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Azure SQL Managed Instance on Azure Local

Azure SQL Managed Instance on Azure Local delivers a managed relational database service that runs on-premises with near-full SQL Server compatibility. Deployed through Azure Arc data services, it provides automated patching, backup, high availability, and monitoring while keeping data within the local infrastructure boundary.

Service Details​

What It Enables​

SQL Managed Instance on Azure Local provides a cloud-managed database engine on-premises. Arc-enabled data services deploy and manage the instance on a Kubernetes cluster (AKS on Azure Local), giving DBAs and developers the SQL Managed Instance experience without migrating data to the cloud.

Key Use Cases​

  • Data residency and compliance — Run managed SQL databases on-premises where regulations prohibit cloud data storage (financial services, healthcare, government)
  • Low-latency database access — Keep the database tier close to application servers running on the same Azure Local infrastructure, eliminating network hops to cloud regions
  • Hybrid data estate — Manage on-premises and cloud SQL instances from a single Azure portal with consistent monitoring and policy
  • Modernize without migrate — Move from self-managed SQL Server to a managed instance model while keeping data on-premises

Architecture​

  • Azure Arc data services — The data controller runs on AKS on Azure Local and manages the lifecycle of SQL Managed Instance pods
  • Kubernetes — SQL MI runs as containers orchestrated by AKS, with persistent volumes backed by S2D storage
  • High availability — Built-in Always On availability groups for automatic failover within the cluster
  • Monitoring — Metrics and logs exported to Azure Monitor and Log Analytics via the Arc data controller
  • Connectivity modes — Supports both direct (always-connected) and indirect (periodically-connected) modes for Arc registration

Supported Features​

  • Near-100% SQL Server surface area compatibility
  • Automated backups with point-in-time restore
  • Automated patching and version upgrades
  • Built-in high availability (Always On)
  • Azure Monitor and Grafana dashboards integration
  • Azure RBAC for instance management
  • Elastic pools for multi-database resource sharing
  • Direct and indirect connectivity modes

Deployment Notes​

  • Requires AKS on Azure Local with the Azure Arc data services extension
  • Azure subscription required for Arc data services control plane
  • Minimum 16 GB RAM and 4 vCPUs recommended per SQL MI instance
  • Persistent storage volumes required for data, logs, and backups

Limitations​

  • Some SQL Managed Instance cloud features (e.g., link to Azure SQL) may have reduced functionality in indirect connectivity mode
  • Cross-instance distributed transactions require manual configuration
  • Performance governed by local hardware resources; no elastic scale-out to cloud
  • Licensing: SQL Server license required (pay-as-you-go through Arc or bring-your-own)

External References​

Data verified with Microsoft Azure Local documentation, March 2026.