What is cloud computing?

If you're looking to grow your company, expand your services, and manage costs, cloud computing could be an asset that helps your business scale effectively without additional overheads.

Cloud computing offers many benefits according to technology studies.

Research by Statistica found that nearly half (48%) of businesses using these services reported increased efficiency, while the UK Parliament Post found that 89% of larger firms use at least one cloud-based service.

However, smaller businesses can lag when it comes to adopting this technology.

According to research by Close Brothers, 58% of small and medium sized enterprises (SMEs) do not use cloud-based computing.

Trust is the biggest challenge, with over one-third of SMEs worried that about security issues.

Cloud computing explained

Cloud computing uses remote, networked servers to host, process, and manage data over the Internet.

This can range from email and document storage to accessing boosted computing power to on demand rather than buying capital equipment.

Cloud computing services can be accessed with a broadband connection on devices such as desktops, laptops, tablets, and smartphones.

The three most popular offerings are SaaS (Software as a Service), IaaS (Infrastructure as a Service), and PaaS (Platform as a service):

  • SaaS

    This provides users with on-demand access to cloud applications or software over the Internet, meaning no hardware management or complex software is needed. A popular example of this is Microsoft 365, which allows users to access word processing, spreadsheet, and presentation tools without installing software on a local device.

  • IaaS

    This is on-demand access to the "back end" infrastructure of cloud computing, such as Amazon Web Services, which gives customers access to cloud-hosting servers, storage, and networking to run business-intensive services such as hosting their website and streaming video.

  • PaaS

    This is on-demand access to fully-functional and ready-to-go cloud platforms to run and manage applications, such as delivering interactive eLearning courses to customers, using a PaaS service such as Microsoft Azure.

Businesses may use a combination of services, such as paying an annual fee for employees to access Office 365, renting cloud storage for company documents, or hosting a website.

Leasing cloud computing can be cheaper than, for example, buying and running a server on your work premises.

The benefits of cloud computing


The unpredictable can happen when running a business, making the ability to quickly access computing power and scale your business a key component of agile operations.

Whether suddenly handling an influx of traffic to your website or requiring access to additional computing power to render 3D models or run virtualisation operating systems during app development, commercial cloud service providers can scale computing resources up or down as you need them.

This avoids the need to source and set up new equipment quickly.

Once demand lowers, services can be scaled back, so you're not left with spare and under-utilised computing capacity.

Data security

Between 2021 and 2022, the UK Government reported that 31% of British businesses suffered cyber-attacks at least once per week.

Data loss and cybersecurity are major concerns for any business.

While cloud computing means that your data is stored in large data centres, often owned by corporations such as Google, Amazon, or Microsoft, it can be more secure than storing on your computing systems.

Cloud computing systems are massive in scale, with extensive security and redundancy, with data mirrored and stored in different locations worldwide.


From a HR perspective, using a cloud service provider can help reduce management tasks and employee training, saving time and money.

With less IT staff to maintain your servers, headcount can be refocused on other business activities.

Centralised access to documents, records, and company data accessible anywhere and at any time can provide more effective use of information and resources.

Reduced business costs

Cloud computing services are typically sold as a subscription, with businesses paying a monthly or annual fee to access cloud storage and processing power.

These payments are often a fraction of the cost of buying, maintaining, and operating servers and storage.

Due to the vast scale of these services, providers can offer businesses access to significant processing and storage resources for relatively small costs.

Disaster recovery

Many small businesses use cloud storage as a convenient way to secure and protect valuable data.

Securely storing data offsite means that if your business suffers a disaster, such as a fire or cyber-attack, data is held securely offsite and out of harm’s way.

Companies can quickly recover from data loss by reinstating offsite back-ups, enabling businesses to recover operational activities.

Better collaboration

Cloud computing was initially conceived out of the desire to have multiple individuals be able to work on a single computer at the same time to share data globally.

Many services are tailored to collaborative working.

This allows employees to work remotely and in different locations, sharing and working on data and information without the overhead of having to accommodate them in a shared physical space.

Supports sustainability

Cloud computing can require vast amounts of energy to operate.

However, due to the large numbers of businesses using it, these services can use less energy than would have been used by companies operating their own IT equipment.

Many organisations, such as Apple and Microsoft, are investing in powering cloud computing via renewable energy sources.

Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

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Our Making business finance work for you guide is designed to help you make an informed choice about accessing the right type of finance for you and your business.

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