Replicate Azure SQL database with a lag

If you specifically need a 3-hour lag, the built-in replication options like Active Geo-Replication or Auto-Failover Groups won’t help, since they’re designed for near real-time sync.

For your use case, you could:

Use Azure Data Factory (ADF) or Synapse pipelines to copy data from the Azure SQL Database to the SQL Server on the VM. You can schedule the pipeline to run every 3 hours, which effectively gives you the lag you need.

Another option is transactional replication, but note that it requires Azure SQL Database as the publisher and a SQL Server instance as the subscriber. However, this will be closer to real-time, not with a fixed lag.

If your manager wants the lag for reporting or recovery purposes, ADF scheduled copies are usually the simplest way to control timing.

So in short: ADF with a 3-hour trigger is the easiest solution to achieve controlled lag replication.