How Does Cloud Computing Work?


Most people benefit from cloud computing, even if they aren’t aware of it. Storing data in “the cloud” is increasingly common for both consumers and businesses. 

But online storage is just one small aspect of cloud computing. 

For example, cloud-based operating systems, computing power, and virtual environments are helping developers create new software. And cloud applications, infrastructure, and data recovery services are bringing greater efficiency to businesses.

In this article, you’ll learn:

  • The basics of how cloud computing works.
  • The difference between public, private, and hybrid cloud systems.
  • The different types of cloud services, including IaaS, PaaS, SaaS, and others.
  • The advantages and disadvantages of cloud computing.

What Is Cloud Computing?

Cloud computing means slightly different things in different contexts. Here’s how the most common implementation of this technology works.

A cloud services provider runs the back end of a cloud computing service. This means it maintains the hardware needed to provide the service and administers any necessary front-end software.

End-users interact with the front end of a cloud computing service. They don’t need to maintain any equipment beyond an internet connection and a device capable of accessing the front-end software.

For consumers, using the cloud means there’s no need to store data on a device. Files will conveniently back-up and sync between a potentially unlimited number of devices, including desktop computers and smartphones.

For businesses, cloud computing has had some revolutionary implications in terms of cost, convenience, and efficiency.

What Is Public Cloud?

Public cloud is generally accessible to any consumer or business, with or without charge. The cloud services provider maintains its customers’ data on its own servers and sets the terms of any contracts associated with the service. 

Public cloud providers include:

Typically, users access public cloud services via the internet. However, certain public cloud services offer a direct, dedicated connection to their IT infrastructure. For example: 

What Is Private Cloud?

Private cloud involves the same fundamental technology as public cloud systems. However, an organization using a private cloud service directly owns and operates the hardware and software assets needed to provide the service.

Running a private cloud service provides many of the benefits associated with public cloud computing. A company’s employees can use front-end software to access the storage or processing power of centrally-managed hardware. 

However, the company itself must maintain the back-end infrastructure and administer the front-end software. As such, for the most part, private cloud operators do not benefit from the convenience and cost-savings associated with public cloud services.

What Is Hybrid Cloud?

Hybrid cloud combines public cloud and private cloud technologies with a network that allows the two systems to communicate. Hybrid cloud lets companies enjoy the benefits of both types of cloud systems. 

For example, a company could store most data with a public cloud provider to save costs while keeping its more sensitive data in a private cloud system for security reasons. 

Three Main Types of Cloud Services

There are three main types of cloud services, which vary in their complexity and the level of control a user can maintain over the service. 

What is Infrastructure as a Service (IaaS)?

Infrastructure as a Service (IaaS) is the least “complex” type of cloud computing service.

IaaS providers offer remote access to a data center. It’s up to end-users what they use this access for (subject to any legal or contractual restrictions).

Through IaaS, customers can gain virtual access to:

  • Networking facilities.
  • Storage.
  • Computing power.
  • Web servers.

Paying to use another company’s infrastructure helps reduce the costs associated with housing and maintaining infrastructure on-premises.

Examples of IaaS providers include:

What Is Platform as a Service (PaaS)?

Platform as a Service (PaaS) is the next most “complex” type of cloud computing service. 

PaaS provides a platform for developing software. It’s up to the end-user what type of software they develop within the technical and contractual constraints of a given PaaS system.

Developers can use PaaS to create mobile, social media, or web-based applications. A PaaS provider will generally provide the following facilities to its users:

  • Operating system.
  • Middleware.
  • Database.
  • Virtual hardware.

Using PaaS can reduce or eliminate the upfront cost of investing in these facilities.

The PaaS provider may also help users manage the following aspects of development:

  • Security.
  • Testing.
  • Scalability.
  • Storage.

Outsourcing these activities allows developers to dedicate more time and computing resources to developing their application. PaaS can also eliminate some of the more repetitive tasks associated with coding and testing.

Examples of PaaS providers include:

What Is Software as a Service (SaaS)?

Software as a Service (SaaS) is the most “complex” type of cloud computing service, in that it consists of a completed piece of software created for a specific task or industry. Unlike IaaS or PaaS, SaaS applications can be used by customers with little technical knowledge. 

SaaS is centrally-hosted and usually licensed on a subscription basis. Customers usually access SaaS products are via the internet, typically using a web browser.

SaaS applications can be “vertical” or “hortizontal.”

“Horizontal” SaaS products tend to cater to a specific need and are industry-neutral. For example:

“Vertical” SaaS products are industry-specific. For example:

SaaS applications are usually customizable within pre-determined parameters. For example, SaaS applications can sometimes be rebranded to display the client company’s logo, or otherwise repurposed according to the client’s needs (within limits).

A SaaS provider will often frequently update its application to provide bug fixes and new features. In some circumstances, SaaS providers will force updates on users. From the provider’s perspective, this can reduce the cost of maintaining older versions of the software.

Other Types of Cloud Services

In addition to the three core types of cloud computing services, new implementations of cloud computing technology are emerging.

Disaster Recovery as a Service (DRaaS)

Disaster Recovery as a Service (DRaaS) allows companies to fully back up their systems using cloud technology. 

In the event of a large-scale systemic problem with a company’s on-premises hardware, DRaaS allows the company to continue its operations “in the cloud,” thereby mitigating the costs and reputational damage associated with long-term downtime.

DRaaS providers include:

Function as a Service (FaaS)

Function as a Service (FaaS) enables customers to develop specific functionalities in the cloud without maintaining the infrastructure required to developing an entire app. Developers can execute discrete functions using only the resources necessary for executing those functions.

FaaS is sometimes called “serverless” computing. Customers can avoid the cost and inconvenience of server management. FaaS even removes the need for processes to run on a server unless they are triggered by an event mechanism.

Examples of FaaS providers include:

Advantages of Cloud Computing


Both consumers and businesses benefit from the high degree of portability brought about by cloud computing.

End-users no longer need to rely on physical access to a hard-drive on which to store their files or applications. Instead, they can access their data through any internet-connected desktop or mobile device.

This convenience has contributed to the growth of consumer cloud services such as:

Short-Term Cost

Cloud computing means it’s not necessary to invest in the full cost of the hardware or software required to store a large data set, develop an application, or get a business off the ground. Very little up-front capital is required when using cloud services. 

Cloud services can eliminate the high costs involved in purchasing computer hardware or installing network equipment. It can also reduce the cost of purchasing software, as a monthly subscription is typically much cheaper than an indefinite license.

Support and Maintenance 

An important benefit of cloud computing is that a company can benefit from services and infrastructure without needing to employ additional personnel.

Running an in-house data center requires an IT department capable of keeping it working properly. This is totally impractical for most companies — even those who need to store relatively modest amounts of data might struggle to service the necessary infrastructure.

It can also be more difficult to maintain software packages installed on employees’ physical workstations. It’s typically much easier for SaaS providers to fix and update their applications remotely.


Cloud services providers typically offer various plans designed to cater to the needs of businesses of all sizes. Cloud services are easily scalable and can adapt to the requirements rapidly expanding — or contracting — businesses.

There are many instances in which this scalability can be helpful. 

For example, a company with a high level of staff turnover could subscribe to a different number of licenses for a SaaS application each month. A company with variable data storage requirements can choose to pay for less cloud storage space according to its business needs.


Companies using cloud-based services can concentrate on the core purposes of their business without worrying too much about repetitive or difficult tasks.

The efficiency savings brought about by cloud computing are particularly apparent in the context of PaaS, which can take care of repetitive coding tasks — and FaaS, which allows users to avoid devoting server resources to idle processes.

Disadvantages of Cloud Computing


Using cloud storage puts your data in the possession of a third party. There are privacy implications associated with cloud computing both for consumers and businesses.

For example, Google monitors data stored in Google Docs and will disable a user’s account if their content violates its Terms of Service. 

The privacy concerns associated with cloud computing have led the academic commentator Shoshana Zuboff to nickname SaaS “Survellience as a Service.” 

Long-Term Cost

While cloud computing allows for considerable savings in terms of up-front cost, the price of a cloud-based service can be comparatively higher in the long term.

The monthly fee for using several terabytes of cloud storage space might be 20 times cheaper than buying the hard-drive space upfront. But after 21 months, this cloud storage deal no longer works as a cost-saving exercise.


Cloud-based applications and platforms can sometimes allow for a degree of customization. However, SaaS applications are normally quite inflexible.

Additionally, SaaS applications are frequently updated, and there might be little or no choice around updating to the latest version. Therefore, businesses using cloud-based applications may incur unexpected costs to train staff in using the updated software.


Cloud service companies can retain control over their assets and can set the terms of any contracts that govern the ongoing relationships with their clients.

Purchasing a perpetual product license outright grants indefinite ownership of that product. A contract between the buyer and seller lasts as long as the warranty period. After this, the seller cannot normally change the terms of the contract in any significant way.

By contrast, if you subscribe to a cloud-based service, your contract generally renews once per month or year. This means that the service provider could raise their prices. Users must either absorb these costs or move to a different provider, which can be difficult.


Cloud service providers are responsible for the security of the data stored on their servers. 

For some companies, this may represent an advantage — particularly if they would be unable to meet the cost of adequately securing the data themselves.

However, for others — particularly those dealing with sensitive personal information or financial data — a cloud service provider might be unable to guarantee a suitable level of cybersecurity.