaling is manual and expensive. You’ll have to scale up your entire instance, even if only one customer needs more resources.
• Compliance is trickier. Achieving full data isolation in RDS requires extra DBA work, especially across regions.
• Noisy neighbor issues persist. Unless you’re dedicating an entire RDS instance to each customer (which gets expensive and unmanageable fast), performance can be unpredictable.

With Neon, you get built-in isolation from the start, and scaling happens on a per-customer basis. Instead of dealing with rigid instances, you get a flexible, serverless approach that adjusts based on actual demand—and you can manage your entire fleet via the API.

Try it 

For B2B SaaS companies dealing with HIPAA compliance and scaling across regions, Neon’s one-project-per-customer model offers a huge advantage over traditional multi-tenant setups in AWS RDS. You get better security, more consistent performance, and easier management, all while keeping costs under control.

Sign up for Neon today and get $100 in credits.  Once you’re ready to set up a proper PoC, contact us—our team of Postgres experts will help you get started and assist with your evaluation.