1.3 - Service models and cloud pricing (IaaS, PaaS, SaaS)
AZ-900 objective 1.3 covers the three service models and how the cloud is priced. In IaaS you deploy virtual machines and stay responsible for the guest operating system, middleware and applications; in PaaS you write only your own code and Microsoft handles servers, OS and runtime updates, but you accept reduced control over the underlying OS; in SaaS a ready application such as Dynamics 365 or Outlook.com is delivered to you, yet account and access management always stays your responsibility. On pricing, pay-as-you-go or consumption billing charges only for the seconds each VM actually runs with no commitment, while a reservation commits to a one or three year term for a significant discount over pay-as-you-go. Operating expenditure is the monthly usage-based bill, and the Total Cost of Ownership benefit comes from offloading operational work to the provider. Expect scenarios that describe who patches what or how a workload is billed and ask which service or pricing model fits.
IaaS = you patch the guest OS; PaaS = Microsoft patches the OS, you secure your code; SaaS = ready app, but you still manage accounts and access. No commitment, pay per second = pay-as-you-go; commit one or three years for a discount = reservation.
Practice questions
1. A startup wants to avoid buying servers upfront and instead pay monthly only for what it uses. Which financial model does moving to Azure enable?
- A capital expenditure (CapEx) model with hardware depreciated over years
- An operational expenditure (OpEx) model (correct answer)
- A fixed long-term leasing contract with a minimum spend commitment
- An upfront perpetual licensing model covering all the infrastructure
Cloud spending is OpEx: you pay as you go for what you consume, with no upfront hardware purchase. CapEx is the traditional model of buying equipment and depreciating it; leasing commitments and perpetual licenses both require paying ahead of actual usage.
2. Which statement describes the consumption-based model used by many Azure services?
- You pay one fixed monthly fee no matter how much of the service you actually consume
- You are billed only for the resources you actually use (correct answer)
- You must sign a mandatory three-year minimum contract before deploying any resource
- You purchase hardware capacity upfront and depreciate the expense over several years
The consumption-based model bills only actual usage: compute seconds, stored gigabytes, executed operations. There is no fixed fee, no mandatory multi-year contract, and no upfront hardware purchase - stopping a resource stops most of its charges.
3. A team deploys Azure Virtual Machines and remains responsible for the guest operating system, middleware, and applications installed on them. Which service model is this?
- Infrastructure as a service (IaaS) (correct answer)
- Platform as a service (PaaS) with a fully managed operating system
- Software as a service (SaaS) consumed directly through a web browser
- A serverless offering where the code is billed only during each execution
Virtual machines are the flagship IaaS service: Microsoft provides the physical host, storage, and virtualization, while the customer manages everything from the guest OS upward. In PaaS the OS would be managed for you, SaaS delivers a finished application, and serverless abstracts servers away entirely.
4. A sales team subscribes to an online CRM application, signs in through a browser, and never deploys code or manages any infrastructure. Which service model is it consuming?
- Infrastructure as a service (IaaS), since the CRM runs on the provider's servers
- Platform as a service (PaaS), since the provider maintains the CRM runtime
- Software as a service (SaaS) (correct answer)
- A private cloud subscription dedicated to the sales department's workloads
A finished application consumed over the internet on a subscription basis is SaaS: the provider manages everything except the customer's data, accounts, and devices. IaaS and PaaS both require the customer to deploy something (an OS or code), and nothing here describes dedicated private infrastructure.
5. A team uses Azure SQL Database: it creates tables and queries data while Microsoft handles the database engine, the operating system, and all patching. Which service model is this?
- Infrastructure as a service (IaaS), because a database server is still involved
- Platform as a service (PaaS) (correct answer)
- Software as a service (SaaS), because the database is billed as a subscription
- A colocation model where Microsoft hosts the customer's database hardware
Managed databases such as Azure SQL Database are PaaS: the provider runs the OS, the engine, and patching, and the customer works only with schemas and data. IaaS would mean installing SQL Server on a VM yourself, SaaS is a finished end-user application, and colocation is a datacenter rental model, not a cloud service model.
6. To leave its datacenter quickly, a company moves its existing virtual machines to Azure without changing their architecture or code. Which service model will host them, and what is this strategy called?
- IaaS, using a lift-and-shift migration (correct answer)
- PaaS, using a full refactoring of every application into managed services
- SaaS, by replacing every internal application with subscription equivalents
- IaaS, after first rewriting each application as cloud-native microservices
Moving VMs as-is to cloud infrastructure is lift-and-shift (rehosting), and the destination is IaaS because the customer still manages the OS and everything above it. Refactoring to PaaS and replacing with SaaS both mean changing the applications, and rewriting to microservices contradicts 'without changing architecture'.