Infrastructure as a Service (IaaS) is a cloud computing model providing virtualized resources over the internet, allowing users to manage storage, networking, and compute resources. It offers significant cost savings and flexibility compared to on-premises solutions, with potential reductions in expenses by up to 82% through reserved instances and efficient resource management. Tools like Azure Cost Management and Cloudyn can assist in optimizing these costs, as demonstrated by Ticketmaster's improvements in budget forecasting.