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Cloud Technology: What Is Cloud Computing and How Does It Work?

Feb 08, 2021

4 min read

Cloud technology might at first seem like some type of magic on the same trajectory as The Force from Star Wars. In actuality, the true capacity of cloud technology isn’t far from magic.

Considering that the cloud computing industry was valued at $371.4 billion in 2020 and is expected to more than double to a project amount of $832.1 billion by 2025, whatever this industry is, it's certainly worth the investment. 

But that brings about the question: what exactly is cloud computing, and how does it work? If you want to find out, keep reading. 

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What Is Cloud Technology?

Cloud computing encompasses technologies that allow individuals or businesses access to certain data or services without the need for physical infrastructure. 

There are a few popular cloud technology categories such as infrastructure as a service (IaaS); communication as a service (CaaS); and software as a service (SaaS).



Let's break down each one of the categories.


IaaS is one of the root forms of cloud computing. This is because IaaS provides network infrastructure like servers and storage. Businesses like yours can avoid investing in on-site resources and outsource this need to an IaaS provider. 

Amazon Web Services (AWS) is likely the most pervasive example of IaaS. While it’s likely more people are familiar with the online shopping website, AWS is a cloud platform hosting data centers globally that powers much of the internet. 

Jeff Bezos compares AWS to a utility company. In the early 1900s, a factory needing electricity would need to build its own power plant. Of course, this was until electric companies made it possible for others to buy electricity as a public utility. 

Similarly, AWS serves as a storage space for more than a third of the cloud market. For small and medium-sized businesses (SMBs) especially, this can be a practical way of reducing startup costs. 


CaaS is something most people are familiar with, even if the term ‘CaaS’ isn’t the first thing to come to mind.

Communication mediums like instant messaging, Voice over Internet Protocol or VoIP technology, video conferencing, and more all fit neatly under the category of CaaS.  

You probably don’t need any help to think of a bunch of CaaS examples in action. These examples may include Skype, Facebook Messenger, Discord, Slack, etc. 

Whatever hardware and software are responsible for delivering these services is largely behind the scenes while you reap the benefits. 


With SaaS, businesses can access software on a subscription basis.

SaaS providers carry the burden of maintaining and storing servers, databases, and the code that makes up the application. All you need is an internet connection. Some salient examples of SaaS might be Microsoft 365 or Dropbox. 

Microsoft 365 lends you all the products of the Microsoft Office Suite that are often installed on one’s computer. Except with Microsoft 365, it can be utilized from your web browser, no installation required.

Dropbox is a storage service where you can save documents, pictures, and videos online. The advantage gained is that if you lose media on your local device, you will always have a backup online so long as you have an internet connection. 

How Does Cloud Technology Work?

Perhaps the simplest way to understand how cloud computing works is to envision computer systems as being composed of two categories: front-end and back-end. These two ends are connected via a network, largely the internet. 

The front-end involves anything that is user-facing, what clients see directly. For example, what you see on this article and/or website is all thanks to front-end web development

On the back-end, however, are all the processes and data that keep this page running smoothly. Back-end development oversees the servers and databases and whatever else helps maintain the stability of this web page. 

When cloud computing enters the picture, it takes a steadfast position as the overlay for anything that occurs on the back-end. In other words, whatever happens on the back-end, now takes place in the cloud. 

6 Advantages of Cloud Technology

The simplicity and accessibility of cloud technology encourage its use in both the public and private sectors. Let’s look at five key ways in which cloud technology is changing the economy.


1. Business Transformation

Cloud technology helps businesses to save on infrastructure costs by offering solutions that are easy to install, update, and maintain. Compared to hardware options that often come at a higher price and with less room for adjustment, cloud technology is a great alternative. 

Cloud computing also transforms business by creating flexible workplaces and improving productivity. 

Largely because of cloud technology, remote work is becoming a popular choice for many companies who want to cut down on office maintenance costs. The cloud allows employees to have a fully functioning office at their home. 

Not to mention, cloud technology enables access to foreign markets, meaning unrealized growth opportunities. Businesses no longer need to be location-dependent and you can find talent across the globe. 

2. AI & IoT Capabilities

Data is the foundation of deep learning and machine learning, the crux of all artificial intelligence (AI) technology.  The cloud enables data gathering and analysis. 

The Internet of Things (IoT) which connects physical devices to the internet, works in a similar way. Using data from the cloud, IoT paves the way for fully comprehensive smart devices. 

3. Improved Customer Experience

Cloud technology can drive 24/7 customer support. The interconnectedness of cloud computing leads to the increased accessibility of information and user support globally. 

Companies big and small benefit from providing their customers with timely support. Support is not limited to physical centers but can range from virtual chatbots to an online archive of helpful resources. 

4. Decreased Security Challenges

With cloud service providers getting wind of blockchain technology, you can look forward to a more secure future. 

Cloud technology uses encryption to store and transfer information. Encryption protects data from potential cyber threats, making the cloud safer than locally stored data. 

5. Scalability 

Cloud technology is able to handle the ever-growing amount of data that must be stored to meet users' demands without much change in pricing and availability. 

The capacity of the cloud is almost unlimited. Thus, scaling up or down are equally viable options with cloud technology. 

6. Globalization

Cloud technology can bolster business growth in developing countries given its global reach. 

Competitive players in the international tech arena extend reduced business costs while eliminating entry barriers and providing a technological advantage.

How Cloud Technology Brings New Opportunities To Emerging Economies

Emerging markets are characterized by many socioeconomic factors such as rapid economic growth measured by the national gross domestic product (GDP) or susceptibility to commodity swings. Brazil, China, Russia, South Africa, and Mexico are all emerging economies. 

These economies tend to have traditional economies that rely on trade and agriculture. They seek to disrupt this dependency by investing in more stable and secure industries like technology. This is why many of these countries are renowned for their outsourcing talent

Technological development also attracts investors who are curious to see fast economic growth and a return on investment. Many governments favor this tendency and encourage tech companies to attract more international investment by providing them with incentives like lower tax rates. 



Cloud technology – not unlike clouds themselves – has cast a growing shadow on the everyday lives of common people. But there is nothing to be feared from this emerging technology. It has the faculty to change every industry for the better. 

Outsourcing is an easy way to get started in the cloud industry if you don’t already have the team to implement the technology.

At Trio, we not only deliver top-tier content and insights in software development but also offer the finest Latin American developers for outsourcing. Explore our talented Argentinean developers, Chilean developers, and Brazilian developers to elevate your projects today.

Learn more about IT outsourcing

Frequently Asked Questions

What is cloud technology?

Cloud computing encompasses technologies that allow individuals or businesses access to certain data or services without the need for physical infrastructure.


What does IaaS, CaaS, and SaaS stand for?

In respective order, IaaS, CaaS, and SaaS stand for information as a service, communication as a service, and software as a service.

How does cloud technology work?

Cloud technology takes a steadfast position as the overlay for anything that occurs on the back-end. In other words, whatever happens on the back-end, now takes place in the cloud.


What are the advantages of cloud computing?

The advantages of using the cloud include improved customer experience, AI and IoT capabilities, business transformation, decreased security challenges, scalability, and globalization.

Author avatar

Daniel Alcanja

Daniel is a software engineer and co-founder of Trio, a successful startup empowering remote senior software engineers and partnering with companies to solve everyday problems through technology. With over two decades of experience in the industry, Daniel is a dynamic and strategic leader committed to driving growth and positive change.

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