This domain is 25-30% of AZ-900 and has no Azure product names to memorise. The questions are about vocabulary and judgement: who is responsible for what, which cloud model fits a scenario, why a benefit such as elasticity or high availability applies, and whether a workload is IaaS, PaaS or SaaS. Most wrong answers come from mixing two similar terms, so the tables below put the easy-to-confuse pairs side by side.
What cloud computing is
Cloud computing is renting computing services (servers, storage, databases, networking, software, analytics) over the internet from a provider, and paying for what you use instead of buying and running your own hardware. The provider owns and maintains the datacenters. You get resources in minutes through a portal, a command line or an API.
Key characteristics worth knowing:
- On-demand self-service: you create resources yourself without raising a ticket.
- Broad network access: reachable over the internet or private links.
- Resource pooling: the provider shares hardware between many customers (multi-tenancy) with logical isolation.
- Rapid elasticity: capacity grows and shrinks quickly.
- Measured service: usage is metered, so you pay for what you consume.
Shared responsibility model
Security and operations are split between the provider and the customer. Microsoft always owns the physical layer: datacenter buildings, power, cooling, physical hosts and the physical network. The customer always owns their data, their accounts and identities, and the devices and endpoints that connect to the cloud. Everything in between shifts depending on the service type.
| Layer | On-premises | IaaS | PaaS | SaaS |
|---|---|---|---|---|
| Information and data | Customer | Customer | Customer | Customer |
| Devices, accounts and identities | Customer | Customer | Customer | Customer |
| Identity and directory infrastructure | Customer | Customer | Shared | Shared |
| Applications | Customer | Customer | Shared | Microsoft |
| Network controls | Customer | Customer | Shared | Microsoft |
| Operating system | Customer | Customer | Microsoft | Microsoft |
| Physical hosts, network, datacenter | Customer | Microsoft | Microsoft | Microsoft |
Rules of thumb for exam questions:
- The more managed the service, the more Microsoft takes on. The customer is never fully off the hook: data and identity stay with you in every model.
- In IaaS, you patch the guest operating system. In PaaS and SaaS, Microsoft does.
- Physical security of the datacenter is always Microsoft’s, in every cloud model except a private cloud you run yourself.
Cloud models
| Model | Who owns the hardware | Typical use | Trade-offs |
|---|---|---|---|
| Public cloud | A provider such as Microsoft, shared by many customers | Most new workloads, variable demand, quick starts | No hardware to buy; you rely on the provider’s controls |
| Private cloud | Your organisation (or a hosted private environment used by one organisation) | Strict regulatory or data-residency needs, legacy systems that can’t move | You pay for and run the hardware, so you lose most of the cost benefit |
| Hybrid cloud | A mix of both, connected and managed as a whole | Keep sensitive data on-premises but burst to the cloud for peaks, migrate gradually, disaster recovery | More complexity in connectivity and consistent management |
Related ideas:
- Multi-cloud means using more than one public cloud provider. It isn’t the same as hybrid.
- Azure Arc and Azure Stack are the Microsoft answers for hybrid: manage and run Azure-style services on your own hardware or other clouds.
- Cloud bursting is a hybrid scenario: run normally on-premises, then add public cloud capacity during a spike.
Choosing a model
| Scenario | Model |
|---|---|
| A startup with no datacenter and unpredictable growth | Public |
| A bank must keep customer records in its own building but wants cloud analytics on anonymised data | Hybrid |
| A government agency’s law forbids any shared infrastructure | Private |
| A retailer needs extra capacity every holiday season on top of on-premises systems | Hybrid (bursting) |
Consumption-based model and pricing
In the consumption-based model you pay only for what you use, with no upfront hardware purchase and no cost when you stop a resource that doesn’t bill when idle.
| Capital expenditure (CapEx) | Operational expenditure (OpEx) | |
|---|---|---|
| Meaning | Large upfront spend on assets such as servers | Ongoing spend on services as you use them |
| Example | Buying a rack of servers | Paying per hour for a virtual machine |
| Cloud | Not needed | The normal cloud model |
Comparing pricing models:
| Model | How you pay | Fits |
|---|---|---|
| Pay-as-you-go | Per second, minute, hour or unit of use, no commitment | Short-lived, unpredictable or experimental workloads |
| Reserved / committed (Azure reservations, savings plans) | A one- or three-year commitment for a discount | Steady, predictable workloads |
| Spot | Deeply discounted unused capacity that Azure can take back | Interruptible work such as batch jobs |
| Fixed subscription (SaaS licence) | Per user per month | SaaS products |
Moving from CapEx to OpEx is a benefit for finance teams: lower upfront cost, costs that follow demand, and no paying for idle capacity. But a badly managed cloud can cost more than on-premises, which is why cost management matters (see the management and governance notes).
Serverless
Serverless doesn’t mean there are no servers. It means you don’t manage them. The provider handles provisioning, scaling and patching, and you pay only while your code runs.
- Typical Azure examples: Azure Functions (event-triggered code), Azure Logic Apps (workflows), and serverless tiers of databases.
- Characteristics: event-driven, scales automatically (including to zero), billed per execution or resource-second, no VM to maintain.
- It is a PaaS-style option sitting above containers and VMs in terms of how much you manage.
- Good for short, event-triggered tasks (resize an image when uploaded, process a queue message). Poor fit for constantly running, heavy, or long-lived processes where a VM or container is cheaper.
Benefits of cloud services
High availability and scalability
- High availability means the service stays up despite failures. Azure delivers it through redundancy: availability zones, region pairs, load balancing and service level agreements (SLAs), which state the uptime Microsoft commits to (for example 99.9% or 99.99%).
- Scalability means adjusting resources to demand.
- Vertical scaling (scale up/down): give an existing machine more or less CPU and memory.
- Horizontal scaling (scale out/in): add or remove instances.
- Autoscale does this automatically from a metric or schedule.
- Elasticity is scalability that happens automatically and quickly in both directions, so you don’t over-provision.
Reliability and predictability
- Reliability is the ability to recover from failure and keep working. Cloud provides it through multiple regions, zones, backups and disaster recovery services.
- Predictability covers performance (autoscaling and load balancing keep response times steady) and cost (you can forecast and set budgets using tools such as the pricing calculator and cost analysis).
Security and governance
- The platform provides physical security, built-in threat protection and compliance certifications.
- Governance is the set of rules and controls that keep resources consistent and compliant: policies for allowed configurations, role-based access, tagging and auditing.
- The cloud makes it possible to apply those rules everywhere at once, and to meet standards such as ISO 27001 or regional regulations.
Manageability
Two kinds:
- Management of the cloud: the cloud resources themselves can be managed automatically, for example autoscaling, deploying from templates and monitoring that triggers alerts or fixes.
- Management in the cloud: your tools to manage resources, such as the portal, command line, PowerShell, REST APIs and automation.
Summary of benefits
| Benefit | One-line meaning |
|---|---|
| High availability | Keeps running through failures |
| Scalability | Handle more or less load by changing capacity |
| Elasticity | Scaling automatically with demand |
| Agility | Provision in minutes, not weeks |
| Fault tolerance | Failure of a component doesn’t take the system down |
| Disaster recovery | Restore service after a major incident |
| Global reach | Deploy close to users worldwide |
| Economy of scale | Provider’s size lowers unit cost |
Cloud service types
| Type | You manage | Provider manages | Example | Use when |
|---|---|---|---|---|
| IaaS | Operating system, middleware, runtime, apps, data | Datacenter, hardware, virtualisation | Azure Virtual Machines, virtual networks, Azure Disk Storage | You need full control, lift-and-shift of existing servers, custom software, or specific OS configuration |
| PaaS | Your application and its data | Everything beneath, including OS and runtime | Azure App Service, Azure SQL Database, Azure Functions | You want to build and run applications without managing servers |
| SaaS | Your data, users and settings | The entire application | Microsoft 365, Dynamics 365, Outlook.com | You want ready-made software |
Ways to tell them apart in a question:
- “Install and patch the OS yourself” or “need administrator access to the server”: IaaS.
- “Developers deploy code and the platform handles scaling and patching”: PaaS.
- “Users just sign in and use it”: SaaS.
- Serverless is a flavour of PaaS where you don’t even size the platform.
Traps
- Azure Virtual Machines is IaaS even though Microsoft runs the host. You still manage the guest OS.
- Azure SQL Database is PaaS; SQL Server on a VM is IaaS. Same engine, different responsibility.
- A hybrid cloud is not the same as having both IaaS and PaaS. Hybrid is about mixing on-premises and public environments.
- Reserved pricing is not consumption-based in the pure sense: you commit to a term. Pay-as-you-go is the purest consumption model.
Exam checklist
- Physical datacenter, hosts and network: always Microsoft. Data, identities, accounts and devices: always the customer.
- IaaS = you patch the OS. PaaS and SaaS = Microsoft patches the OS.
- Public (provider owns, shared), private (one organisation), hybrid (both, connected). Multi-cloud means more than one provider.
- CapEx is upfront hardware; OpEx is pay-as-you-go. Cloud shifts spend to OpEx.
- Serverless: no server management, event-driven, billed per execution, scales to zero.
- Scale up/down is vertical; scale out/in is horizontal; elasticity is automatic scaling.
- High availability is about staying up (SLAs, zones); reliability is about recovering from failure; predictability covers cost and performance.
- Examples: VM is IaaS, App Service and Azure SQL Database are PaaS, Microsoft 365 is SaaS.