What Is 'The Cloud'? A Plain English Explanation for Business Owners

18 December 2025 7 min read

Confused by 'the cloud'? This guide explains what it actually means, why everyone's talking about it, and whether your business should care—all without the tech jargon.

Written by CTC Editorial Editorial Team

What Is The Cloud, Really?

Let's cut through the mystery: "the cloud" just means someone else's computer.

When you save a file "to the cloud," you're saving it to a computer in a big data centre somewhere, instead of on your own computer. When you use "cloud software," you're using a program that runs on someone else's computer and you access it through the internet.

That's it. No actual clouds involved. Just computers in warehouses, connected to the internet.

The term sounds magical, but it's actually very simple once you understand what it means.

Why Does Everyone Keep Talking About It?

The cloud became a big deal because of three things:

1. You don't need to buy expensive equipment

In the old days, if your business needed a server to store files or run software, you had to buy one. That cost thousands of pounds, needed a room to put it in, and someone to look after it.

With the cloud, you pay a monthly fee instead. Someone else owns the computers, keeps them running, and fixes them when they break.

2. You can access your stuff from anywhere

If your files are on a computer in your office, you can only get to them from your office. If they're in the cloud, you can get to them from anywhere with an internet connection—your home, a coffee shop, your phone on the train.

3. It grows with you

Need more storage? Click a button. Need less? Click another button. You don't have to predict the future and buy equipment that might be too big or too small.

Examples You Already Use

You're probably using the cloud already without realising it:

Email

If you use Gmail, Outlook.com, or Yahoo Mail, your emails are stored in the cloud. They're not on your computer—they're on Google's computers, Microsoft's computers, or Yahoo's computers.

Photos on your phone

When your iPhone backs up to iCloud or your Android backs up to Google Photos, those pictures go to the cloud. If you lose your phone, the photos are still safe somewhere else.

Netflix and Spotify

These services stream content from the cloud. The films and songs aren't stored on your device—they're sent over the internet from computers somewhere else.

Online banking

Your bank balance isn't stored on your phone. The banking app connects to your bank's computers (in the cloud) every time you check.

The Two Main Types of Cloud for Business

Cloud Storage

This is the simplest type: a place to save files that you can access from anywhere.

Examples:

Microsoft OneDrive (comes with Microsoft 365)
Google Drive (comes with Google Workspace)
Dropbox

What it does:

Stores your documents, spreadsheets, photos, and other files
Lets you share files with colleagues without emailing attachments
Automatically backs up your work
Lets you access files from any device

Cost: Usually £5-15 per person per month, often bundled with email

According to the Federation of Small Businesses, 67% of UK small businesses now use cloud storage. It's become the normal way to handle files.

Cloud Software (SaaS)

SaaS stands for "Software as a Service." Instead of buying software and installing it on your computer, you pay a monthly subscription and use it through your web browser.

Examples:

Xero or QuickBooks (accounting)
Slack or Microsoft Teams (communication)
Mailchimp (email marketing)
Salesforce or HubSpot (customer management)

What it means for you:

No need to install or update software—it happens automatically
Access from any device with a browser
Usually pay monthly instead of a big upfront cost
Your data is stored safely somewhere else

According to Gartner, 85% of businesses will be "cloud-first" by 2025, meaning they'll choose cloud software over installed software whenever possible.

Is The Cloud Safe?

This is the question everyone asks. The honest answer: usually safer than doing it yourself.

Big cloud companies like Microsoft, Google, and Amazon spend billions on security. They hire thousands of security experts. They have backup systems for their backup systems.

Most small businesses can't match that. A server in your office cupboard, looked after by whoever drew the short straw, is usually less secure than Microsoft's data centres.

According to the National Cyber Security Centre, cloud services from major providers typically offer better security than most on-premises alternatives for small businesses.

But there are things to think about:

You need a strong password and two-factor authentication on cloud accounts
You're trusting the provider with your data—read their security credentials
Internet outage = no access (though this is rare with good broadband)
Some industries have rules about where data can be stored—check what applies to you

Should Your Business Move to the Cloud?

For most small businesses, the answer is yes—and you probably already have without a formal decision. If you use Gmail for business, that's cloud. If you use online banking, that's cloud.

The question is usually about the remaining things: files stored on local computers, software installed on individual machines, data in spreadsheets on someone's desktop.

Moving to the cloud makes sense when:

You want to access work from multiple locations
You're worried about losing data if a computer dies
You're tired of managing IT equipment
You want to share files easily with your team
You're growing and don't want to keep buying hardware

It might not make sense when:

You have very slow or unreliable internet
Your work involves huge files that would be slow to upload/download
Regulations require you to keep data on your own premises
You've just invested heavily in local equipment that works fine

The Costs: What to Expect

Cloud services typically cost per user per month. Here are realistic prices for small business needs:

Basic setup (email + files):

Microsoft 365 Business Basic: £4.90/user/month
Google Workspace Starter: £5.20/user/month
These include email, cloud storage, and basic office tools

Standard business setup:

Microsoft 365 Business Standard: £9.40/user/month
Google Workspace Business Standard: £9.60/user/month
Includes desktop apps and more storage

Specialist cloud software:

Accounting (Xero, QuickBooks): £12-40/month
CRM (HubSpot, Pipedrive): Free-£50/user/month
Project management (Asana, Trello): Free-£10/user/month

For a five-person business using email, files, and accounting software, expect to spend roughly £50-100/month total.

Compare this to buying and maintaining your own server (£1,500+ upfront, plus electricity, IT support, and eventual replacement), and cloud usually wins on cost.

Common Cloud Myths

Myth: The cloud isn't secure

Reality: Major cloud providers are more secure than most small business IT setups. The NCSC recommends cloud services for small businesses.

Myth: You lose control of your data

Reality: Your data is still your data. You can download it, delete it, or move it to another service. Read the terms of service to understand your rights.

Myth: The cloud is unreliable

Reality: Major cloud services have better uptime than most office servers. Microsoft 365 guarantees 99.9% availability—that's less than 9 hours of downtime per year.

Myth: It's complicated to set up

Reality: Cloud services are designed to be easy. Creating a Google Workspace account takes about 10 minutes. No technical expertise required.

Myth: You need fast internet

Reality: Most cloud services work fine on standard UK broadband. Uploading large files is slower, but day-to-day work is smooth.

Getting Started: A Simple Approach

Step 1: Start with email (if you haven't already)

Microsoft 365 or Google Workspace gives you cloud email plus file storage. This is the foundation.

Step 2: Move your files

Upload your important documents to OneDrive or Google Drive. Create a shared folder structure for your team.

Step 3: Add specialist software as needed

Once comfortable with cloud basics, consider cloud versions of accounting, customer management, or other tools you use.

Step 4: Phase out local storage

Once everything's in the cloud and backed up, you don't need to keep copies on local computers. The cloud becomes your primary storage.

The Bottom Line

The cloud isn't a complicated technology trend. It's just a simpler way to access computers and software.

For most small businesses, moving to the cloud means:

Less hassle with IT equipment
Access to your work from anywhere
Automatic backups and updates
Predictable monthly costs instead of big upfront investments

You don't need to understand how it works technically. You just need to know that it's a reliable, affordable way to run your business—and that you're probably using it already.

The question isn't whether to use the cloud. It's how much more of your business could benefit from it.

Frequently Asked Questions

What happens if the cloud company goes out of business?

For major providers (Microsoft, Google, Amazon), this is extremely unlikely—they're among the world's largest companies. For smaller providers, always ensure you can export your data. Cloud services worth using will let you download everything you've stored. Don't use a service that locks you in completely.

Can I use the cloud without good internet?

Yes, to a point. Most cloud services let you work offline and sync when you're connected again. Microsoft 365 and Google Workspace both have offline modes. But if your internet is truly unreliable, some cloud benefits are lost. Test with your actual connection before committing.

Is my data in the UK or abroad?

It varies by provider and plan. Microsoft and Google offer UK data residency for business customers, meaning your data stays in UK data centres. If this matters for regulatory reasons, check before signing up—most providers can confirm where data is stored.

What if I forget my password?

Cloud services have password recovery options (usually via email or phone). This is actually more recoverable than forgetting a password on a local computer. Set up recovery options when you create your account. Enable two-factor authentication for extra security.

Do I still need to back up if I use the cloud?

The cloud itself is a form of backup—your data is stored securely off-site and protected against hardware failure. But for critical data, consider an additional backup to a different service. This protects against accidental deletion or account problems. The 3-2-1 backup rule still applies.

Can hackers access my cloud data?

They can try, but major cloud providers have extremely strong security. Most breaches happen because of weak passwords or phishing, not because someone hacked Microsoft or Google directly. Use strong passwords, enable two-factor authentication, and train your team to spot fake emails.