How Do Cloud Services Work: Cloud Computing & Storage Explained

Jarrod Koch

CEO and Partner of DivergeIT

July 8, 2025

How Do Cloud Services Work

If your business manages between 100 and 300 endpoints, understanding how cloud services work is essential to staying competitive and secure. Cloud computing has become a core part of IT infrastructure for growing businesses.

This blog will explain how cloud services function, the different types of deployment, and how they benefit your organization. If you have 20 or more employees on your team, this blog is for you. We’ll also touch on public cloud, private cloud, hybrid cloud, AWS, and what a cloud service provider like Microsoft Azure can offer. You’ll learn how hardware and software work together to deliver reliable cloud computing services.

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How do cloud services work in business environments

Cloud services allow businesses to access computing resources over the internet instead of relying on local servers or physical hardware. These services are hosted in data centers managed by third-party providers and delivered through a network connection.

When a user opens a cloud application or stores data in the cloud, their request is sent to remote servers that process the task and return the result. This setup reduces the need for on-site infrastructure and allows companies to scale quickly.

Bustling futuristic data center daylight

Understanding the type of cloud deployments available

There are several ways businesses can deploy cloud services depending on their needs. Each type offers different levels of control, flexibility, and cost.

Public cloud deployment

Public clouds are owned and operated by third-party providers like AWS or Microsoft Azure. They offer shared resources to multiple customers over the internet.

Private cloud deployment

A private cloud is dedicated to a single organization. It can be hosted on-site or by a third-party provider but offers more control and security.

Hybrid cloud deployment

Hybrid clouds combine public and private models, allowing businesses to move workloads between environments as needed.

Community cloud deployment

This model is shared by several organizations with similar requirements, such as government agencies or financial institutions.

Multi-cloud strategy

Using multiple public clouds from different providers helps reduce risk and improve performance.

On-premises to cloud migration

Many companies start by moving specific workloads from local servers to the cloud in phases.

Edge computing integration

Some businesses use edge computing alongside the cloud to process data closer to where it’s generated.

Key benefits of using cloud services for business growth

  • Lower upfront costs compared to traditional infrastructure
  • Scalable resources that grow with your business needs
  • Improved collaboration through shared access to files and applications
  • Enhanced data backup and disaster recovery options
  • Reduced need for in-house IT management of servers and storage systems
  • Faster deployment of new tools and software updates across teams
Cloud services enabling workspace collaboration

How does cloud computing work behind the scenes?

Cloud computing works by using virtualization technology to divide physical hardware into multiple virtual machines (VMs). These VMs run applications, store data, and handle tasks just like traditional computers—but they do it remotely.

Service providers manage massive data centers filled with servers that deliver compute power, memory, storage, and networking capabilities on demand. Users access these resources through web interfaces or APIs without needing to understand the backend systems.

Exploring the type of cloud computing models available today

Different service models define how much control a business has over its IT environment in the cloud.

Infrastructure as a service (IaaS)

IaaS gives users access to virtualized hardware like servers, storage, and networking components. You manage the OS and applications yourself.

Platform as a service (PaaS)

PaaS provides a platform for developers to build applications without managing the underlying infrastructure.

Software as a service (SaaS)

SaaS delivers fully functional software over the internet—like email or CRM tools—without installation or maintenance required from users.

Function as a service (FaaS)

Also known as serverless computing, FaaS runs code in response to events without provisioning servers manually.

Desktop as a service (DaaS)

DaaS offers virtual desktops hosted in the cloud that users can access from any device.

Storage as a service (STaaS)

STaaS provides scalable data storage solutions without investing in physical drives or backup systems.

Futuristic cloud services server room

Practical considerations when using cloud infrastructure at scale

Before moving fully into the cloud, businesses should evaluate their current systems and goals. Consider compliance requirements, workload types, cost models, and integration with existing tools.
Security is also critical—ensure your provider offers encryption, identity management, and regular audits. Performance monitoring tools can help track usage patterns so you can optimize costs over time.
Working with an experienced

Common uses of cloud technology across industries today

  • Hosting websites and web apps with high availability
  • Running virtual machines for development or testing
  • Storing large volumes of structured or unstructured data
  • Delivering SaaS platforms like email or accounting software
  • Supporting remote work with centralized file access
  • Backing up critical systems for disaster recovery planning
Futuristic IT control room displaying cloud service analytics

How DivergeIT can help with how do cloud services work

DivergeIT simplifies the complexities of cloud services by offering expert guidance tailored to your business needs. Whether you're migrating to the cloud, managing hybrid environments, or optimizing your current setup, our team ensures a seamless transition with minimal disruption. We help you understand how cloud services work—from storage and scalability to security and access—so you can make confident, informed decisions that support long-term growth and flexibility.

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Practical FAQ section

What is cloud computing used for in small businesses?

Cloud computing helps small businesses reduce IT costs while improving flexibility. Instead of buying expensive hardware, companies use remote servers managed by providers like AWS or Microsoft Azure.

These services include file storage, email hosting, virtual machines, and more—all accessible from anywhere with an internet connection. Cloud computing services are especially useful for teams working remotely or across multiple locations.

What type of cloud should my company choose?

The right type of cloud depends on your security needs, budget, and workload types. Public clouds are cost-effective but less customizable; private clouds offer more control but require more resources.

Hybrid clouds combine both models for flexibility. A trusted service provider can help assess your environment to determine whether public, private, hybrid—or even

What are cloud based services we should consider?

Cloud based services include everything from file sharing platforms like OneDrive to full-scale enterprise resource planning (ERP) systems hosted online.

Other common examples include customer relationship management (CRM) tools like Salesforce or accounting platforms like QuickBooks Online—all supported by reliable server infrastructure in secure data centers.

What are the benefits of using a managed cloud service?

Managed services reduce internal IT workload by outsourcing tasks like updates, backups, monitoring, and security patches to experts who specialize in maintaining uptime across multiple clients’ systems.

This allows your team to focus on core business functions while ensuring that your infrastructure remains secure and efficient—especially when using complex platforms such as Microsoft Azure or AWS environments.

What is a cloud service provider’s role?

A cloud service provider delivers access to computing resources such as storage space, processing power (compute), networking tools—and manages them behind the scenes so users don’t have to worry about maintenance or downtime issues.

Top providers include AWS (Amazon Web Services), Microsoft Azure, Google Cloud Platform—all offering scalable solutions tailored for various industries including healthcare, finance, retail among others located even in

How does using cloud computing improve scalability?

Using cloud computing allows businesses to scale up or down quickly based on real-time demand without investing in new hardware every time workloads increase temporarily due seasonal spikes etc.

This elasticity means you only pay for what you use while maintaining high performance levels thanks modern virtualization technologies running behind scenes inside global data centers operated by trusted vendors.

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