Introduction
Terraform is frequently chosen for managing infrastructure on Azure. In many cases, it is adopted without a thorough risk assessment. IT departments often favor it due to internal experience, while businesses often promote it with the goal of reducing costs. Yet, both sides typically lack a full understanding of the risks they are introducing.
This article is intended for decision-makers, risk owners, and stakeholders responsible for operational and technological stability. It outlines the critical risks associated with using Terraform for Azure — not to provoke fear or criticism, but to enable informed governance and responsible infrastructure decisions.
The goal
To expose the risks organizations face when using Terraform to manage Azure infrastructure, and to ensure that choices around tooling and architecture are made deliberately, based on long-term business interests rather than convenience or trends.
Risk #1: Loss of Legal Stability
On August 10, 2023, HashiCorp announced its decision to move Terraform from a permissive open-source license (MPL) to the restrictive Business Source License (BSL), fundamentally changing the legal nature of the tool. Many teams either missed the change or underestimated its consequences.
This licensing shift introduces legal ambiguity for anyone using Terraform in commercial environments — especially when embedded into internal platforms, SaaS products, or automation services. Even if your current usage is compliant, there is no guarantee it will remain so. HashiCorp retains the right to redefine what constitutes “production usage” at any time.
This creates a risk: the entire infrastructure automation layer may become legally constrained or require a costly rewrite in the future.
Relying on a tool whose licensing terms can change unpredictably is not a sustainable strategy for any serious IT solution.
Risk #2: Loss of Support
In response to HashiCorp’s licensing change, the open-source community launched OpenTofu, a fully open alternative to Terraform. While this preserved open tooling for many, it also created a dangerous split.
Now, the Terraform ecosystem is fractured. Many contributors, module authors, and vendors have shifted their efforts to OpenTofu — leaving Terraform behind. This is especially problematic for Azure users, because the AzureRM provider, critical for managing Azure resources, has never been maintained by Microsoft. It remains community-driven.
This creates a risk: Terraform’s support for Azure may stagnate or degrade over time. Bugs could remain unresolved for extended periods, and critical new Azure features may become inaccessible for months — or indefinitely.
Risk #3: Issues Due to Breaking the Platform Model
Microsoft Azure is built around a foundational principle: all resource management must go through Azure Resource Manager (ARM) — the authoritative control plane for infrastructure lifecycle, governance, security, and auditability.
When you use Azure-native tools like Bicep or ARM templates, you work with Azure as the manufacturer intended: you submit a declarative template, and ARM manages everything — creation, updates, validation, rollback, logging, and access control.
Terraform does not follow this model.
Instead, it imitates the work of Azure Resource Manager by issuing raw API calls through its own AzureRM provider, bypassing the system designed to ensure safe, secure, and compliant infrastructure changes.
This creates a risk: infrastructure provisions may fail, and you will not be able to leverage critical platform features like deployment history, validation, rollback, or auditing.
Risk #4: Issues Due to Loss of Integrity
Terraform relies entirely on its own state file to represent what exists in Azure. However, that file is not a source of truth — it is just a static snapshot. In real-world environments, things may change outside of Terraform’s awareness:
- A portal modification.
- A quick CLI fix in production.
- An emergency scaling operation.
- Even Azure automatically provisioning new resources.
Terraform does not detect these changes — unless you explicitly refresh the state — and even then, it might misinterpret them. This phenomenon, known as state drift, is one of the most dangerous operational risks in Terraform-managed Azure environments.
This creates a risk: deployments may fail unpredictably, and the effort required to restore infrastructure integrity can be significant, disruptive, and costly.
Risk #5: Issues Due to Qualification
One of the unspoken reasons many companies adopt Terraform for Azure is not technical — it is driven by hiring convenience and perceived cost savings. It is easier to find lower-cost coders familiar with Terraform syntax than to find experienced Azure platform engineers.
This shortcut introduces a deep structural weakness.
Instead of hiring or developing engineers who understand how Azure actually works, organizations end up filling critical roles with people who only know how to script resource definitions in Terraform.
This creates a risk: low-qualified developers may build non-optimal, insecure, and unreliable infrastructure and automation, ultimately increasing long-term costs and risks.
Hiring people to manage Azure infrastructure just because they know Terraform is like building starships and hiring engineers simply because they speak English. The ability to speak a language is no guarantee of knowing how to engineer a system.
Conclusion
By reaching this point, the key risks associated with using Terraform for Azure should now be clear.
Effective risk management demands more than awareness — it requires deliberate action. Organizations must either consciously accept the risks described, fully understanding their potential impact, or eliminate them by aligning with proven best practices.
The path to eliminating these risks is straightforward: use tools that are designed, provided, and supported by the platform manufacturer.
For Azure, this means adopting Bicep and ARM templates — solutions purpose-built to operate within Azure's native control plane, ensuring full integration with governance, security, operational stability, and future scalability frameworks.
In building critical infrastructure, there is no room for shortcuts.
Serious business demands serious engineering.
Choose your foundation wisely.
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