The cloud, or cloud computing, has seen huge growth and adoption among businesses of all sizes over the last few years. But for many business owners and managers who would not consider themselves tech-savvy, they are unsure of what the cloud means and why it matters to their business. 

This guide explains the different types of cloud services and provides examples.  It should be read in conjunction with the Guide to Choosing a Cloud Package and the Checklist on the Pros and Cons of the Cloud.

First a definition. The cloud takes IT resources such as servers, software and applications, and makes these available as services to businesses in a self-service manner via the internet or network. Distinctions are often made between public cloud and private cloud solutions.

Different types of cloud

Public cloud: A public cloud is a set of hardware, networking, storage, services and applications owned and operated by a third party that is made available to the general public via the internet. The term “public” does not mean the service is free, although it may sometimes be free.

A public cloud also does not mean that the user’s data is visible publicly – public cloud vendors normally provide access controls for users. Public cloud services provide a flexible, cost-effective way of deploying business solutions. However, some public clouds may not have deep security or a well-defined Service Level Agreement (SLA).

Private cloud: As opposed to the generally available nature of a public cloud, a private cloud is a set of computing resources owned and operated in a company that serves only the company itself, but which is set up in a cloud-like manner with regard to how it is managed.  A private cloud can be set up on a proprietary network or in a datacenter.

A private cloud can be set up by a supplier for the exclusive use of a business, and is generally governed by strong SLAs with an in-house IT or a supplier.

Hybrid cloud: A hybrid cloud combines a private cloud with the use of public cloud services. While a private cloud provides a flexible environment with a higher level of security than the public cloud, a hybrid cloud may enable a company to choose public services ranging from storage, platform and application services to strengthen and address their changing business needs.

In this model, businesses typically outsource non-business-critical information, while keeping business critical data and services in their control.

The value of the cloud

Implemented correctly, cloud computing can have many benefits for a smaller business.

The key benefit is that many cloud services are pay-as-you use. This means that they involve no capital expenditure at all. Because the deployment of cloud computing is fast, businesses have minimal project start-up costs and predictable ongoing expenditure. There are plenty of benefits of moving to the cloud.  However, it is important to note that adopting the cloud also comes with risks, which are detailed in this checklist.

Key considerations

Before jumping feet first into cloud computing, it is important to think about the mix of IT environments that will yield not only the best performance, but also the most savings. It is sometimes not straightforward to compare the cost of owning an IT application against buying it as a service.

Understanding the total cost of ownership (TCO) of an IT application extends beyond the cost of the hardware and software to factors like office space and air conditioning, as well as IT support.

Some types of cloud computing services, such as infrastructure, may be billed using unit of work by volume or time, and the costs of subscribing to a service over time may appear greater at first glance than the costs of owning the infrastructure outright. Indeed, there may be a trade-off between reduced capital expenditure and the increased flexibility offered by cloud computing and increased operating costs over time.

Cloud-based IT services

Cloud services come in several forms:

  1. Business Process as a Service (BPaaS): A whole business process is provided to the end user as a service involving little more than a software interface. For example, these could include services for sending out online newsletters, online marketplaces or providing an internet payment gateway on your eCommerce site. 

Examples: eBay, Mailchimp, Survey Monkey,

  1. Software as a Service (SaaS): The end user uses an application but does not control the network, hardware or software on which the application is running. Examples include well-known CRM solutions, online accounting, offsite backup and storage solutions, business productivity and collaboration packages

CRM examples:, SageCRM, Sugar CRM, Oracle CRM on Demand

Online accounting examples: SageOne, QuickBooks Online

Backup/storage examples: DropBox, Mozy Pro

Business productivity/collaboration examples: Google Apps for Business, Microsoft Office 365, Microsoft SharePoint Online, Cisco WebEx, IBM SmartCloud

  1. Platform as a Service (Paas): The end user runs and controls their own applications using a hosting environment controlled by the supplier. For example, Windows Azure is a PaaS based on Microsoft Windows and SQL that allows customers with deep expertise in .Net application development to develop and deploy software to a Microsoft infrastructure.
  2. Infrastructure as a Service (IaaS): The end user uses “fundamental” computing resources such as processing power, storage, networking or middleware provided by a supplier. The consumer can control the operating system, storage, applications and possibly the networking, but not the cloud infrastructure beneath them.

2 Action Points


Get comfortable with the cloud. Don’t let IT jargon put you off.  Take time to understand how cloud services work and how they can add value to your business


Seek professional help.  If you are uncertain about which cloud service is best for you, check out what others in your network use.  Seek help from an IT professional.