IaaS

What it means

IaaS is renting bare infrastructure: servers, storage and networking. The provider is responsible for the hardware and its availability; everything above it - operating system, patching, backups, security - is the customer’s to run.

It is the lowest rung of the cloud ladder. PaaS adds a ready environment for running an application, SaaS a finished application you simply use.

What sets IaaS apart from classic hosting or renting a physical server is elasticity. A virtual server, disk or network is created and removed within minutes through a console or an API, and the bill covers the time and volume the company actually used. With colocation, by contrast, the company owns the hardware and rents only space, power and connectivity in the data centre.

How it works in practice

It suits custom software, bursty workloads and a move away from an office server where nobody wants to change everything at once. It also features in a hybrid setup as a standby site.

In the books it is a service: the monthly fee goes straight to costs and is not depreciated, unlike a purchased server. That matters in the decision - an investment becomes an operating expense.

IaaS invoices usually come from foreign providers, often in a foreign currency and for a different amount every month. When we process them we check that the client has accounted for VAT correctly through reverse charge. A company that is not a VAT payer has to register under § 7a because of such a service from an EU provider.

What to watch out for

Responsibility for configuration and security stays with the customer. An open storage bucket or an unpatched system is not the provider’s fault, and no contract fixes it. Egress traffic, billed separately, is worth watching too.

The second common leak is forgotten resources: a test server, old disk snapshots or an unused public IP address are billed every month even though nobody needs them. Without a named owner for each resource and a regular comparison of the invoice with the resource list, the cost creeps up unnoticed. An alert that fires when the monthly budget is exceeded helps.