Losing customization capability with managed servers (AWS or Azure)? We're currently hosting our SQL Server instances on AWS VMs. I was recently hired as a data architect and DBA. I'd like to move our instances to either managed services using AWS RDS or Azure SQL. I was told by our current CTO the following:

After having actually managed all this for several years now, I disagree [about the benefits of moving to a Platform-as-a-Service (PaaS) model]. I actually have experience with both "cloud managed" (on both AWS and Azure) and "self managed" and I have real concerns about performance (mostly I/O) on PaaS platforms. The level of flexibility and ability to tailor storage exactly how we need is something we just can't do with the PaaS services. With the ease of use, you lose almost all customization capability.

For those of you with experience using AWS RDS or Azure SQL, do we actually lose almost all customization capability? Most of our databases are under 1TB. In fact, I think our largest is currently at 680GB. Also, as an FYI, my colleague's greatest concern seems to be the performance gap between a managed environment and an instance sitting on a VM. The ease with which you can scale resources would seem to alleviate this concern.

Also, if this isn't the appropriate forum for a question like this, I would be glad to move it, if someone can tell me a more appropriate forum.
For platform-as-a-service (PaaS) databases, you don't get to design the underlying hardware such as CPU, I/O or memory configuration.

You can only choose a service tier that gives you a general idea of the overall performance. On Azure SQL Database, the different service tiers are defined by something Microsoft calls "DTUs", a performance metric that blends disk and CPU performance, but you cannot prioritize one over the other. I suspect AWS RDS works similarly in this regard.

The reason (personal opinion) why you would choose PaaS over IaaS (installing SQL Server on a VM) is that you don't have to maintain and patch any infrastructure. Your colleague is correct in saying that this comes at a price: less freedom.

The upside with PaaS is that you can scale it up and down whenever you need, minute by minute or hour by hour.