Infrastructure as a Service (IaaS) is a cloud-computing model that delivers fundamental IT resources—compute, storage, and networking—over the internet on a pay-as-you-go basis. Instead of buying and maintaining servers, organizations provision virtual machines and related services from a cloud provider such as AWS, Microsoft Azure, Google Cloud, IBM Cloud, or Oracle Cloud.
How IaaS works
- Virtualization layer: Cloud providers use hypervisors to slice physical servers into multiple virtual machines, each with its own OS and apps.
- Self-service portal or API: Users spin up or tear down resources in minutes, scaling up during peak demand and down when loads drop.
- Metered billing: You pay only for the CPU cycles, storage capacity, and bandwidth consumed, converting capital expenses into operating expenses.
- Shared responsibility: The provider manages the hardware, data-center facilities, and hypervisors; customers control the OS, middleware, and applications.
Key advantages
- Cost efficiency – Eliminates upfront hardware purchases and lowers total cost of ownership, with savings of 30-60% compared with on-premises gear.
- Elastic scalability – Enterprises can add thousands of cores for a spike in analytics and scale back hours later, avoiding over-provisioning.
- Speed and agility – Provisioning that once took weeks now happens in minutes, accelerating DevOps and innovation cycles.
- Global reach – Providers maintain data centers worldwide, letting companies deploy closer to users to cut latency and meet data-sovereignty rules.
- Built-in resilience – Features such as automated backup, load balancing, and disaster recovery are baked into most IaaS offerings.
Why IaaS matters in 2025
- Explosive market growth: The IaaS market is projected to reach USD 562 billion by 2031, growing at a 33% CAGR.
- Digital-transformation backbone: 85% of organizations are now cloud-first, relying on IaaS to support AI, big-data, and IoT workloads.
- Hybrid and multi-cloud realities: IaaS underpins hybrid architectures, letting enterprises blend on-prem resources with multiple public clouds for resilience and compliance.
- Edge computing: Providers extend IaaS to edge locations, enabling low-latency apps such as autonomous vehicles and real-time analytics.
- Sustainability focus: Hyperscale clouds run on renewable energy and advanced cooling, helping companies cut carbon footprints versus traditional data centers.
Common use cases
Security and governance considerations
While providers harden the underlying infrastructure, customers remain responsible for OS patching, access control, and data encryption. Adopting a shared-responsibility model, zero-trust networking, and continuous compliance monitoring is essential.
IaaS vs. PaaS vs. SaaS
- IaaS – Full control of OS and runtime; maximum flexibility.
- Platform as a Service (PaaS) – Provider manages OS and middleware; you focus on code.
- Software as a Service (SaaS) – Provider delivers complete applications (e.g., CRM, email).
Getting started
- Assess workloads for cloud suitability (latency, compliance, dependencies).
- Select a provider based on regions, cost models, and service portfolio.
- Plan migration using frameworks such as the 7 Rs (Rehost, Replatform, Refactor, etc.).
- Implement governance—identity, cost management, and security baselines.
- Optimize continuously by rightsizing instances and adopting reserved-instance or savings-plan discounts.
Bottom line
IaaS matters because it turns infrastructure into an on-demand utility—fueling agility, innovation, and cost control in a highly competitive, digital-first world. Organizations that master IaaS today position themselves for the next decade of cloud-powered growth.
Related
How does IaaS compare to PaaS and SaaS options
What are key security considerations for IaaS deployments
How can businesses optimize costs with IaaS services
What industries benefit most from using IaaS solutions
How to choose the right IaaS provider for your needs