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I need to create a site which contains multiple logical business fucntionalities. One way is to create multiple sites within single sitecore instance. Other possible option is to have multiple folders in the same content tree. What is the benefit of having separate sites within single sitecore instance for multitenant in comparison to having multiple different content folder within single site.

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This is a loaded question and the answer will wholly depend on specific situations and several factors such as security, performance, code-dependency, deployment scenarios, uptime requirements, etc. There are several blogs out there about multi-tenancy and multi-sites (plus multi-languages/regions) but here's one that Sitecore is evangelizing through Helix.

UPDATED: Based on the comment, it really depends on the marketing needs such as URLs, analytics, SEO, etc. But here are some things to consider between the two setups:

Content Sharing and Links Management

In a subfolder-based structure, it'll be easier as you don't have to worry about URLs (i.e. all within the same host). Meanwhile, for a site-based structure, it's possible but you may now need to update your URL strategy along with some link providers, etc. But if there's no need for sharing content between the "sites", then site-based should be fine.

Extranet Security

If you have different audiences for each "site" and need logins, site-based allows you to have specific domain per site while the subfolder-based structure doesn't.

Flexibility and Autonomous

Obviously, having its own site provides you more ways to enhance it technically without affecting others "per se". It's just a bit safer. You could have a VS solution per site instead of having in one large solution. Although, if you follow Helix, you could create a project per site or per even per subfolder depending on which way you go with to still allow for autonomy. If you do this with the subfolder-based structure, the boundary may not be as clear.

Design

You can have a different design per site but may be hard to configure for a subfolder-based site depending on the complexity of the design(s). We've done themes on a subfolder basis before but is still based on an overall design. But, if there's no design changes, the subfolder-based structure will be easier to setup.

WFFM (not Experience Forms)

You can have specific forms only available to specific sites but not for subfolder-based.

Authoring and Workflow

If the authoring audience is different per business function and there's a strict separation of access, site-based "MAY" be easier to set up. But if the requirements are not that complex, subfolder-based will my choice.

I'm sure there's more here but to me the bigger question is "what is the intent of the site(s) and the user experience?" If it's more of a collection of related topics housed in an overarching gateway like an online magazine with different categories, then folder-based is perfect. If it's more for different audiences that require different needs (i.e. site features) like StackExchange that has subdomains for various topics, then I would choose site-based.

I hope this helps.

  • Thanks Marco, I believe the word multi tenant has made the question bit confusing. My question is whether there is any benefit in creating multiple sites in sitecore (by adding site node in site defintion) for individual business domain in comparison to having a single site within sitecore. I am having the single domain url with different sub url to segregate different business functionalities. – rdhaundiyal Jan 10 '18 at 4:25
  • I've updated my answer to hopefully give you some things to consider based on you clarification. – Marco Jan 10 '18 at 17:05
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To name a couple of the benefits, by using separate site definitions:

  1. you can easily separate Sitecore Analytics without any extra work.
  2. Each site is given their own caches
  3. No need to write a custom processor to detect the domain/url requested.

If management of Site configs seem overwhelming in a multi-tenant solution consider available mutilsite/dynamic modules to assist.

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