Feature/Aspect SQL Server on Azure VM Azure SQL Managed Instance Azure SQL Database
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Overview Full control over SQL Server instance and OS Managed service with near 100% compatibility with SQL Server Fully managed platform-as-a-service (PaaS)
Type of cloud service IaaS PaaS PaaS
Control Full administrative control over OS, SQL Server, and networking Limited OS access, full SQL Server control Limited control, focus on database management
Availability 99.99% 99.99% 99.995%
SQL Server compatibility Fully compatible with on-premises physical and virtualized installations. Applications and databases can easily be "lift and shift" migrated without change. Near-100% compatibility with SQL Server. Most on-premises databases can be migrated with minimal code changes by using the Azure Database Migration Service Supports most core database-level capabilities of SQL Server. Some features depended on by an on-premises application may not be available.
Customization Customizable hardware (CPU, memory, storage Less customization, predefined service tiers Service tiers with various performance levels
Administration Self-managed backups, patching, high availability Automated backups, patching, and high availability Automated backups, patching, and high availability
Scaling Manual scaling by resizing VM Automatic scaling within managed instance tier Elastic pools, auto-scaling within service tiers
Security Full control over security settings Integrated with Azure AD, VNET support Integrated with Azure AD, advanced security features
Compatibility Supports all SQL Server features Near 100% compatibility with on-premises SQL Server Some feature limitations, newer features may differ
Use Cases

Legacy applications, third-party software, lift-and-shift

Use this option when you need to migrate or extend an on-premises SQL Server solution and retain full control over all aspects of server and database configuration.

Modernization with minimal changes, hybrid environments

Use this option for most cloud migration scenarios, particularly when you need minimal changes to existing applications.

New cloud-native applications, simple databases, microservices

Use this option for new cloud solutions or to migrate applications that have minimal instance-level dependencies.
Cost Pay for VM size, SQL Server license, storage Pay for managed instance tier, includes licensing Pay for database size, DTU/vCore-based pricing
SSRS/SSAS Support SSRS/SSAS Support Limited support (workarounds needed) Not supported
Key Identifiers Need OS-level control, third-party apps, specific configurations Need near full SQL Server compatibility with managed service Need fully managed PaaS, cost-effective, simplified management