What you need to know about cloud computing

Anyone, for example, who uses their smartphone to take photos or videos and upload them to the Internet, will generally be using a cloud. Cloud computing is hence a term that has long become established both in our private and professional lives. But there isn’t just the one cloud, which is reason enough to take a closer look at this topic and ask how cloud computing works, and what the advantages and disadvantages are?

Cloud computing put simply

Broadly speaking, cloud services work like an online storage space that IT service users can access via an existing Internet connection. Since data centers provide the storage and the services, companies or private individuals don’t need their own servers, storage systems and accompanying software to access, edit and store data.

That means private users can play videos and music via cloud data centers of known providers like Netflix or Spotify. Millions of people now use these services in everyday life.

Two thirds of companies in Germany also already use cloud computing services. Applications such as Office packages, databases, and IT security software can be used in this way. Microsoft, for example, offers a local version and a cloud version of Office 365. It has the same functions as the software package that users install on their computer from a DVD or by means of an installation file.

An overview of the special features of cloud computing

An overview of the special features of cloud computing

The National Institute of Standards and Technology (NIST) in the United States has summarized the properties of cloud computing in five points. These also give an indication of when the cloud is an interesting model for commercial and private users:

On-demand self-service: Users order software, servers, or other services on their own, based on the self-service principle. This is done via an Internet portal.

Resource pooling: Users share the systems and services in a cloud data center. In other words, in addition to the other customers, every user gets a part of a server, a database, or a storage system. This is possible due to a technology called virtualization. Of course, the individual areas of the customers are strictly separated from each other.

Rapid elasticity: Cloud services automatically adjust to the users' needs. For example, they can order more servers or more powerful servers or book additional Office licenses. This on-demand model allows the IT environment to adapt to the actual needs without users having to install IT systems in their own home.

Pay only for what you use: Cloud computing services are known as measured services. The service provider can check in detail what services and capacities customers have used and bill them accordingly. This is why cloud service providers offer billing on an hourly or minute basis.

Broad network access: Cloud services are accessible via normal, open networks, preferably the Internet. In other words, users don’t need any special tools.

Cloud technology in use

The cloud is there for everyone – and everyone can benefit from it. As mentioned at the start, everyday life today is hard to imagine without cloud computing.

How do private individuals benefit from clouds?

The majority of private individuals are mainly impressed by the convenience associated with the services: Images, documents, music, and movies can be accessed from anywhere. Data can be shared and even edited together with family, friends, or colleagues – on any device such as a computer, a smartphone or a tablet.

If the chosen cloud provider is demonstrably reputable and ensures strict data protection, such information is secure in the cloud– often even more so than on your own computer or a flash drive. If a flash drive is lost or the hard disk breaks down irretrievably, the data is gone. Unlike cloud service providers they store their customers’ data in several separate data centers at different locations. Even if one data center breaks down, the information is still available. In many cases, cloud storage is also often very inexpensive. A world-famous hardware and software giant currently charges €0.99 a month for the private use of its cloud for 50 gigabytes of storage space. 200 gigabytes are available for €2.99.

Where can companies use cloud computing?

One of the most important areas where cloud computing is used for companies is Industry 4.0. This term describes the networking of the entire supply chain – IT systems, machines, products, warehousing, and transportation systems. In addition, there are components such as sensors that are connected with each other through the Internet of Things (IoT). Thanks to constant monitoring by sensors, machines are able, for example, to request help on their own if a component is very worn and could cause a breakdown. Transport containers with work materials report when they are getting empty. As a result, processes are largely automated.

In addition, companies can use cloud platforms from an automation specialist to carry out evaluations. These evaluations offer benefits in the field of edge computing or in data analysis.

In contrast to cloud computing, edge computing is a less well-known term. But what exactly is it? Read more about it in Edge Computing: Everything you need to know.

For startups and smaller companies, the cloud is a good alternative to setting up local servers, operating systems, storage systems and Office licenses. Added to that are expenses for the staff who set up and administered these systems.

Companies surveyed have become increasingly open-minded and interested in cloud computing in recent years.
“funk” fetches Office, phone, and storage from the cloud

“funk” fetches Office, phone, and storage from the cloud

funk, the online media offering for young people from German broadcasters ARD and ZDF, also changed from an internal infrastructure to a public cloud. funk had a problem: a rapidly increasing number of employees who used many different tools, such as different Office and chat tools. Besides, there were no fixed office hours at funk. In other words, employees also had to be able to work from home.

This is why funk threw out its old software and changed to Microsoft’s public cloud service Office 365. Today, video conferences and phone calls run via Skype for Business. To share information with co-workers quickly, the employees from funk use the Microsoft Team chat software. Data and documents are also stored in the cloud with OneDrive for Business. Classic Office applications, such as Word, Excel, and PowerPoint are also available.

One benefit of the cloud is that funk can integrate new employees into the working environment with little effort. It's sufficient to rent more Office 365 licenses. Employees can also access applications and data in the cloud from anywhere, such as from their home office or at an airport.

Is cloud computing used in public administration?

Public institutions and authorities could also benefit from the advantages of cloud computing, for example, with flexible provision of computing and storage capacities and applications. “Could” because in reality the situation is quite different. According to the study “Future Panel State and Administration 2017” by Wegweiser GmbH and the Hertie School, more than half of the public authorities in Germany reject cloud services, as well as big data applications. One reason for this is the stringent data protection regulations in Germany and the EU. Added to that are hurdles such as the lack of a uniform cloud strategy for public institutions due to the federal system in Germany with its 16 federal states.

The advantages and disadvantages of cloud computing


  • High level of data protection: Reputable cloud service providers usually create data backups and offer better protective measures than a company data center.
  • Large computing and storage capacities: Growing connectivity leads to large amounts of data (big data) that need to be collected, prepared, and evaluated. Cloud computing can take care of that.
  • Complex requirements are also possible: Various service models from cloud providers offer assistance without the need for major investments. As a result, cloud computing is a door opener for big data analyses.
  • Easily accessible IT environment: Companies of any size can obtain a perfectly tailored IT environment at a reasonable, calculable cost that’s also flexible.


  • Reliance on service providers: Changing providers results in expenditure for transferring the data and possibly in retraining employees to learn new IT know-how.
  • Loss of data for technical, organizational, or contractual reasons: Companies in particular should make sure that there’s a fallback concept so that important data can be recovered from the cloud in case of an emergency.
  • Network coverage: There many in part be no broadband Internet connections in rural regions, making it much more difficult to interact with the cloud. In the long term, innovative technologies like the mobile standard 5G can remedy the situation.

Cloud service models and applications

What are the challenges associated with cloud computing?

Almost everything is possible in the cloud. App stores and market places of cloud providers contain thousands of products. Even prototypes and simulators of quantum computers, the high-performance computers of the future, are available in the cloud. IBM, for example, offers scientists access to such a a computer via its own cloud computing environment. The experts can carry out experiments with the system and develop software for it, depending on what kind of cloud computing they use.


Different cloud computing types and products

  • Software as a Service (SaaS): Service models give an indication of the type of services users buy from a cloud, such as server capacities or cloud storage. That means it’s possible, for example, to purchase software applications like video conference software via cloud computing.
  • Infrastructure as a Service (IaaS): IT systems such as servers, storage systems and network components can be made available. The cloud systems must then be set up and managed independently. That allows more customization and is therefore often chosen for data protection reasons.
  • Platform as a Service (PaaS): The situation is different with cloud computing providers who offer a complete infrastructure.


Deployment models: Public vs. private vs. hybrid cloud

  • Public cloud: The deployment models define where the data of a cloud service comes from or where it is stored. If several users share the cloud data center of an external service provider, this is called a public cloud. If more servers or software licenses are needed, they can simply be booked in addition. The disadvantage is that the solution cannot be customized.
  • Private cloud: If a cloud is set up at the company’s own data center, so that only employees or partners of the company have access to these cloud services, this is called a private cloud.
  • Hybrid cloud: This solution combines both of the aforementioned models. With a hybrid cloud some of the data is stored in a private cloud and some of it in a public cloud.

Cloud security: How secure is it?

Security is important when sensitive data ends up in the cloud. ISO certificates and cloud certificates from organizations like the EuroCloud association and the Cloud EcoSystem show just how serious cloud service providers take security. These certificates are awarded only to service providers that prove that they comply with strict security standards. Since May 2018, these include the rules of the EU General Data Protection Regulation (EU GDPR).

A word of advice: If you want to book a cloud service, you should ask what security and quality certificates the cloud computing provider has and if it renews these regularly.

The issue of security concerns more than just cloud certificates. Read more on this in the Discovery Cloud Security: Work online safely.

According to a study by the LinkedIn Information Security Community, more than 60 percent of IT security experts fear that hackers or disloyal employees of cloud service providers steal data. As a result, cloud users could lose important business data. The discussion about the activities of the NSA has also made it clear that even government facilities can view and gather sensitive data from companies and private users without their knowledge. In most cases, cloud users can help themselves by encrypting data in the cloud – provided they take other precautions. For instance, they must make sure that the data never appears as plain text during data transfers.

It is dangerous when hackers get hold of users’ access details, as this allows them to steal or manipulate data. The problem is that in many cases these attacks remain unnoticed for some time. It is therefore important to train employees regularly about the use of IT security solutions that report unusual activities of a supposed user.

Providers of cloud services must fulfill strict security and compliance standards. Since May 2018, these include the rules of the EU General Data Protection Regulation (EU GDPR). If a cloud provider breaches these regulations, data could be lost or be viewed by third parties. In cases such as this, it is not only the provider that faces high penalties and loss of reputation. Users of the services are also liable. They cannot pass on the responsibility for data protection to the providers.

Weak passwords, no multi-factor authentication or negligent handling of passwords and certificates make things easy for hackers. This is why providers and users of cloud computing services should use security software that offers effective protection against unauthorized access to data and applications. It is also a good idea to check the provider’s security functions beforehand.

APIs (Application Programming Interfaces) create the connection between a company's IT systems and the cloud. This is why they must have no security gaps. Especially because cloud services are accessed via public Internet connections.

Attacks by the employees of service providers (insiders) are especially dangerous. This applies especially to users with extended access rights, such as administrators. According to a study by KPMG, insiders were responsible for data theft from German companies in 20 percent of the cases. It is therefore important to review the activities of these user groups regularly.

If hackers flood a cloud service with requests from many hijacked computers, this can block the service. The provider must take precautions, such as monitoring network traffic and using protection systems.

The IT and network systems in a cloud can also have security gaps and weak points. Consequently, users of cloud services should ask whether the provider carries out regular weak point scans and installs software patches as quickly as possible.

Why cloud computing is the way of the future

One thing is clear: These days, the issue is no longer whether cloud computing will be used, but most importantly how. After all, the core task of a mechanical engineering company or a retailer is not to maintain a data center. Such companies want to build reliable equipment or offer their customers appealing products. Also with regard to the increasing importance of big data analyses, it is practical to purchase at least part of the company’s IT environment “as a service”.


For IT experts in companies that means further specialization, as they need to know, for example, how to connect the cloud services to the IT systems at the company. Ideas for new digital products also have to be developed and companies made fit for the digital age. These tasks can be carried out easier and quicker if the cloud is part of the equation.

The most important questions and answers at a glance

Cloud computing means the provision of IT services via the Internet – in other words, the provision of servers, storage, computing capacity, databases, and software. Users decide exactly what services they need and can use these immediately. They pay only for what they use. As a result, they do not have to invest in hardware or software. This makes cloud computing a popular solution for companies – but also for private users who want to back up photos or music in a cloud.

Cloud computing is no longer a tool for large high-tech companies. Private users and small companies can also benefit. In particular, startups have completely new options as a result of highly flexible IT solutions and the much lower costs. Extended computing and storage capacities are also needed in industry: Because of the trend to network machines, systems, and means of transportation, an increasing volume of data has to be collected and evaluated. These days, in countries such as the US, public authorities are also cloud users.

Cloud computing offers many benefits: The extent of the services that are ordered can be adapted exactly to your needs, which means a high degree of flexibility. The costs are also easy to calculate, as users pay only for services that they use. In many data centers, data protection is even better than in the company’s own data center. For private users, their documents, photos, and videos are usually also more secure in a cloud, since cloud providers make regular backups. As opposed to a flash drive, data in the cloud cannot get lost just like that.

In spite of all the benefits, there are some concerns with cloud computing. Companies in particular need tailored IT solutions – which usually means higher costs. For many people, the security issue is an impediment: Because, in the past, when cyber criminals hacked the systems of cloud service providers, the effects were, in some instances, disastrous. A few security tips should definitely be observed. Does the chosen provider have the relevant certificates? In which country is the data stored? Data protection laws can differ considerably. It is also important to encrypt the data and to handle passwords and access rights with caution.

Cloud services differ with regard to their service models. You can choose between “infrastructure as a service” (IaaS), “platform as a service” (PaaS), and “software as a service” (SaaS). Various methods of provision are also available. With a private cloud, the services are provided via the company's own data center, while with a public cloud they come from an external provider. The hybrid cloud unites both options by connecting them via interfaces.

In the future, cloud computing will allow many companies to focus on their core activities by outsourcing at least some of their IT services. Experts will still have plenty to do, since the cloud services have to be connected with the company’s own systems, for example. But if people want to prepare their company to handle the enormous volumes of data in the digital age, they won’t get around cloud services. In other words, use of cloud computing will increase in the future.

Last update: October 2020