Understanding the Purposes of Key Terraform Files and How to Structure Their Folders

Terraform is the go-to platform for deploying and managing infrastructure as code (IaC). But for Terraform to function, it needs a set of configuration files that specify the resources, settings, and structure of your infrastructure. How you create and organize IaC files will have a big impact on how effective and efficient your IaC deployment becomes, especially as your environment scales and evolves.

The goal of this article is to help you understand the role and function of some of the most critical Terraform files, and how you can structure their folders to optimize the efficiency and scalability of your cloud resources. Learn about the importance of keeping Terraform files in order, and explore some tips for making sure your setup serves your IaC operations well.

Overview of Key Terraform Files

Files in Terraform are the most critical components of your IaC setup, as they contain the configurations that dictate how your cloud resources are defined, deployed, and managed. How many of these files you use in your Terraform projects depends on the complexity of the environment and infrastructure you want to build. 

Here are some core files you’re most likely to encounter in nearly any Terraform setup.

main.tf

This file is at the heart of all you do in Terraform, as everything you want Terraform to provision and manage will be described here. This may include resources like virtual machines, networking components, security groups, or databases, along with their configurations.

variables.tf

The variables file is essential because it allows you to deploy various inputs without altering the core configuration. It does so by letting you specify input variables like “type” and “description,”  which define what kind of data can be used and provide clarity on how each variable will be used in the configuration. 

outputs.tf

This file reveals information about Terraform configurations by defining output values that can be referenced post-deployment. Things like resource IDs, IP addresses, or connection strings are important pieces of information if you want to further integrate your infrastructure, or document and track key resources.

provider.tf

This file is what allows Terraform to connect to cloud providers like AWS, Azure, and Google Cloud. It contains all of the configuration details to make it happen, such as authentication credentials, API endpoints, and regions. Before you can do anything in Terraform, it’s important to define your providers and establish connections that let Terraform know where to deploy your infrastructure resources.

Best Practices for Folder Structure

Knowing the different Terraform files and why they exist is important, but it’s not necessarily what will make your IaC environment effective. How you structure these files and organize their folders is what determines how easy it will be to manage your resources, and enable collaboration across your team.

With that in mind, here are some best practices for structuring Terraform folders.

Let’s start from the beginning, and that’s root-level organization. At the root level, it’s important to separate your environments by creating dedicated directories, such as testing, staging, and production. Isolating your environments in this way ensures that changes made in one environment don’t translate to another.

Next, you’ll populate these folders with the files we discussed previously. For example, the /testing and /production directories will each have their own main.tf, along with other files, which allows you to set different values based on the environment, and allow you to test the configuration before promoting it to production.

To further simplify your folder structure, create a “modules” directory where you can store reusable components like databases, virtual private clouds (VPCs), or other resources that are shared across environments. Having these resources in one place will allow you to define infrastructure components once and reuse them in multiple places without duplicating code – which is, more or less, the point of IaC.

For example, you might have a vpc module that defines a VPC with subnets and routing tables. Instead of redefining this configuration in every environment folder, you can simply reference the vpc module in each environment's main.tf file.

One last thing you have to worry about when it comes to Terraform file structure is how to manage state files. These files infrastructure changes, making them critical for keeping consistency across your infrastructure.

To manage state files effectively, it’s recommended to use remote state backends, such as AWS S3, Google Cloud Storage, or Azure Blob Storage, combined with state locking mechanisms (for example, DynamoDB for AWS) to ensure that only one user or automation process can make changes at a time. 

Each environment should have its own dedicated state file to separate concerns and prevent cross-environment conflicts. The backend.tf file for each environment should specify where the state file is stored.

Common Mistakes and How to Avoid Them

When learning about how to best manage your IaC resources in Terraform, it’s also helpful to know what not to do. Here are some of the most common mistakes to avoid.

1. Overcomplicating the Folder Structure

The approach suggested above should be about as complicated as your folder structure needs to be. Adding extra directories or breaking your configuration into too many files only adds unnecessary complexity that will make your project harder to maintain. Keep it simple and logical, and only add things if it adds clarity or helps with reusability.

2. Mixing Environment-Specific Configurations

Another mistake you might make is applying a configuration intended for one environment to another. That’s exactly why you should keep your different environments in separate directories. Doing so makes it all the more unlikely that you’ll make that mistake.

3. Lack of Documentation

Managing IaC infrastructure without documentation is like driving to a different country without a map – you may get there eventually, but it will take longer, and it’s highly likely that you will get lost along the way. Ensure that your project includes clear and concise documentation, explaining how the folder structure works, what each module does, and how different environments are configured. This will improve collaboration and make onboarding new team members easier.

Final Thoughts

Are you managing your IaC infrastructure according to these best practices? If not, now is the best time to start. As your environment gets more complex and you add new resources or team members, the folder structure will play a significant role in how easy it is to collaborate, maintain, and scale your infrastructure without errors.