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Cloud Computing Definition: What is the cloud and how does it work?

Cloud technology is on a steady rise: in a survey conducted by the Institute for Data Communication (IDC), 60% of the respondents consider cloud computing as the most important technology when it comes to digitisation in companies. This means that it is ahead of Big Data and mobility. But what exactly is the cloud? How does storage of files and access management work in the large online cloud? Which problems can result and how are they resolved? This article will address these questions and explain the most important terms in cloud computing.


Definition: What is the cloud and how does it work?

The cloud is now an integral part of most companies. But how exactly does it work? Credits: fotolia | © Jakub Jirsák



What is cloud computing?

The cloud or cloud computing refers to Internet-based provision of storage, computing power, or application software as a service. Basically, these infrastructures are used via programs installed on the accessing devices (clients) or web browsers. The underlying architecture is maintained by the service provider.

Since the 1990s, the term “cloud” has always been used in IT diagrams to refer to parts of an information architecture. These are usually areas in which computer systems, such as desktop computers, servers, and smartphones, exchange data in an unspecified manner. The analogy to the cloud is derived from the fact that the actual computer where the data are stored and the underlying hardware is sort of “unclear”. In addition, the user often does not know which software is used to save and avail the data. The data are “simply there” and, ideally, always accessible for authorised users.

The principle of online storage

From the mid-1990s and still during the 2000s, many companies were busy renting and managing their own storage space, which was then connected to the Internet through expensive, additionally leased lines. However, this was characterised by a crucial problem: planned and unplanned maintenance of the components of this system usually resulted in a complete failure of the company’s website or workstation.

The cloud was first born in 2006 when the online bookstore, Amazon, began renting computing and storage capacities to companies under its Amazon Web Services. It was a bookable information store on the Internet. It is currently estimated to have more than 1 exabyte (1 million terabytes) of data available for retrieval on different clouds.


Data centre with huge server cabinets and hardware

Huge data centres for storage of cloud data and data distribution on different devices. Their exact location is often unknown. Credits: fotolia | © Sashkin


The growing number of cloud providers in recent years has made it possible for companies to increasingly outsource issues such as fail safety and data connection to third-party providers. The relevant data are, just like before, still stored on a server architecture. However, these data are generally redundant (i.e. saved numerously) in several locations. The architecture can also be expanded without any limitations and is not that susceptible to failures. Devices such as PCs, laptops, smartphones, and tablets only require an Internet connection and appropriate access information to access the online storage from anywhere in the world.

With its cloud solution, Hamburg-based cloudplan has developed a peer-to-peer solution that uses the customer’s infrastructure and incorporates all devices in the data backup and is where the cloudplan software is installed. This way, the data are not just saved in multiple locations but also secured in different ways and are thus often faster to retrieve. If a specific file is saved on the cloudplan system on a device that is also connected to the same network (in companies, this is usually the company’s intranet with a bandwidth of up to 10 Gb), it is loaded directly from this client and need not be downloaded from the Internet.


  • The term cloud has been around since the 1990s
  • The first public cloud was from in 2006
  • Companies can save resources by outsourcing and managing storage space in clouds
  • Peer-to-peer clouds, such as cloudplan, enable fast access and redundant storage


Multiple clients accessing the same cloud application

Several clients accessing the same datastore simultaneously in a simple cloud application. Credits: fotolia | © YB


When is the cloud worth it?

According to a study conducted in 2016 by KPMG in cooperation with the research department of BitKom Research, 74% of the interviewed German companies confirmed that the use of a public cloud has resulted in better availability and performance of their IT services. None of the respondents reported a deterioration. Nevertheless, only 26% of German companies have such a solution.

Basically, the cloud is said to be worth it if the company’s data has to be saved on more than one computer. This is particularly true in cases where mobile devices, such as smartphones and tablets, are also used in the everyday work in addition to computers and laptops.

In times of modern and distributed work environments, the data are often not just needed at a central location in a company. This is mostly the case when…

  • … a company has several branches with a common database (decentralised data storage).
  • … the company is growing quickly and must expand and/or relocate its capacities (need for scaling).
  • … certain employees are expected to have access to the data while on the move (ubiquity).
  • … home office should also be accommodated, especially in the ever-increasing competition for talented specialists (talent wars).

The use of a private cloud does not just offer many advantages over conventional server-based data storage within the company. It also makes it possible to save costs and time through the immediate availability. For instance, this enables a company to scale its operations flexibly depending on the computing and storage capacities needed at that particular time. The data are simply in the cloud and access is secure, i.e. can only be accessed by authorised users. According to a study by the US market research firm, IDC, investment in a secure cloud solution usually pays off after just over one year thanks to the high savings potential.




  • Cloud solutions are perceived as very efficient and economical in the cases where they are used
  • However, they are still not all that popular, especially in Germany
  • The cloud can be useful even if a company only has 2 connected computers
  • Cloud computing enables a company to remain flexible and competitive
  • However, many private cloud solutions are complex to set up and require substantial maintenance


Figure showing participating components in a private cloud

In most private cloud systems, the data are distributed to the clients over multiple intermediate stations and protected against server failures. Credits: cloudplan


Dataprotection and security

What happens with corporate data on its way to the cloud? Where exactly is the physical data storage? And to what extent does the company retain control over these potentially sensitive data?

Basically, the cloud allows for the same rights management and encryption mechanisms as traditional server architecture. Not only is it possible to encrypt the entire traffic to and from the cloud, but the entire data can also be saved in such a way that renders it completely worthless to possible hackers and third parties. However, it is assumed that in some countries with lower standards of data security, the systems might be susceptible to tapping – not to mention the long access times.

To be on the safe side, your cloud should ideally be located in Germany and be operated as stipulated by the revised Data Protection Act from 2018 according to the latest EU standard. You only need the right service provider for your cloud infrastructure to avoid any risks in this regard. Since cloudplan only runs and backs up the data on the customer’s infrastructure, you determine the server location.


  • Uncertainties regarding data protection make many companies reluctant to migrate data to the cloud
  • Data transmission should always be encrypted
  • More recent European data protection guidelines stipulate that cloud providers should address data privacy based on the location of the user
  • If you select the right provider of cloud computing services, you will not have to worry about security risks


What should be saved on the cloud, and what not?

According to IDC, over 60% of companies around the world already use cloud services and approximately 26% deal extensively with the topic.In most cases, these are the so-called public clouds such as Microsoft OneDrive, Google Drive, and Dropbox. These services are accessible to anyone and allow for a whole range of access options. However, it is not always clear who has which type of access to the data and, for crucial corporate information, responsible administrators should not allow third parties access to a public cloud unheedingly.

When companies provide their employees with typical cloud computing services for more efficiency but opt to use their own infrastructure, they have a so-called private cloud. The advantage in this case is that the data remain on the company’s computers. However, this has the disadvantage of the somewhat complex infrastructure and possible high maintenance costs. Such a solution also requires a stable and fast Internet connection. As in the case of cloudplan, a third-party provider purchases a private cloud and then develops it continuously. This makes it possible to combine the advantages of a maintenance-free operation with a secure, company-owned solution.

A hybrid cloud combines both approaches: Some non-sensitive data and volatile information are stored in a public cloud whereas more confidential information are saved on a private cloud. This is more of a compromise between both approaches. In addition, cloudplan offers the possibility to connect independent locations with a cloud thus allowing them to work on the same database around the clock. This only requires the Private Cloud Node add-on, with which the data are encrypted to additionally guarantee decentralised maximum security (e.g. in the case of different time zones of the locations).

It is up to you to decide which data you transfer to the cloud. If in doubt, we will be glad to advise you accordingly.

In short

  • Publicly available so-called public clouds have a reputation of not dealing with customer data cautiously
  • A private cloud ensures that critical files remain in the company while at the same time ensuring that they can always be accessed from anywhere
  • A third-party solution saves the company significant maintenance costs

1(Source: Ponemon Institute State of Data Centric Security survey, 2015)


Data exchange in case of failure of individual components

The opportunities presented by a cloud and its advantages are obvious. The ability to access the data anytime and anywhere enables simultaneous access by users working from home or different locations. But what happens if the Internet connection fails at a certain point?

When you create a document on your computer and save it on the cloud, other authorised employees can access it from their computer. However, if there is a problem with the Internet connection, data exchange with the cloud is no longer possible. This is particularly problematic in rural areas or in the case of failures on the side of the service provider as well as time-critical and safety-critical procedures.

As a provider of a fail-safe so-called peer-to-peer solution, cloudplan does not necessarily connect to any other cloud participants on the Internet (e.g. clients or server systems in other locations). It first checks whether the required data are available on a device that can be accessed faster. This can be a colleague’s computer that is connected to the same Wi-Fi or LAN network. If in doubt, this not only saves you mobile data volume and transmission bandwidth, but you also benefit from the much faster data transmission speeds.


Symbolic distribution of data in P2P cloud computing

The smart distribution of data between the participants and the cloud ensures fail-safety and fast availability of the required data.  Credits: fotolia | © Julien Eichinger



  • Connection problems in conventional cloud solutions can lead to loss of working hours and data losses
  • The transmission of data via the Internet is always slower than in the local network
  • With cloudplan, this is automatically and efficiently taken into account since files that exist in the local network are not downloaded from the Internet


Which cloud for which requirement?

The type of cloud that best suits your requirements depends on the measure of distributed infrastructure and redundancy that you need. In the case of so-called IaaS (infrastructure as a service), the cloud provider only provides the customer with an archiving and backup system as well as servers. Thus, the offer only includes the infrastructure and maybe software components for administration of the system. On the other hand, PaaS (platform as a service) offers include a combination of hardware and software with which an environment for development and use of proprietary applications are possible.

If you are sceptical or unsure of the possibilities, simply try out our free offer for business customers. This gives you:

  • 2 x Basic Free unlimited workplace licenses
  • 4 x Business Pro 14-day trial workplace licenses
  • 1 x Enterprise 14-day trial server license

This enables you to learn about the benefits of storing data in your own cloud infrastructure and provision of multiple devices. You will therefore be able to assess your own needs and future work with the cloud better.



Cloud solutions are useful whenever you have several employees accessing and modifying the same database. They avail existing data to authorised persons and allow access at any time and from anywhere. However, you should consider a few points when choosing a suitable solution:

  • The cloud servers should best be located in your company, or in Germany at least
  • The data must be encrypted when saving and transmitting to external servers
  • Data access must be guaranteed in case the Internet connection in your company fails
  • Only data that are not available locally should be transmitted online
  • The solution should be very powerful because time is money and not everyone is willing to wait long for a much-needed file

Not only is cloudplan’s solution highly redundant and very secure, but also avails the required files extremely fast through multiple storage in the local network.



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