Terraform vs. CloudFormation: A Side-by-Side Comparison

Infrastructure as Code (IaC) has emerged as a critical tenet in cloud computing, making efficient resource management possible across cloud environments. Terraform and AWS CloudFormation are two leading tools in IaC that facilitate the provisioning and management of infrastructure resources. While both offer similar functionalities, their fundamental differences make each suitable for different use cases.

In this blog post, we will learn about the key differences between Terraform and CloudFormation. But first, let's understand what Terraform and CloudFormation are.

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What is Terraform?

Terraform, developed by HashiCorp, is an open-source Infrastructure as Code (IaC) tool with the declarative definition of infrastructure configurations using HashiCorp Configuration Language (HCL) or JSON syntax. Furthermore, multi-cloud support enables Terraform users to manage resources across several cloud providers, including Amazon Web Services (AWS), Azure Platform Service Provider (ASP), Google Cloud Provider (GCP), and others.

Terraform provides organizations pursuing multi-cloud strategies or employing multiple cloud providers with an effective multi-cloud deployment tool. It also empowers organizations to build hybrid infrastructure setups, providing a seamless blend of on-premise resources and cloud services and optimizing utilization in both environments.

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Below are the key Features of Terraform:

Declarative Language: Terraform uses a declarative configuration language to specify your infrastructure's desired end state without providing step-by-step instructions to reach that goal.

Provider Support: Terraform supports multiple cloud computing service providers, such as AWS, Azure, GCP, VMware, etc. This enables users to provision, configure, and manage cloud resources across different providers using a single configuration file.

Infrastructure as Code (IaC): Terraform allows infrastructure to be designed using code. This approach increases infrastructure consistency and decreases risks related to manual infrastructure provisioning.

State Management: Terraform keeps a state file that tracks actual resources created and their configuration, enabling you to monitor changes or manage updates to your infrastructure more securely. It is essential to keep the state file secure and up-to-date to ensure the integrity of the infrastructure.

Plan and Apply: Terraform executes provisioning tasks in two phases: plan and apply. The former shows you which changes will be made to your infrastructure before implementation, while apply makes these modifications happen.

Dependency Management: Terraform's dependency management feature allows it to set dependencies between resources in your configuration. Dependencies refer to the relationship between different resources in an infrastructure. For example, a virtual machine may depend on a network interface or a storage disk. Terraform uses dependency graphs to determine the order in which resources should be created or updated to maintain consistency and avoid errors.

Modularity and Reusability: Terraform configurations can be organized into modules, reusable pieces of infrastructure code that encapsulate one or more resources. Modules allow you to easily share and reuse infrastructure code across different projects and teams. They can be used to define entire environments, such as a production or staging environment, or to define specific components, such as a load balancer or a database. They can also be nested within other modules to create more complex infrastructure configurations.

What is CloudFormation?

AWS CloudFormation is Amazon's IaC service tailored specifically for the AWS ecosystem. It allows users to define infrastructure as code using JSON or YAML templates. CloudFormation handles creating and managing AWS resources while ensuring their state complies with the defined templates.

AWS CloudFormation is a natural choice for organizations heavily invested in the AWS ecosystem. Its deep integration with AWS services makes it easier to manage AWS-specific configurations and services efficiently. CloudFormation is especially beneficial for AWS-centric applications and projects focusing on automating AWS-specific tasks.

Here are some of the key features of AWS CloudFormation:

Declarative Templates: CloudFormation templates are declarative, meaning you describe the desired state of your infrastructure, and AWS handles the underlying operations to achieve that state. This simplifies configuration and reduces the chances of errors common with manual step-by-step configuration.

Automated Resource Provisioning: CloudFormation automates the process of creating, updating, and deleting resources in your AWS environment based on the definitions in your templates. It ensures that your infrastructure remains consistent with the desired configuration.

Stack Management: CloudFormation manages resources as stacks. Stacks are created, updated, and deleted as a single unit, ensuring consistency and easier management of resources.

Change Sets: Before making changes to an existing stack, CloudFormation lets you preview those changes using change sets. Change sets show you what changes will be applied and provide an opportunity to review and approve them before implementing the modifications.

Rollbacks and Drift Detection: CloudFormation can roll back stacks to a previous state if a stack update fails. It also includes drift detection, which identifies and reports any differences between the desired and actual stack configurations.

Reusable Templates and Nested Stacks: CloudFormation supports the creation of modular and reusable templates, which can then be used in other templates as nested stacks. This promotes code reuse and simplifies the management of complex deployments.

Template Functions and Intrinsic Functions: CloudFormation templates support various functions that enable users to perform operations, transformations, and evaluations within them - further expanding your templates' versatility and capabilities. These functions contribute greatly towards making CloudFormation templates flexible.

Stack Policies and IAM Permissions: CloudFormation allows you to set Stack Policies and IAM Permissions that limit who can make changes to a stack and also allows you to specify IAM permissions with Amazon Identity and Access Management to restrict CloudFormation actions and limit who can perform them.

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Key Differences: Terraform vs. CloudFormation

Below are some of the differences between the two IaC tools:

Multi-Cloud Support

Terraform is an open-source tool designed for provisioning and managing infrastructure across different cloud providers, such as AWS, Azure, Google Cloud, and on-premise environments. It provides a consistent syntax and workflow when managing resources across different clouds.

CloudFormation is an AWS native service specifically created to provision and manage resources on AWS. Embedded deeply within their ecosystem, this standardized way to describe and deploy infrastructure makes CloudFormation invaluable in meeting resource demand across an AWS environment.

Language and Syntax

Terraform utilizes HashiCorp Configuration Language (HCL), an easy and concise domain-specific language specifically tailored for describing infrastructure as code. HCL lets users easily define resources, variables, and other configuration elements with concise syntax.

AWS CloudFormation supports both JSON and YAML formats to describe infrastructure. JSON can provide machine-friendly data representation, while YAML facilitates natural, structured representations of resources with their relationships.

Declarative vs. Templating

Terraform is a declarative tool, while CloudFormation is templating. Terraform's configuration files describe your desired state, while CloudFormation templates outline how it should approach reaching this state.

Ecosystem Integrations

Terraform boasts an expansive ecosystem of providers and modules developed by its community that allow it to integrate with various tools, cloud platforms, and services. CloudFormation, on the other hand, excels at AWS-specific integrations.

State Management

Terraform relies on a state file that records the actual state of the deployed infrastructure. This state file is essential for tracking changes, detecting drift, and planning updates to the infrastructure. The state can be stored locally or in remote backends like Amazon S3 or Consul.

AWS CloudFormation manages the state of stacks internally without exposing it directly to users. Users interact with stacks through CloudFormation's API, and the tool internally manages the state of resources associated with each stack.

Resource Lifecycle Management

Terraform provides a "plan-apply" model. When you make changes to the infrastructure configuration, you generate an execution plan first ("terraform plan"), which shows the proposed changes. After reviewing the plan, you apply the changes ("terraform apply") to create, modify, or delete resources.

AWS CloudFormation utilizes a "create-update-delete" model. You define the desired state of your infrastructure using CloudFormation templates. During updates, CloudFormation determines what changes are needed to bring the stack's actual state in line with the desired state and applies those changes.

Ecosystem and Extensibility

With plugins, you can extend Terraform's functionality to support new providers, data sources, and resources. You can also write your own plugins to customize Terraform to your specific needs. Plus, there is already a ton of community-contributed plugins available that you can easily integrate into your workflows.

AWS CloudFormation integrates tightly with AWS services, enabling seamless management of AWS resources. However, its scope is limited to AWS services, and there is no direct support for managing resources from other cloud providers.

Drift Detection

Terraform provides built-in drift detection, allowing you to identify discrepancies between the infrastructure's current state and the state described in your configuration. This is useful for identifying manual changes or unexpected modifications.

AWS CloudFormation's drift detection is specific to CloudFormation-managed stacks. It directly compares the current state with the template-defined state. It helps ensure that the resources deployed through CloudFormation remain in the expected state.

Interpolation and Functions

Terraform provides an extensive set of interpolation functions that allow you to dynamically generate values based on other values or inputs, making your configurations more flexible and easier to manage.

AWS CloudFormation offers intrinsic functions that allow you to perform tasks like referencing other resource attributes, performing basic calculations, and conditional logic within your templates. While not as comprehensive as Terraform's interpolation functions, they still offer essential dynamic capabilities.

Learning Curve

While Terraform and AWS CloudFormation have relatively gentle learning curves, the choice may depend on the team's existing knowledge and expertise. Developers familiar with AWS services may find AWS CloudFormation more intuitive, while those with experience in multiple cloud environments may prefer Terraform.

Community support

Terraform boasts a larger and more active community than CloudFormation, so there are more resources to assist users when learning and using Terraform.

Here is a table that summarizes the differences between Terraform and CloudFormation:

Feature / Aspect


AWS CloudFormation

Multi-Cloud vs. AWS-Centric

Supports multiple cloud providers and on-premises environments.

Exclusively focuses on managing AWS resources.

Configuration Language

Uses HashiCorp Configuration Language (HCL), with clear syntax.

Supports JSON and YAML formats for templates.

State Management

Utilizes state files for tracking infrastructure state and changes.

Manages stack state internally without exposing it.

Resource Lifecycle

Follows "plan-apply" model for creating, updating, and deleting resources.

Adopts "create-update-delete" model for stack management.

Ecosystem and Extensibility

Features a wide range of third-party providers and modules.

Integrates deeply with AWS services and resources.

Drift Detection

Includes built-in drift detection to identify deviations from the desired state.

Also offers drift detection but focuses on AWS resources.

External State Management

Allows storing state files externally in various backends like S3 or Consul.

Manages stack state internally, necessitating custom sharing solutions.

Interpolation and Functions

Offers a rich set of interpolation functions for dynamic configurations.

Provides intrinsic functions for dynamic template values and references.

Community and Documentation

Has a robust community, extensive documentation, and a vibrant ecosystem.

Benefits from AWS's resources and support but is more AWS-specific.

Which One Should I Learn: Terraform or CloudFormation?

Terraform and CloudFormation are both highly popular infrastructure-as-code (IaC) tools, but each has distinct advantages and disadvantages.

Terraform is more flexible than CloudFormation because you can use dynamic configurations and modules to create more complex infrastructure. However, its learning curve is steeper.

CloudFormation is exclusive to AWS, making it a better choice to complete AWS-centric tasks. Furthermore, CloudFormation has matured over time with better documentation and support.

At the core, your decision should come down to personal needs and preferences. Terraform will be suitable if you need to manage infrastructure across multiple cloud service providers or a single provider that’s not AWS. CloudFormation will be preferable if you only deal with AWS infrastructure.


That was all about Terraform, CloudFormation, and their differences. Terraform and AWS CloudFormation are powerful tools designed to streamline Infrastructure as Code management.

In summary, choose Terraform if you need multi-cloud support, want more flexibility in your infrastructure, or prefer a configuration language that's more approachable to those with coding experience. Choose AWS CloudFormation if you're working primarily within the AWS ecosystem and want automatic management of resource dependencies and stack updates.

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