Short answer: cloud computing means using servers, databases, storage and software over the internet, as a service – instead of buying and maintaining your own hardware. You usually pay for what you actually use and can scale resources up or down in minutes. There are three main service models: IaaS (infrastructure), PaaS (platform) and SaaS (ready-made software), and several deployment models: public, private and hybrid cloud.
Contents
- What is cloud computing?
- How does the cloud work?
- IaaS vs PaaS vs SaaS
- Public, private and hybrid cloud
- Advantages and disadvantages
- How companies use the cloud – examples
- How much does cloud computing cost?
- Security and GDPR in the cloud
- How to move your company to the cloud
- FAQ
What is cloud computing?
Cloud computing is a model in which computing power, storage, databases and applications are delivered by an external provider and accessed over the internet. Instead of running a server room in the office, a company "rents" the resources it needs in the provider's data centres – such as Amazon Web Services, Microsoft Azure, Google Cloud or local providers – and uses them from anywhere.
You use the cloud every day, even if you do not think about it: web-based e-mail, file storage, video calls, online CRM and invoicing systems are all cloud services. For the user, what matters is access to data and applications from a computer, phone or tablet, while hardware maintenance, updates and backups are handled by the provider.
How does the cloud work?
The foundation of the cloud is virtualisation: physical servers in data centres are divided into many virtual machines, containers and services that can be started on demand. The provider manages the hardware, power, cooling, network and physical security, while the customer decides through a console or API how many resources they need and for how long.
The key characteristics of cloud computing are:
- on-demand self-service – a new server or database ready in minutes,
- elasticity (scaling) – more resources at peak times, fewer in quiet periods,
- pay-as-you-go pricing – you pay for hours, gigabytes and data transfer, not for hardware up front,
- network access from any place and any device.
IaaS vs PaaS vs SaaS – cloud service models
| Model | What you get | What you manage | Example |
|---|---|---|---|
| IaaS (Infrastructure as a Service) | virtual servers, storage, networking | operating system, applications, data, updates | a virtual machine for your own application |
| PaaS (Platform as a Service) | a ready environment to run applications, managed databases | application code and data | managed PostgreSQL, application hosting |
| SaaS (Software as a Service) | a ready application available in the browser | mainly configuration and data | e-mail, CRM, invoicing software |
The higher in this table, the more control you have – and the more work on your side. The lower, the faster you can start, but within the limits of the product. Examples of SaaS for companies include our own systems, such as the SalesWizard CRM – see the full list of our SaaS services.
Public, private and hybrid cloud
- Public cloud – provider resources shared by many customers (logically separated). The cheapest and most flexible option.
- Private cloud – infrastructure dedicated to one organisation, in its own server room or at a provider. More control, higher cost.
- Hybrid cloud – a combination of both: for example, sensitive data in a private cloud or on-premises, with applications and computing in the public cloud.
- Multi-cloud – using services from several providers at once to avoid depending on a single one.
Advantages and disadvantages of cloud computing
Advantages
- no large up-front hardware investment – capital expenses become operating expenses,
- fast launch of new projects and scaling as you grow,
- access to data and applications from anywhere, easier remote work,
- built-in backups, redundancy and disaster recovery options,
- access to services that would be hard to run yourself (e.g. AI, data analytics).
Disadvantages and limitations
- costs can grow unnoticed if nobody monitors them,
- dependence on the provider and on an internet connection,
- security must be configured carefully – misconfiguration is a common cause of data leaks,
- legal requirements regarding where and how data is processed.
How companies use the cloud – examples
- Web and mobile applications – backend, database and user files in the cloud, with automatic scaling. Learn more in how to create a web application.
- Business systems as SaaS – CRM, ERP, invoicing and document workflow in the browser.
- Backups and archives – company data stored off-site, safe from hardware failure or theft.
- Remote work – shared documents, messaging and video conferencing.
- Analytics and AI – processing large data sets and using AI models without your own infrastructure.
- Online stores – resilience to sudden traffic spikes, e.g. on Black Friday.
How much does cloud computing cost?
Cloud pricing depends on the type and amount of resources: CPU and memory, server running time, stored data, outbound data transfer and additional services (databases, backups, monitoring). A small business application can cost a few dozen euros a month, while a large system with heavy traffic can cost thousands.
How to avoid overpaying:
- size servers to the real load and switch off unused test environments,
- use autoscaling instead of permanently keeping spare capacity,
- for steady workloads, consider reservations or longer-term commitments that lower the rates,
- set up budget alerts – every major provider offers them.
Security and GDPR in the cloud
The cloud follows a shared responsibility model: the provider is responsible for the security of the infrastructure, and the customer for configuring services, user access and their own data. In practice this means:
- two-factor authentication and the principle of least privilege,
- data encryption and regular, tested backups,
- choosing the data centre region – for personal data, the simplest option is to keep it in the European Economic Area,
- a data processing agreement with the provider, as required by the GDPR,
- in some industries (e.g. finance), additional regulatory requirements for outsourcing to cloud providers.
How to move your company to the cloud – step by step
- Inventory – list your systems, data and the dependencies between them.
- Choose a strategy for each system: move it as is (lift and shift), modernise it for the cloud, or replace it with a ready SaaS product.
- Pilot – start with a less critical system.
- Security and backups – set up access, monitoring and backups before migrating production data.
- Migrate and test, then keep optimising costs.
You do not have to do it alone – read when it is better to rely on an in-house IT team or a software house.
FAQ – cloud computing
What is cloud computing in simple terms?
It means using someone else's servers and software over the internet, as a service. Instead of buying your own hardware, you pay a provider for the resources you actually use, and your data and applications are available from anywhere.
What are the types of cloud computing?
By service model there are IaaS, PaaS and SaaS; by deployment model there are public, private, hybrid and multi-cloud.
What is the difference between IaaS, PaaS and SaaS?
IaaS gives you virtual servers and storage that you manage yourself, PaaS gives you a managed platform where you only deploy your code and data, and SaaS gives you a finished application you use in the browser, such as a CRM or e-mail.
Is data in the cloud secure?
Major cloud providers offer a high level of physical and infrastructure security. Most depends, however, on the company's own configuration: access control, two-factor authentication, encryption and backups.
Is the cloud GDPR compliant?
It can be, if the provider offers appropriate safeguards: a data processing agreement, storage in the EEA or a lawful mechanism for transfers outside the EEA, and adequate security measures.
How much does the cloud cost for a small business?
A small business that mainly uses SaaS applications usually pays per-user subscriptions. A small custom application in the cloud can cost from a few dozen euros a month; the cost grows with traffic, data volume and the number of services.
Summary
Cloud computing lets companies launch projects faster, pay for actual usage and work from anywhere. To actually save money, however, you need to choose the right service model, take care of security and keep costs under control.
At 4B Systems we build web applications and business systems that run in the cloud, with databases such as PostgreSQL, and help companies move existing solutions to the cloud. Tell us about your project and we will prepare an estimate.