When it comes to data storage, processing and collaboration, many businesses choose the flexibility and convenience of cloud computing over traditional local hosting and on-premise software.

With cloud computing, you can access and store data and applications online instead of on a hard drive. If your company uses Google Docs for editing and document collaboration, Dropbox or Google Drive for file storage, Slack for cross-team communications, or online CRM software for managing sales, youre using cloud computing.

Working in the cloud offers small businesses many benefits, including enhanced collaboration, easy access and fast turnaround. However, cloud computing drawbacks include security concerns and fewer customization options. Well explore cloud computing, how it works, cloud services to consider, and the pros and cons of cloud computing for small businesses.

Cloud computing is the on-demand delivery of computing services, including applications, data storage and data processing, over the internet. Youll usually pay for cloud computing services on a pay-as-you-go basis, so you pay only for the applications and cloud services you use. This approach helps lower your businesss operating costs and allows for flexible scaling.

In todays ever-changing business climate, small business owners must be able to access data and applications from their computers, tablets or mobile phones, whether in the office, out in the field or on the road. Cloud computing provides this anywhere access via an internet connection.

Did you know?: Cloud computing gets its name from the practice of drawing the internet infrastructure as a cloud in network flowcharts and patent diagrams from the 1990s.

Chances are, youre using cloud computing right now, even if you dont realize it. Cloud computing makes it possible behind the scenes, whether you use an online service like Gmail or Outlook 365 to send an email, collaborate on a document, store files or stream a video. [Related article: Best New Gmail Features for Business]

Here are some of the most common cloud computing uses:

Did you know?: The best POS systems for retail stores, restaurants, and mobile businesses offer affordable cloud-based SaaS subscription plans with regular updates and customer support.

A web host houses your organizations website and makes it accessible on the internet. You can choose a traditional web host or a cloud hosting service. Heres more on traditional hosting vs. cloud hosting.

A traditional web host uses physical server space to handle its clients web hosting needs. Within the traditional hosting space, services are either dedicated or shared. Each option has its merits.

While traditional web hosting relies on physical server space, cloud-based hosting carves virtual server space for each user. These are some key aspects of cloud web hosting:

Editors note: Looking for the right cloud backup service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

Cloud-computing services range from data storage to functional programs, including accounting software, customer service tools and remote desktop hosting. These services can be categorized into three models: infrastructure, platform and software as a service.

FYI: Aside from Google Workspace, Google business tools include Google Business Profile, Google Ads, and Google Analytics.

Cloud services store data and host services in three primary ways: public, private and hybrid cloud. Cloud services may pose a security risk if you choose a provider whose storage model doesnt align with your businesss size and needs.

Key takeaway: The three main cloud-storage service options are public, private and hybrid clouds. Choose a service that aligns with your businesss size and needs.

Business cloud computing use is on the rise. According to Foundrys 2020 cloud computing research, 92% of companies use services connected to or run in the cloud. Additionally, Flexera forecasts that two-thirds of SMB workloads will be in the cloud in 2022. Considering that the pandemic made online work ubiquitous, the trend is likely to continue.

Cloud computing can help businesses save time and money by boosting productivity, improving collaboration and promoting innovation. Here are some of the top benefits of adopting cloud services for your small business:

Tip: If you or members of your IT team are interested in enhancing their cloud expertise, consider Googles Cloud Certifications options to boost knowledge and earning potential.

While there are many benefits to moving your business operations to the cloud, you should be aware of several potential downsides.

By definition, cloud computing services require an internet connection. If you have an unstable or low-speed connection, your team will have trouble accessing the cloud applications and data they need to perform their work. Additionally, repeated downtimes, lags and errors due to a spotty internet connection may reduce their productivity.

Ensuring your team has access to a high-quality, high-speed connection can easily address this cloud computing drawback.

Even though 52% of companies experience better security in the cloud than with onsite IT environments, a perceived lack of cloud security remains a concern for many small business owners.

The key to maximizing security is finding a reputable cloud service provider, understanding its contingency plans in the event of a security breach and taking your own steps to bolster security. To improve cybersecurity, ensure theres sufficient data encryption, implement additional authentication measures, introduce a data loss prevention (DLP) solution, and establish clear communication between management, your IT team and the cloud provider to minimize security incidents and formulate a clear response plan. [Follow these cybersecurity tips that take less than an hour to implement.]

Ask cloud computing vendors these 10 security questions before signing up for their services:

Compliance is an issue for any business that uses backup services or cloud storage. In fact, according to a survey by Statista, 44% of companies consider compliance to be their biggest cloud computing challenge.

Every time your company moves data from internal storage to a cloud, it must comply with industry laws and regulations. For example, healthcare organizations must comply with HIPAA rules, retail companies must comply with SOX and PCI DSS regulations, and companies dealing with the European market must comply with GDPR standards.

While many established cloud providers have aligned themselves with relevant accreditation programs, your company is ultimately responsible for ensuring that all data processes and workloads are compliant.

Tip: Conduct a regular compliance audit that includes information from all your cloud providers.

While cloud computing offers the benefit of not managing complex infrastructure like servers in-house, saving your company time, money and effort, this means less control over your companys software, systems and computing assets.

With less oversight and control, it becomes harder to assess security system efficiency, implement incident responses, or get a complete overview of data and user activity to identify abnormal patterns and potential breaches.

To mitigate this lack of control, assess every new cloud providers allowed visibility level, and determine what measures it takes to prevent data breaches. You can also use a monitoring tool or set up an API to help you get insights into your data.

Implementing any new technology requires training personnel and establishing an effective troubleshooting system during and after the launch. Initially, you may also encounter resistance among your employees, especially those unfamiliar with cloud technology.

However, once you establish the onboarding process, determine IT team members responsible for implementing and adopting cloud services, and outline the benefits of cloud operations, you can get your company on track in no time.

Key takeaway: Do your due diligence with the services you investigate to inquire about their security protocols and compliance standards, train your staff about using the cloud solution, and follow best practices to ensure your data is safe from unauthorized users.

While we addressed potential security issues as a cloud computing drawback above, its essential to understand precisely what can go wrong in a cloud computing setup.

According to Check Points 2022 Cloud Security Report, some of the most pressing cloud security challenges are incorrect cloud infrastructure setup, unauthorized access and insecure APIs.

If youre considering moving your operations to the cloud or implementing cloud services, consider these top cybersecurity risks.

Ease of access makes cloud computing attractive to many small businesses, but its also the source of potential security risks. In many organizations, employees have varying cloud service access levels. The more people and access levels involved, the easier it is to overlook an unauthorized access setting.

Additionally, the infrastructures cloud nature means companies must rely on their providers security controls. These controls arent always straightforward, opening more avenues for misconfiguration.

To mitigate this security risk and streamline access management, track all levels of access your team members have to various cloud services. You can even create a basic tracking document in Google Sheets if you keep it updated. Conducting regular cybersecurity audits that include security details and protocols from all cloud providers can also reduce the risk.

APIs allow better control and visibility into your cloud systems and applications. However, external APIs are often insecure and provide an entry point for potential cyberattacks that can compromise confidential data and manipulate services.

According to the Salts State of API Security Report for Q1 2022, API attack traffic increased nearly 700% from December 2020 to December 2021, showing that its a serious threat to small businesses.

Building in-house APIs can significantly reduce this security risk. However, not all businesses have the internal expertise or resources to do this. To mitigate the risks, implement authentication and authorization practices, encrypt traffic using TLS/SSL, validate input, log API activity, use API firewalls, and conduct a regular audit and penetration testing to identify and fix outdated APIs.

Two-thirds of the respondents in Bitglass 2020 Cloud Security Report named data loss and leakage as their biggest cloud computing security concern. Aside from malware attacks, cloud data can be lost if the cloud provider accidentally deletes it, if theres a physical catastrophe like a fire or earthquake that damages remote servers, or if an encryption key is lost.

To reduce the risk of data loss, ensure you back up all your data stored in the cloud. At the very minimum, you should follow the 3-2-1 rule of secure backups:

Also implement a cloud DLP solution that protects your data from unauthorized access and automatically disables access when suspicious activity is detected.

Tip: To mitigate the damage of a small business data breach, get cyber insurance that protects against losses from ransomware and other cyberthreats.

The cost of cloud computing varies widely, depending mainly on the cloud service you need. Heres a general idea of typical costs:

Cloud-based software pricing also depends on the industry. Other factors that affect pricing include the number of users, how you will launch and distribute the software across the company, and priority tech support options.

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How Cloud Computing Can Benefit Your Small Business