Definition
Cloud computing is the delivery of computing resources, such as servers, storage, databases and software, over the internet on a pay-as-you-go basis. Instead of buying hardware, installing it in a data centre and maintaining it, a company rents exactly what it needs from a provider like Amazon Web Services, Microsoft Azure or Google Cloud and scales up or down in minutes. The provider handles the physical machines, power, cooling and much of the security.
In a company, cloud computing is the foundation under almost every modern software product and most internal tools. It comes in layers: IaaS (Infrastructure as a Service) rents raw machines and networks, PaaS (Platform as a Service) rents a managed environment to run your code, and SaaS (Software as a Service) rents finished applications. A startup can launch a global product with no upfront hardware cost, and a large company can move workloads without a multi-year procurement cycle.
The misconception is that cloud computing is automatically cheaper. It is cheaper to start and cheaper to scale, but a poorly managed cloud bill grows silently, and a handful of companies with very stable, heavy workloads have moved back to their own hardware to save money. In 2026 the main cloud growth driver is AI: providers compete on GPU capacity and hosted models, and the cloud bill increasingly includes AI inference alongside servers and storage.
In practice
In the companies I run, a new product goes from idea to serving customers in 20+ countries without anyone buying a server. Capacity is added for a launch campaign and removed the week after, and the bill follows usage rather than forecasts.
Why it matters
Cloud computing turned infrastructure from a capital expense into an operating expense you can steer monthly. That flexibility is also its risk: nobody owns the bill unless you assign someone to, so make cloud cost a line item somebody reviews.
Frequently asked questions
- Is cloud computing cheaper than on-premise servers?
- For most companies, yes, because you avoid upfront hardware, staff to run it and paying for capacity you do not use. For very large, stable and predictable workloads, owning hardware can be cheaper over several years. The honest answer depends on utilisation and on how well the cloud spend is managed.
- Is the cloud secure?
- The major providers run more secure data centres than almost any company could build itself, and they hold certifications such as ISO 27001 and SOC 2. Most cloud breaches come from customer mistakes: weak access controls, misconfigured storage or leaked credentials. Security in the cloud is shared, and your half is the one that usually fails.