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How the two options compare
| Decision factor | SQL Server on Azure Local | Azure SQL Managed Instance |
|---|---|---|
| Where SQL Server runs | In customer-managed virtual machines on infrastructure in your environment | As a managed database service in Azure |
| Management responsibility | Your team manages the VM and SQL Server environment | Microsoft manages platform maintenance tasks such as patching and backups |
| Disconnected operation | Supported in a disconnected deployment mode, with management limitations | An Azure service; evaluate its network and service requirements for your environment |
| SQL Server compatibility | SQL Server runs in a VM; validate your chosen guest and configuration | Broad instance-level support, but not identical support for every SQL Server feature or behavior |
| Availability and recovery | Designed and operated by your organization | Built-in availability architecture, with service-tier and configuration choices |
| Cost comparison | Infrastructure, facilities, operations, support, and licensing | Compute, storage, licensing choice, region, tier, utilization, and operations around the service |
Does the workload need to stay local or run disconnected?
SQL Server on Azure Local is the direction to investigate if policy, latency, connectivity, or operational design requires the database to remain in your environment. Azure Local supports connected and disconnected deployment modes. In connected mode, supported Azure Arc capabilities can provide centralized inventory, governance, monitoring, security, and licensing. In disconnected operations, workloads and the control plane run within the environment without an ongoing dependency on the public-cloud control plane; however, the SQL Server extension for Azure Arc is not supported in that mode.
Managed Instance runs in Azure and provides native virtual network support. Before choosing it, validate how the application, administrators, and dependent systems will reach the instance through your network design. Locality requirements and disconnected operation are distinct: a workload might remain local while connected to Azure management services, or require a fully disconnected deployment.
How much of the platform should your team operate?
With Azure Local, SQL Server runs inside Windows Server or Linux virtual machines on infrastructure in your environment. Your organization retains control of the VM and SQL Server environment, and must plan its staffing and lifecycle processes for those components. That control is useful when you need to manage the local environment directly, but it comes with responsibility for the database stack and its resilience.
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Managed Instance is intended to reduce that platform burden. Microsoft handles tasks such as patching, backups, upgrades, and built-in availability. Your team still owns workload decisions: compatibility, network access, service tier, and recovery design. Managed service does not mean that application dependencies or recovery objectives can be left unassessed.
Will the SQL Server workload migrate without changes?
Managed Instance is a migration candidate for SQL Server workloads that need a broad set of instance-level capabilities. “Close to 100% feature compatibility,” as used in Microsoft product material, should not be read as a promise that every feature or behavior is identical. Check the target engine’s supported features against the actual workload before committing.
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Include more than database files in that review. Microsoft’s migration guidance calls out database placement and instance-level objects such as logins, credentials, SQL Agent jobs and operators, and server-level triggers. Record which objects the application depends on, identify any unsupported or behaviorally different features, and plan how each dependency will be handled. Also assess migration downtime against the application’s tolerance; do not assume the move will be interruption-free.
If a workload depends on features or configurations that Managed Instance does not support, running SQL Server in VMs on Azure Local may preserve more direct control over the environment, but the VM and guest configuration still need to be validated. The deployment model alone does not prove compatibility.
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Who designs availability and disaster recovery?
On Azure Local, your organization must design and test SQL Server high availability, backups, and disaster recovery. Define recovery time and recovery point objectives for the workload, then verify that the local infrastructure and recovery plan can meet them. Availability design is not supplied simply by running on Azure Local.
Managed Instance includes an availability architecture, with General Purpose and Business Critical service tiers offering different performance and availability characteristics. Zone-redundancy choices may also be relevant. Microsoft’s SQL Server-to-Managed Instance migration overview states a 99.99% availability guarantee, but that sentence does not state a publication year. Confirm the current service-level agreement, its applicability, the selected region, and your configuration before treating the figure as a commitment. A service availability figure is not a substitute for checking workload recovery requirements.
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How should you compare licensing and total cost?
There is no evidence-supported universal cost winner. A fair comparison needs to account for the full operating model rather than matching an Azure Local hardware quote against a Managed Instance list price.
- For Azure Local: include infrastructure acquisition or lifecycle costs, facilities, operations, support, and SQL Server licensing.
- For Managed Instance: model compute, storage, license choice, service tier, region, and expected workload utilization, along with networking, migration, and support costs.
- For either option: check your licensing position and the terms that apply to your organization. Microsoft documents SQL Server licensing options through Azure Arc, including virtual-core licensing; verify current terms and any Azure Hybrid Benefit or subscription eligibility against Microsoft guidance and your agreement.
Use the workload’s expected utilization and operating requirements in the model. A comparison that omits operational effort, migration, or recovery requirements can make either option look less expensive than it will be in practice.
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- Powerful Pass-Through Charging: Supports up to 85W pass-through charging so you can power up your laptop while you use the hub. Note: Pass-through charging requires a charger (not included). Note: To achieve full power for iPad, we recommend using a 45W wall charger.
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- HD Display: Connect to the HDMI port to stream or mirror content to an external monitor in resolutions of up to 4K@30Hz. Note: The USB-C ports do not support video output.
- What You Get: Anker 332 USB-C Hub (5-in-1), welcome guide, our worry-free 18-month warranty, and friendly customer service.
A practical way to make the choice
- Set non-negotiable constraints. Establish whether data must remain in local infrastructure, whether disconnected operation is required, and what network paths the application can use.
- Assess the workload. Inventory SQL Server features, databases, logins, credentials, jobs, operators, triggers, and other instance-level dependencies; check these against Managed Instance support and migration prerequisites.
- Assign operational ownership. Decide whether your team can own VM and SQL Server lifecycle, availability, backups, and disaster recovery, or whether a managed Azure service better matches your operating model.
- Specify recovery needs. Define recovery objectives and test how the candidate design would meet them, including region and service-tier choices for Managed Instance or local failover and recovery design for Azure Local.
- Build a workload-specific cost model. Use your licensing position, utilization, hardware and facility costs, cloud region and tier, migration effort, support, and operational staffing.
Microsoft’s Azure Local overview was updated September 29, 2026. Managed Instance capabilities, service regions, availability terms, licensing, and pricing can change, so confirm current documentation and terms before deployment.
