Azure groups its services into three classic cloud models: Infrastructure as a Service (IaaS) — virtual machines, storage, and networking you manage almost like your own datacenter; Platform as a Service (PaaS) — managed platforms (web apps, databases, AI services) where Microsoft runs the underlying infrastructure and you focus on your application and data; and Software as a Service (SaaS) — ready-to-use applications (Microsoft 365, Dynamics 365, many third-party apps) you simply consume. The trade-off is control vs convenience: IaaS gives the most control and the most operational burden; SaaS gives the least burden and least flexibility; PaaS sits in the middle and is where most modern Azure workloads end up. Most enterprises run a mix — choose the model that fits each workload, not a single dogma.
This guide explains each model with Azure examples and how to choose.
The Three Service Models
|
Model |
What you manage |
Azure examples |
|
IaaS |
OS, apps, data, runtime |
Virtual Machines, VM Scale Sets, Disks, VNets |
|
PaaS |
Apps and data |
App Service, Azure SQL, AKS, Functions, Azure OpenAI |
|
SaaS |
Just use it |
Microsoft 365, Dynamics 365, third-party SaaS |
IaaS on Azure
IaaS gives you the most control. You provision virtual machines, attach storage, set up networking, and manage the OS and everything above it. Suits lift-and-shift migrations, workloads with strict OS/runtime requirements, and apps you’re not ready to refactor. The cost is operational — patching, scaling, and security of the VMs is yours.
Explore Enterprise Azure Solutions
PaaS on Azure
PaaS is where most modern Azure development lives. Services like App Service, Azure SQL Database, Container Apps, AKS, Functions, and Azure OpenAI let you focus on application and data — Microsoft runs the underlying platform. The trade-off is some loss of OS-level control in exchange for far less operational work, faster scaling, and built-in platform features.
SaaS on Azure
SaaS apps are turn-key — Microsoft 365, Dynamics 365, and many third-party applications. You just use them. No infrastructure to manage; the trade-off is configuration over customization. SaaS dominates productivity, collaboration, CRM, and increasingly industry-specific applications.
Choosing Between Them
Choose per workload, not per company. Use IaaS when control or migration constraints require it; use PaaS as the default for new apps and modern workloads; use SaaS for commodity functionality you don’t want to build or operate. Most enterprises end up with a mix that mirrors the maturity of each application. (See Azure cloud architecture best practices for enterprise.) Centric designs Azure architectures across IaaS, PaaS, and SaaS through its Azure cloud services.
Want the right mix for your workloads? Explore Centric Azure cloud services or talk to the Centric team.
Frequently Asked Questions
What is the difference between IaaS, PaaS, and SaaS in Azure?
IaaS gives you control over the OS and above (Virtual Machines, storage, networking); PaaS managed services (App Service, Azure SQL, AKS, Functions) where you focus on app and data; SaaS turn-key apps (Microsoft 365, Dynamics 365). Trade-off: control vs convenience.
Which Azure model should we use?
Choose per workload. IaaS for lift-and-shift and OS-specific apps; PaaS as the default for new and modern apps; SaaS for commodity functionality you don’t want to operate. Most enterprises run a mix.
Is Microsoft 365 part of Azure?
Microsoft 365 is SaaS that runs on Microsoft’s cloud, with deep ties to Azure (especially Entra ID/identity). For most enterprises they’re managed together, even though Microsoft 365 is its own product family.
Is PaaS more expensive than IaaS?
Per unit, sometimes; in total, often less because it removes operational work, patching, and scale-out complexity. Compare total cost (compute + people + risk), not just per-hour pricing.
