What is Cloud Computing? Here's Everything You Need to Know.

How does cloud computing help you get work done and share files? Discover what cloud computing is and how it works in this detailed guide.

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By Entrepreneur Staff

Cloud computing has taken the world by storm, and for good reason. It's a meaningful, effective way to provide software and computer resources to people around the globe. Hence, enterprises and businesses of all levels now use cloud computing for various needs.

It's widely known that cloud storage does not involve big data; instead, it deals with physical servers and operating systems. However, beyond that, for many Americans and front-line workers, cloud solutions can seem a little hard to understand.

Below is a breakdown of everything you need to know about cloud computing, including what it is, how it works and the types of cloud computing you may encounter.

Related: This is how cloud computing advances, a valuable resource for companies

Cloud computing explained

Cloud computing is the internet-based, on-demand delivery of platforms, applications and other IT resources from one terminal to another.

Without cloud computing, a company must typically create or purchase its software, then host that software on its own data centers, servers, hard drives or computers. For instance, a company might buy project management software and install the software using a disc.

Cloud computing instead transmits the information needed for software — such as a project management platform — over the internet, which corporate computers then access on the fly.

The company's computers connect to the internet, access the project management software provider's servers, and the information for the project management software is downloaded straight to those terminals.

In this way, cloud computing allows organizations of all sizes to access IT resources without purchasing, owning and maintaining the data centers and services necessary to carry out IT tasks.

Cloud computing provides organizations with more bandwidth and cost savings, allowing access to open-source data without having to house massive computer mainframes on-site.

Related: 4 Ways You Should Be Using Cloud Computing to Scale Your Business

How does cloud computing work?

Cloud computing allows client devices, like computer terminals, to access cloud applications and data over the internet. Those applications and data are stored remotely — off-site from the end-client — servers or computers.

With a cloud computing solution, the front end — such as a corporate computer terminal — connects to the internet, then to the back end — such as a cloud services provider.

The cloud services provider maintains servers, computers and databases where information, apps, and platforms are stored.

The front and back end communicate over the internet via a central server. The server uses specific protocols and is commonly used to exchange data quickly and seamlessly.

Meanwhile, businesses or end-users don't need to retain on-premises IT infrastructure. Such companies can complete their workloads, optimize for productivity and use modern development tools or cloud security tools for sensitive data storage, ranging from Amazon Web Services to other companies.

If this seems futuristic and highly technical, that's because it is. Modern cloud computing relies on automation technologies and virtualization to a great degree. However, cloud computing is now reliable and beneficial enough to replace purchasing and installing software on home computers for many organizations and purposes.

Related: Still Foggy on Cloud Computing?

Types of cloud computing

Technically, you or your business can pursue many different types of cloud computing. Here's a breakdown of the significant types of cloud computing:

SaaS — Software as a Service

SaaS or software as a service cloud computing is what it sounds like: the delivery of software services, like programs or applications, over the internet. For example, Microsoft Office 365 is a type of SaaS application.

Furthermore, the majority of enterprise-level applications, like ERP suites from Oracle or SAP, are available on the cloud in SaaS formats.

Regardless, SaaS cloud computing is the most common type of cloud computing because businesses can use it to access critical programs or apps from afar without having to install or purchase those apps on their home computers.

IaaS — Infrastructure as a Service

IaaS or infrastructure as a service cloud computing provides virtualized storage, networking and computing power over the internet on a case-by-case or pay-per-use basis. For instance, if your server requires extra resources, you can get them from a cloud computing provider.

Then, as traffic for your website or server decreases, you can relinquish those resources and give them "back" to the cloud computing provider.

In this way, you only have to pay for the cloud infrastructure or IT resources you need, so you don't waste money. This type of cloud computing is part of what makes cloud computing, in general, highly scalable and flexible.

PaaS — Platform as a Service

PaaS or platform as a service cloud computing offers services and workflows for developers, who often use different processes, tools and APIs to create, test and deploy applications.

Salesforce Platform and Salesforce Heroku are examples of PaaS offerings, as are OpenShift and Cloud Foundry.

FaaS — Function as a Service

FaaS, or function as a service cloud computing, is technically serverless computing. It's also primarily used by developers.

This type of cloud computing service prevents developers from seeing or altering anything beneath their code stacks. In this way, developers can focus on uploading functional blocks of code and combining them with other processes or code chunks. FaaS products include AWS Lambda, Google Cloud Functions and IBM Cloud Functions.

What is a private cloud?

A private cloud is a private network that uses the same technologies as general or public clouds. A large company might have its own private cloud by hosting and maintaining its own servers or databases.

Then, instead of each computer in that company having to install a piece of software one by one, those computers simply connect to the servers or databases, and through cloud computing, get the SaaS solutions they need remotely.

What is a hybrid cloud?

A hybrid cloud is a mix between a public and a private cloud. It's created by making different parallel environments that allow apps and data to move easily between private and public clouds.

Related: Opportunities in Cloud Computing

The benefits of cloud computing

Cloud computing has a lot of essential benefits, which is why it has become such an important part of modern business.


For starters, cloud computing is often more cost-effective for businesses. Rather than building, maintaining and upgrading servers and databases, which costs a lot of money, companies can instead spend it on renting IT resources or applications from cloud computing providers.

It's often much cheaper to do this than it is to not only buy the hardware necessary to maintain your own computer network but also pay the salaries of IT maintenance workers.

Agility and flexibility

On top of that, cloud computing is much more agile and flexible than other computing solutions. If, for instance, a company needs a new cybersecurity product ASAP, it can request security services or platforms from a cloud computing provider instead of purchasing software and physically installing it on each terminal.


Then there's scalability: the ability to request and use resources as quickly as necessary without spending time and money building the required infrastructure beforehand.

If a growing business suddenly gets a boost in website traffic, it can use cloud computing to get the server resources it needs right away. Then the company can relinquish those server resources when traffic decreases again, contributing to the affordability mentioned above.

Remote access

Cloud computing allows employees and workers worldwide to access the same data, applications and platforms as long as they have internet connections.

This is part of what facilitated effective and efficient remote work throughout the Covid-19 pandemic, and it's likely to remain an essential part of the modern workforce for years to come.

DevOps organizations can do coding or other software development/application development tasks remotely using the cloud and the Internet of Things (IoT).

Related: Benefits and Importance of Cloud Computing for Tech Entrepreneurs

Security and reliability

Lastly, cloud computing bolsters security and reliability for organizations. As touched on earlier, cloud computing allows security providers to offer security services, such as monitoring, firewalls and even security programs to organizations from afar.

Machine learning and artificial intelligence are significant parts of many security cloud platforms and public cloud services.

But organizations can also use cloud computing to back up files automatically or remotely, protecting key customer or corporate data from crashes, cyber-attacks and other adverse incidents.

Given the increased importance of cybersecurity and consumer trust, it's no surprise that many companies rely on cloud computing for all their online security needs.

Disaster recovery is a cloud-native feature and has many potential use cases. With the right upgrades to your cloud resources, you can prevent your business from suffering from outages or real-time threats.

Cloud computing is a revolutionary form of networked computing that brings software programs, platforms and raw computing resources to devices and work terminals from anywhere in the world.

Thanks to cloud computing, businesses and online operations are more flexible and efficient than ever.

Looking for more educational resources like this one on all things tech? Check out Entrepreneur's Science & Technology library here.

Entrepreneur Staff

Entrepreneur Staff


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