What is IaaS: How it Works

Infrastructure as a Service (IaaS) gives organizations the physical computing resources they need in minutes. It eliminates their need to purchase and maintain hardware and reduces their capital expenses. Many companies find that using IaaS frees them to focus on their core business rather than their IT infrastructure.

This article explains how IaaS enables IT teams to provision the computing resources they need precisely when the business needs them. It explores who uses IaaS and why and outlines the benefits IaaS can deliver. With a thorough understanding of IaaS, companies can make technology decisions that help accelerate innovation, reduce upfront costs and enhance their disaster recovery and business continuity.

In This Article:

• What is IaaS in Cloud Computing?
• How Does IaaS Work?
• IaaS Only Provisions When Needed
• Who Uses IaaS?
• The Benefits of IaaS?
• What Services are IaaS?
• What is the Difference Between IaaS and PaaS?
• What is the Difference Between IaaS and SaaS?
• Advantages of IaaS in Business
• What is the Future of IaaS?

IaaS is a cloud computing model in which customers access physical computing resources over the internet. These resources typically include servers, storage, networking and virtualization. Instead of installing these components locally in a data center and having their IT team maintain them, IaaS customers access and manage their infrastructure through web interfaces or APIs. Customers pay only for the resources they consume on an ongoing basis.

In the IaaS model, providers and customers embrace clearly delineated responsibilities. It’s the provider’s job to manage and maintain the entire physical infrastructure, including hardware. Providers must also scale resources up or down quickly in response to changes in customer demand. It’s up to customers to install, configure and manage their own operating systems, middleware, applications and data.

IaaS makes resources available to users online or through dedicated virtual private networks (VPNs). Using these networking capabilities, customers can set up private, isolated virtual networks and customize them as they see fit.

At the center of every IaaS is virtualization technology. As soon as a user requests resources, the IaaS system springs into action by using hypervisors to create virtual machines on physical servers. This process enables multiple virtual machines to run on a single physical machine, which ensures greater resource usage. Next, the IaaS system will allocate storage and networking resources and apply the necessary security measures.

Once usage begins, the IaaS provider will manage the physical infrastructure, virtualization layer and core services. The customer will generally manage all other components and may sometimes select networking components such as host firewalls. Billing will occur on a pay-as-you-go model, with customers paying only for the resources they consume.

One of the distinguishing features of IaaS is that it only provisions computing resources when customers need them. IaaS has an elasticity that allows it to provision and release resources in response to fluctuations in demand. Providers pool their physical and virtual resources so that they can serve many customers by using a multi-tenant model.

Some IaaS systems are set up to provision resources automatically, while others do so in response to user requests.

Automated Provisioning

IaaS providers use several types of automated provisioning. Many providers allocate and configure resources automatically based on predefined rules or triggers. Customers can also schedule provisioning to happen automatically at certain times or intervals. By integrating with their identity and access management (IAM) systems, they can automate provisioning based on user roles and permissions.

On-Demand Provisioning

Customers can request resources in minutes without human interaction with the IaaS provider. Thanks to this on-demand self-service, customers can scale up and down quickly as their needs change. Users typically request and provision resources through a self-service portal, which eliminates the need for IT intervention. In addition, IaaS providers provide management consoles or tools so that IT administrators can manually provision resources for users. Organizations can establish policies that determine who can provision each type of resource.

Users across industries take advantage of the flexibility, scalability and cost-efficiency of IaaS. Here are some of the most common IaaS users:

• Startups and small businesses that want to avoid significant upfront infrastructure costs.
• Enterprises seeking scalability and flexibility in their IT operations or that want to reduce their IT infrastructure management burden.
• Software developers and IT teams needing to set up and dismantle testing and development environments quickly.
• Website owners who need to host customer-facing websites affordably.
• Companies with growing or fluctuating needs for their data storage, backup and recovery solutions.
• Companies that need disaster recovery solutions to improve their business continuity.
• Big data analysts who need to process and analyze large datasets.
• Scientists, researchers and organizations that run complex simulations or calculations.
• Web application developers for hosting and scaling their applications.

Organizations reap various benefits from using IaaS. Here are some of the most common:

• Cost Savings: By using IaaS, companies can spend less upfront on hardware and infrastructure because they rent these resources over time. Capital costs become operational expenses, and there’s no need to maintain physical infrastructure because that’s the job of the IaaS provider.
• Scalability and Flexibility: IaaS customers can easily scale their computing resources up or down as their needs change. Provisioning new resources takes just seconds.
• Better Performance and Reliability: IaaS gives companies access to enterprise-grade infrastructure and the latest technologies. Because data centers are distributed geographically, customers get excellent performance. And because high availability and redundancy are built into the cloud infrastructure, companies benefit from outstanding disaster recovery and business continuity capabilities.
• Faster Time to Market: Organizations using IaaS can deploy new applications and services more quickly because they don’t have to purchase and configure infrastructure components. They can set up test and development environments in minutes, which accelerates innovation and shortens product development cycles.
• Greater Focus on the Core Business: With IaaS, companies offload infrastructure management to their cloud provider, freeing their IT teams to work on strategic initiatives.
• Enhanced Security: Cloud providers typically apply the most robust security measures available because their businesses depend on it. IaaS customers benefit from regular security updates and patches, data encryption, advanced access controls and support for compliance with various security standards and regulations.
• Greater Agility: IaaS customers can respond quickly to new business opportunities. They can test new ideas with minimal risk and investment and spin up resources easily for temporary or experimental projects.

Services may vary slightly from one IaaS provider to the next. But most providers offer:

• Compute resources, such as virtual machines, servers and processing power.
• Storage resources, such as block, object and file storage.
• Networking resources, such as VPNs, load balancers, firewalls and IP addresses.
• Virtualization layers. These hypervisors enable the provider to create and manage VMs.
• Containerization support through container orchestration platforms.
• APIs and management tools for programmatic control and automation of resources.
• Geographic distribution for access to multiple data centers in various regions.
• Scalability features such as auto-scaling capabilities.
• Additional services such as detailed billing, monitoring and logging, clustering, backup and recovery and disaster recovery.

Companies researching IaaS solutions often consider using them alongside Platform as a Service (PaaS) solutions. PaaS makes it easier for developers to create applications by giving them a complete cloud-based environment solely for that task. This environment includes the tools, operating systems and infrastructure components that development teams need to build robust applications. Without the distraction of managing hardware and software infrastructure, developers can focus on creating and refining applications. As a result, development teams on PaaS can often accelerate their time to market and reduce their overhead costs. IaaS and PaaS have some similarities, but they’re intended for different purposes overall.

Here’s how these two cloud technologies compare in several categories:

Service Delivery

Companies rely on IaaS to deliver storage systems, networks and servers virtually. To access and manage their data in a data center, they log onto a dashboard that’s connected to their IaaS provider’s API. PaaS delivers services in much the same way, but to a more specific audience. The customer is a developer who’s also accessing data in a data center, but this data relates only to an app that the developer will deliver to users over the internet. While IaaS customers access an entire infrastructure, PaaS users access a development environment.

Control for Customers

With IaaS, customers maintain the highest level of control over their hardware and software. They can configure their infrastructure down to the most specific details through a dashboard. PaaS solutions give customers far less control, but that’s a feature, not a shortcoming. Developers can log onto PaaS to build custom applications online without the distraction of configuring data serving, storage or management.

Cost and Scalability

Here’s where IaaS and PaaS are most similar. Both services feature a pay-as-you-go model. With IaaS, customers can scale up or down as their resource needs change, knowing they will only be billed for what they use. PaaS customers see the solution as a cost-effective way to provide a collaborative development environment for an entire team. They pay for resource usage as a project progresses.

Although IaaS and SaaS are both cloud computing technologies, they serve very different purposes. IaaS provides virtualized computing resources for users to build and manage their own IT infrastructure, whereas SaaS delivers fully managed software applications ready for immediate use.

Here are some of the main areas of difference between IaaS and SaaS:

• Level of Control: IaaS provides a high level of control to users by giving them access to virtualized computing resources such as servers, storage and networking. Users manage the operating systems, storage, deployed applications and sometimes networking components. SaaS offers little user control because it delivers ready-to-use software applications that the provider manages. The provider manages the whole stack, including applications, data, runtime, middleware, operating systems, virtualization, servers, storage and networking.
• Degree of Customization: With IaaS, users can customize the infrastructure and applications extensively. SaaS users can typically only make minor customizations through configuration settings in the software.
• Technical Expertise Required: IaaS users must have significant technical knowledge to manage and operate their solutions. SaaS users need only have minimal technical expertise.
• Scalability: With IaaS, users can adjust their resources as needed. With SaaS, the provider handles scalability, leaving the user with less control.
• Pricing Model: Both IaaS and SaaS bill users based on usage rather than charging a flat up-front fee. IaaS typically uses a pay-as-you-go model based on how many resources a user consumes. SaaS usually follows a subscription-based model based on the number of users or feature sets accessed.

Using IaaS can provide businesses with several clear advantages, such as:

• Fewer Capital Expenses: By renting IaaS resources, companies can shift their infrastructure costs from capital expenditures to operational expenses.
• Predictable Costs: It’s not always easy to predict the costs of building and maintaining a robust IT infrastructure. System failures and natural disasters can cause unexpected IT expenses. With IaaS, companies simply pay based on their resource consumption, which is easier to predict.
• Simplified IT Management: In addition to offering automated provisioning and scaling capabilities, IaaS provides centralized management tools and interfaces that provide a dashboard view of a company’s computing resources.
• Greater Innovation and Agility: IaaS makes it easier for businesses to experiment with new technologies and services. This capability can be enough to provide an edge to companies in fast-changing markets.

The global IaaS market is projected to grow from $156.93 billion in 2024 to $738.11 billion by 2032 at a CAGR of 21.4%. Analysts expect increased competition in the space, which is almost always a good thing for customers.

There’s a trend towards serverless computing within IaaS solutions. Companies can use this approach to increase their scalability while reducing infrastructure costs. IaaS solutions also fit well into the multi-cloud and hybrid cloud solutions that are gaining popularity. Cloud computing has forever changed the way small businesses conduct business. Such a transformative technology enables companies of all sizes to access powerful computing resources over the internet, eliminating the need for costly on-premises infrastructure. Small businesses can now leverage enterprise-grade solutions in the cloud to streamline operations, enhance collaboration and amplify productivity.

By embracing cloud services, entrepreneurs can scale their IT resources up or down as needed, paying only for what they use. This affordable technology model allows small businesses to compete with larger enterprises on a more level playing field. From secure data storage to advanced analytics capabilities, cloud computing empowers businesses to focus on growth rather than on managing complex IT systems. Read on to learn the benefits of the cloud for small businesses, the steps firms can take to set up cloud, what the future holds for cloud and more.

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