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What You Need to Know About Infrastructure as a Service

Article by: Charles M.
Last Modified: 2025-10-22 21:47:16




Infrastructure as a Service (IaaS) is shaping how organisations manage their IT. In this article we dive into what IaaS means, why it matters today, and how recent developments are driving change.

Welcome to your guide on Infrastructure as a Service (IaaS). If you are exploring cloud infrastructure, migrating workloads or just want to understand what IaaS is and why it matters, this article will walk you through the essentials, recent market trends, and how to make informed decisions.

Table of Contents

What is Infrastructure as a Service (IaaS)?

The term Infrastructure as a Service (IaaS) refers to a cloud computing service model where a vendor provides virtualised computing resources over the internet. According to the widely referenced definition, IaaS delivers servers, storage, network, and virtualization as a service. “IaaS clouds often offer additional resources such as a virtual-machine disk-image library, raw block storage, file or object storage, firewalls, load balancers, IP addresses…” :contentReference[oaicite:0]{index=0}

In a typical IaaS scenario the customer does not manage the physical infrastructure; instead they control operating systems, applications and sometimes networking while the provider handles the hardware, virtualization layer and underlying data-centre operations.

Why the name matters

“Infrastructure as a Service” emphasises a model whereby infrastructure components are offered as an on-demand service rather than owning and managing your own data centre hardware. This “as a service” model is part of a broader cloud ecosystem that includes Platform as a Service (PaaS) and Software as a Service (SaaS).

Why IaaS Matters Today

There are multiple reasons organisations are gravitating toward IaaS for their cloud infrastructure and digital transformation initiatives:

  • Scalability and flexibility – With IaaS you can scale compute, storage or network capacity up or down based on demand rather than over-provisioning hardware.
  • Cost control – You convert capital expenditure (CapEx) on servers into operational expenditure (OpEx) which aligns with usage.
  • Faster time to market – You can provision infrastructure quickly to support new applications, experiments or sudden business needs.
  • Support for modern workloads – Cloud native applications, analytics, containerisation and microservices often depend on infrastructure that is flexible and ready-to-use.
  • Digital transformation and cloud migration – Many enterprises are modernising their IT estate by shifting workloads to the cloud, and IaaS forms a fundamental building block of that journey.

In fact, according to a recent study by Gartner the global public-cloud IaaS market grew 22.5 % in 2024, reaching US$171.8 billion. :contentReference[oaicite:2]{index=2} This underscores how IaaS is no longer a niche but central to many organisations’ infrastructure strategies.

Key Components of IaaS

Understanding the components helps you evaluate an IaaS offering. The main building blocks include:

  • Compute resources – Virtual machines (VMs), bare-metal servers, containers offered on demand.
  • Storage services – Block storage, object storage, file storage accessible via the service provider’s platform.
  • Networking services – Virtual networks, IP addresses, load balancers, firewall and security controls.
  • Virtualization layer and hypervisor – The abstraction that enables sharing physical hardware across multiple tenants.
  • Management APIs and dashboards – The user interface and programmatic access to control and automate infrastructure resources.
  • Auxiliary services – Backup, disaster recovery, data-centre region selection, identity and access management (IAM).

These components are what make IaaS distinct from other cloud models: you get control over the infrastructure layer (rather than just applications or platforms) while the provider handles the heavy lifting in terms of hardware operations.

How IaaS Works

At its heart, IaaS works on a simple but powerful concept: on-demand access to infrastructure via the Internet. Here is a simplified flow of how it typically works:

  1. A customer chooses an IaaS provider and signs up for a service plan.
  2. The customer selects or defines virtual machines, storage size, network topology and region.
  3. The provider allocates physical machines in its data-centre, assigns virtualised resources and provides access through APIs or a portal.
  4. The customer installs and manages the operating system, applications, middleware and monitors usage, performance and cost.
  5. The provider manages the underlying hardware, networking, cooling, power, physical security and virtualization infrastructure.
  6. The customer can scale resources up or down, pay for what they use, and often take advantage of advanced services like snapshots, backups or load balancing.

From a billing perspective many IaaS offerings are pay-as-you-go or based on consumption. This means you might pay per instance hour, per GB of storage, per network transit or other metrics.

To bring this to life and illustrate relevance, here are some of the most important recent developments in the IaaS space:

  • According to Gartner, spending on **AI-optimised IaaS** (infrastructure tailored for artificial intelligence workloads) is projected to be around US$18.3 billion by end of 2025 and reach US$37.5 billion in 2026 — up by roughly 146 % in one year. :contentReference[oaicite:3]{index=3}
  • The IaaS public cloud services market grew 22.5 % in 2024 and reached about US$171.8 billion globally. :contentReference[oaicite:4]{index=4}
  • The market share of the leading provider Amazon Web Services (AWS) in IaaS slipped slightly in 2024 (from ~39 % to ~37.7 %) even though it remains the largest. Meanwhile competitors such as Microsoft and Google gained share. :contentReference[oaicite:8]{index=8}
  • Regulators are scrutinising IaaS market dominance and competition. For instance, the UK’s Competition and Markets Authority (CMA) flagged that AWS and Microsoft together hold dominant positions in IaaS and PaaS, raising concerns about barriers to entry. :contentReference[oaicite:10]{index=10}

These trends matter because they show that not only is IaaS growth strong, but key inflection points are happening around AI workloads, vendor competition, data-residency, and cost models. Organisations evaluating IaaS today must factor in these shifts.

Benefits and Challenges

Benefits of IaaS

Deploying IaaS brings several clear advantages:

  • Rapid deployment of infrastructure resources.
  • Scalable resources to handle variable demand.
  • Reduced need for capital investment in physical hardware.
  • Greater flexibility to innovate with cloud native and hybrid architectures.
  • Access to global data-centre infrastructure and advanced services like AI-ready compute.

Challenges and Risks

However, IaaS is not without its pitfalls. It is wise to consider:

  • Cost surprises: While the pay-as-you-go model is appealing, inefficient use of resources can lead to high bills.
  • Vendor lock-in: Moving workloads from one IaaS provider to another can be complex and costly.
  • Data residency and sovereignty: Organisations with regulatory obligations may need to ensure data stays within certain geographic boundaries.
  • Security and compliance: While the provider handles physical security, customers still manage OS, applications and data – responsibility is shared.
  • Performance variability: Virtualised infrastructure may introduce latency or variability compared to bare-metal or on-prem data centres.

Choosing an IaaS Provider

When selecting an IaaS provider for your organisation, keep in mind several key criteria:

  • Performance and architecture: Determine what compute, GPU, storage and network performance you need now and in the future (especially if you plan AI or analytics workloads).
  • Scalability and global footprint: Does the provider have data-centre regions in locations relevant to your business? Can you scale easily?
  • Security, compliance and certifications: Look for certifications such as ISO 27017, ISO 27018, NIST standards, and any industry-specific compliance (e.g., HIPAA). For example, in Iran the government is explicitly evaluating providers using ISO 27017 and ISO 27018 standards. :contentReference[oaicite:11]{index=11}
  • Cost model transparency: Understand what billing metrics apply (instance hours, storage usage, egress fees) and how you can optimise usage.
  • Vendor ecosystem and support: Check how well the provider integrates with your tools and whether they support hybrid or multi-cloud setups.
  • Data-residency and lock-in risk: Evaluate how easy it is to migrate out, and whether the provider supports open standards or multiple cloud environments.
  • Future readiness: With the rise of AI-optimised IaaS and specialised infrastructure (GPUs, TPUs, ASICs) expect the provider to keep pace with emerging workloads. :contentReference[oaicite:12]{index=12}

By systematically assessing these factors you increase your chances of selecting an IaaS provider aligned with your strategic goals rather than just tactical cost savings.

Frequently Asked Questions (FAQs)

Q1: What is the difference between IaaS, PaaS and SaaS?

In short, IaaS (Infrastructure as a Service) offers the basic infrastructure (servers, storage, networking). PaaS (Platform as a Service) adds a layer of platform tools (e.g., runtime, middleware) above IaaS. SaaS (Software as a Service) delivers complete software applications over the internet. With IaaS you manage OS and applications; with PaaS less so; with SaaS you just use the app.

Q2: Is IaaS only for large enterprises?

No. While large enterprises often adopt IaaS at scale, smaller organisations and startups can also benefit. IaaS allows you to avoid heavy upfront hardware investment, pay only for what you use, and scale with demand.

Q3: How does hybrid cloud relate to IaaS?

Hybrid cloud refers to a model where you use a mix of on-premises infrastructure and cloud services (public, private). IaaS plays a role in building the cloud portion of a hybrid architecture, enabling you to burst or shift workloads between private infrastructure and IaaS providers.

Q4: What is AI-optimised IaaS?

AI-optimised IaaS refers to infrastructure as a service offerings that are tailored for artificial intelligence and machine learning workloads — for example offering GPUs, TPUs, high-speed interconnects, large-scale storage and parallel compute. Analysts expect such IaaS segments to double spending by 2026. :contentReference[oaicite:13]{index=13}

Q5: What are the common risks of moving to IaaS?

Key risks include cost overruns due to inefficient resource usage, vendor lock-in, data sovereignty and compliance issues, performance variability due to virtualization, and shared-responsibility ambiguities in security. Mitigation requires planning and governance.

Conclusion and Next Steps

Infrastructure as a Service (IaaS) is a foundational cloud model that empowers organisations to move faster, scale on demand and reduce upfront investments. The model is evolving rapidly — especially with emerging AI-optimised IaaS, shifting market shares among providers, and increasing regulatory attention.

If your organisation is considering cloud migration, modernising infrastructure or supporting advanced workloads such as analytics or AI, you should engage in a structured evaluation of IaaS options. Begin by defining your infrastructure needs, mapping current workloads, comparing provider offerings, and modelling cost and performance implications.

Take action today: Start by creating a cloud infrastructure roadmap, include IaaS as a central piece, request trials from preferred providers, and build a governance model around cost, security and performance. With the right partner and strategy, IaaS becomes not just a utility, but a strategic asset.

Ready to explore further? Contact your chosen IaaS vendor, run a proof-of-concept, and stay informed about emerging capabilities that can give you competitive advantage.







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