Best practice / configuring SAP for hosting 3rd party users

We're trying to understand what the best approach is for supporting a 3rd party using our SAP instance.
Our company has always operated with the expectation we're the only users using and putting data into the system.
Now we're required to support (consider it to be application hosting) another organization's use of SAP.
The two options we've been considering are:
1. Separating the data via role assignment / authorization objects
or
2. Creating a separate SAP client to support the 3rd party.
Is there a best / recommended practice to accomplish this goal? We have some of our team in each camp and don't want to re-invent the wheel as others must have already crossed this bridge.
We're in a 4.7 environment.

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Best practice / configuring SAP for hosting 3rd party users

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