What Is IaaS? A Complete Guide to Infrastructure as a Service

As the rate of cloud adoption increases in today’s enterprises, many are moving towards Infrastructure as a Service (IaaS) to control costs, scale faster, and cut reliance on on-premises hardware. With IaaS, you rent compute, storage, and network resources on demand, instead of buying and maintaining your own data center.

For SAP landscapes whether you’re running SAP ECC or planning a move to SAP S/4HANA - IaaS provides the flexibility to handle peak workloads, speed up project timelines, and keep costs predictable. Dive in with SotaTek to understand how IaaS works, what it means for SAP, and how your organization can make a confident shift to the cloud.

What Is IaaS (Infrastructure as a Service)?

Infrastructure as a Service (IaaS) is the base layer of cloud computing. It delivers virtualized compute, storage, and networking over the internet on a pay-as-you-go model. Instead of owning servers and storage arrays, you rent these resources from a cloud provider and manage them like you would physical infrastructure but with far more flexibility.

Core components of IaaS include:

• Compute: Virtual machines (VMs) or bare-metal servers with configurable CPU, memory, and GPU.
• Storage: Block, file, and object storage for databases, shared file systems, and long-term archives.
• Networking: Virtual private clouds (VPCs), subnets, VPNs, load balancers, and firewalls.
• Virtualization layer: Hypervisors that abstract the underlying hardware and allow multiple VMs to share the same host.

IaaS is one of three main cloud service models:

• IaaS: You manage the operating system, middleware, applications, and data. Examples: Amazon EC2, Azure Virtual Machines, Google Compute Engine.
• PaaS (Platform as a Service): The provider manages the OS and runtime. You focus on application code. Examples: Azure App Service, Google App Engine.
• SaaS (Software as a Service): The provider manages everything. You simply use the application through a browser or client. Examples: Salesforce, Microsoft 365.

Think of IaaS as renting the “building blocks” of IT. You still design and run your SAP systems, databases, and apps but you do it on flexible cloud infrastructure instead of on-premises hardware.

How IaaS Works (Core Architecture)

IaaS is delivered from large, highly automated data centers that host thousands of physical servers. A virtualization layer slices this hardware into isolated virtual resources that you control via APIs, consoles, or infrastructure-as-code tools.

Key elements of IaaS architecture are:

Virtual machines (VMs):

Create Windows or Linux instances with specific vCPU, RAM, and GPU sizes. You can scale up (bigger VMs) or out (more VMs) as workloads like SAP S/4HANA or BW/4HANA grow.

Storage services:

• Block storage for databases and SAP HANA data volumes.
• File storage for shared SAP directories and application servers.
• Object storage for backups, logs, and archives.

Virtual networking:

Design isolated VPCs, define subnets, attach route tables, and control traffic with network security groups and firewalls. Load balancers distribute incoming requests across multiple VMs to improve availability.

Security and IAM:

Identity and Access Management (IAM) lets you define who can provision VMs, access storage, or change network rules. You also get encryption at rest and in transit, key management, and web application firewalls.

Automation and Infrastructure as Code (IaC):

Tools like Terraform, AWS CloudFormation, and Azure Resource Manager describe entire environments as code. You can version these templates, review them, and deploy them repeatedly for dev, test, and production.

Behind the scenes, providers use multi-tenant architectures so many customers share the same platform while keeping data isolated. You only see your own virtual resources, but you benefit from the scale and efficiency of the shared infrastructure.

Key Benefits of IaaS for Enterprises

For most enterprises, IaaS is not just “cheaper hosting.” It changes how IT operates day to day.

• Cost efficiency: You avoid large upfront capital expenses on servers and storage. Instead, you pay per hour or per second for compute and per gigabyte for storage and data transfer. With proper governance, many organizations see significant savings compared to running equivalent on-premises environments.
• Scalability and elasticity: Scale SAP application servers, HANA instances, and analytics clusters up or down within minutes. During financial close or a major campaign, you scale out. When peak demand passes, you scale back and stop paying for the extra capacity.
• Disaster recovery and business continuity: IaaS providers offer multiple regions and availability zones. You can replicate SAP systems across regions, automate failover, and design for low recovery time and recovery point objectives. This level of resilience is hard and expensive to match in a single on-premises data center.
• Faster provisioning: New SAP dev, test, and sandbox landscapes can be provisioned in hours or less instead of weeks of hardware procurement and setup. This speeds up projects, upgrades, and proof-of-concept work.
• Performance for large workloads: IaaS platforms provide high-memory instances and high-throughput storage for demanding applications like SAP HANA, BW/4HANA, analytics, and AI/ML workloads. AWS, Azure, and Google Cloud all offer SAP-certified machine types and high-memory configurations specifically for these use cases.

For SAP customers, these benefits often translate into shorter project cycles, simpler global rollouts, and more predictable operating costs.

IaaS vs PaaS vs SaaS - When to Use IaaS?

Although you might use all three cloud models, each fits a different job.

Choose IaaS when you need:

• Full control over custom enterprise systems, including complex SAP landscapes.
• DevOps pipelines and CI/CD workflows that require flexible infrastructure.
• Migration paths for SAP ECC and SAP S/4HANA to the cloud, including hybrid setups.
• Data-heavy workloads such as data lakes, enterprise analytics, and AI/ML pipelines.
• Environments that must meet strict compliance rules and specific security controls.

Top IaaS Providers in 2025

The IaaS market is led by a few global platforms with broad service catalogs and strong partner ecosystems. Most reports and industry analyses for 2025 highlight Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP) as the primary choices for large-scale cloud infrastructure, including SAP workloads.

AWS

AWS is often seen as the reference point for IaaS. Core building blocks include:

• Amazon EC2 for compute.
• Elastic Block Store (EBS) and Amazon S3 for block and object storage.
• Amazon VPC for networking and isolation.
• AWS IAM for identity and access control.

For SAP, AWS offers a large set of SAP-certified EC2 instance types, including high-memory instances with tens of terabytes of RAM for very large SAP HANA systems. AWS has worked closely with SAP to validate these instances and provides detailed architecture guidance and sizing tools for SAP NetWeaver, S/4HANA, and BW/4HANA.

For enterprises that want global reach, a rich partner network, and mature automation options, AWS IaaS is a strong fit.

Microsoft Azure

Azure IaaS centers on:

• Azure Virtual Machines for compute.
• Azure Virtual Network and VPN/ExpressRoute for connectivity.
• Azure Load Balancer and Application Gateway for traffic distribution.

Azure has deep integration with SAP. It has offered SAP HANA Large Instances and very large memory-optimized VMs, with single-node configurations reaching up to around 24 TB of memory for SAP HANA. SAP and Microsoft publish joint reference architectures and operational guidance for running SAP HANA, S/4HANA, and other SAP components on Azure virtual machines.

Organizations already invested in Windows Server, Active Directory, and Microsoft 365 often favor Azure because identity, productivity, and infrastructure services work well together.

Google Cloud

Google Cloud IaaS is built on:

• Compute Engine for virtual machines and bare-metal instances.
• Cloud Storage for object storage.
• VPC and Cloud Load Balancing for networking.

Google Cloud is known for strong price–performance, advanced networking, and deep integration with data and AI services. Its memory-optimized families (M1, M2, M3, and newer M4) and large VMs are certified for SAP HANA, with machine types designed specifically for in-memory databases.

For SAP customers who also want to build modern analytics, AI, and machine learning pipelines, Google Cloud’s IaaS plus its data platform is attractive.

Private Cloud IaaS

Public cloud is not the only option. Many regulated industries and organizations with strict data residency requirements still need private clouds.

Solutions such as VMware-based private clouds and OpenStack-based platforms are popular choices. OpenStack, for example, is an open source cloud platform commonly used to deliver IaaS across private and hybrid environments, managing pools of compute, storage, and networking with APIs and dashboards similar to public clouds.

Private cloud IaaS can run in your own data centers or in hosted environments, and it is often combined with public cloud in a hybrid model.

IaaS Use Cases for Modern Development

IaaS supports far more than simple “lift and shift” hosting. Some common use cases include:

• Hosting mission-critical enterprise applications: Run ERP, CRM, core banking, billing, and other key systems on IaaS with high availability, scaling, and strong security controls.
• Building DevOps pipelines and CI/CD workflows: Use modern SAP development tools to provision ephemeral test environments, run automated integration tests, and tear down resources when pipelines finish. This reduces waiting time for infrastructure and keeps environments consistent.
• Running containerized microservices at scale:  Use IaaS as the foundation for Kubernetes clusters, container platforms, and service meshes. You keep control over the cluster and underlying nodes.
• High-performance computing (HPC): Run simulations, risk models, genomics, and other CPU- or GPU-heavy workloads on specialized instances without buying dedicated hardware.
• Rapid SAP development and sandbox environments: Clone SAP systems into sandboxes or spin up new dev/test systems to trial S/4HANA, new add-ons, or integrations. These systems can be paused or deleted when not needed and are often delivered as part of specialized SAP development services.
• Global multi-region deployments: Deploy applications close to users in multiple regions. Use active-active or active-passive designs to improve latency and resilience.

IaaS for SAP Systems

Running SAP on IaaS has moved from “early adopter” to mainstream. If you’re new to SAP on the cloud, it helps to step back and understand what SAP development is before you design your IaaS strategy. New SAP S/4HANA projects and many ECC migrations now target AWS, Azure, or Google Cloud as the standard platform

Key advantages of IaaS for SAP include:

• Dynamic scaling for peak workloads: Add application servers or scale database instances up during financial closing, promotions, or seasonal spikes, then scale down again to save costs.
• High availability architectures with strong SLAs: Use multiple availability zones, clustering, and database replication to design SAP landscapes that meet demanding uptime targets. Major cloud providers offer SLAs that support 99.95–99.99% availability for the underlying infrastructure.
• Lower total cost of ownership (TCO): Avoid data center build-outs, power and cooling costs, and overprovisioned hardware. With proper sizing, many SAP customers report significant TCO reductions compared to large on-premises deployments.
• Integration with SAP BTP and surrounding services: Connect SAP S/4HANA to services like SAP BTP Extension Suite and Integration Suite, as well as native cloud services for analytics, AI, monitoring, and security.
• Flexible sizing for OLTP and OLAP workloads: Choose different instance types and storage layouts for transactional (OLTP), analytical (OLAP), and BW workloads, all within the same cloud.

In short, IaaS lets SAP teams modernize without giving up the control and configurability they need for complex, business-critical systems, while preparing for the future of SAP development.

Challenges & Best Practices When Using IaaS

IaaS brings powerful benefits, but it must be managed carefully.

Security governance

Define clear cloud security standards. Use identity and access management, network segmentation, encryption, and regular security assessments. For SAP, align cloud controls with your existing compliance frameworks.

Cost control

Without guardrails, cost can grow quickly. Use:

• Tagging for cost allocation.
• Budgets and alerts.
• Reserved or savings-plan instances for steady workloads.
• Rightsizing and automatic shutdown for non-production systems.

Avoiding VM sprawl

It is easy to create VMs and forget them. Enforce lifecycle policies (for example, automatic decommissioning of unused test systems), maintain CMDB updates, and regularly review inventory.

Network performance tuning

For SAP HANA and other latency-sensitive systems, use features such as proximity placement groups, accelerated networking, and optimized storage/network layouts recommended by each provider.

Backup and disaster recovery planning

Combine native snapshots (for example, EBS snapshots, Azure Backup, or Google Cloud snapshots) with third-party tools like Commvault or Veeam when fine-grained recovery or long-term retention is needed. Test restores regularly, not just backups.

By treating IaaS as a strategic platform not just a hosting option you can manage these challenges and keep both cost and risk under control.

Conclusion

IaaS has grown from a simple way to cut hardware costs into the backbone of modern enterprise IT. It gives organizations the flexibility to scale, recover from failures, and innovate faster, while still keeping control over their core systems.

For SAP and other mission-critical workloads, IaaS delivers the performance, memory capacity, and global reach needed to support today’s demands and tomorrow’s growth. With the right design, governance, and partner support, your SAP landscape can become more agile, resilient, and ready for change. Ready to modernize your SAP landscape or build next-generation cloud infrastructure? Contact us today for expert guidance on IaaS strategy, SAP migrations, and custom cloud-native development.