Cloud Services: Types, Benefits, and How to Choose a Provider

Cloud services deliver computing power, storage, and software over the internet, on demand, for a usage-based fee instead of buying and running your own servers. They come as IaaS, PaaS, and SaaS, in public, private, or hybrid models. Businesses adopt them for scalability, lower upfront cost, and faster delivery, and many use a managed provider to run them securely.

Reviewed by the Best IT MSP research team · Updated 2026-06-18

What are cloud services?

Cloud services deliver IT resources, compute power, storage, databases, and software, over the internet, on demand, from a third-party provider. Instead of buying servers and running them yourself, you rent what you need and pay for what you use. That shift has become the default for modern business: worldwide public cloud spending is forecast to reach $723.4 billion in 2025[1], up sharply year over year.

The appeal is that you trade a large upfront capital cost and a data closet for a flexible, scalable service someone else keeps running. Most small and midsize firms use a managed provider to set up, secure, and optimize their cloud, rather than doing it alone.

Best IT MSP does not sell cloud services. We are an independent directory that vets and merit-ranks providers. This guide explains what to buy, then helps you shortlist verified firms.

Cloud vs on-premises: what is the difference?

On-premises means you own and run the hardware in your building, with the upfront cost, maintenance, and refresh cycle that implies. Cloud means a provider owns the infrastructure and you consume it as a service. Cloud scales up or down on demand, shifts cost from capital to operating expense, and removes most hardware maintenance. On-premises gives maximum control and can suit strict data-residency rules. Many businesses land on a hybrid mix of both.

The types of cloud services (IaaS, PaaS, SaaS, and more)

  • Infrastructure as a Service (IaaS). Rent raw compute, storage, and networking (for example, virtual servers). You manage the software on top.
  • Platform as a Service (PaaS). A ready environment to build and run applications without managing the underlying servers.
  • Software as a Service (SaaS). Fully managed applications you just log into, like Microsoft 365 or your CRM.
  • Functions as a Service (FaaS) / serverless. Run code on demand without provisioning servers.
  • Anything as a Service (XaaS). The broad category for the growing range of cloud-delivered IT.

Cloud deployment models: public, private, hybrid

  • Public cloud. Shared infrastructure from providers like AWS, Microsoft Azure, and Google Cloud. Most scalable and cost-efficient.
  • Private cloud. Dedicated to one organization, common in regulated industries that need tighter control.
  • Hybrid cloud. A mix of public, private, and on-premises, so you place each workload where it fits best.
  • Multicloud. Using more than one public provider to avoid lock-in and pick best-of-breed services.

Benefits of cloud services

  • Scalability. Add or remove capacity in minutes to match demand.
  • Lower upfront cost. Pay-as-you-go replaces big hardware purchases.
  • Faster time to market. Spin up resources on demand instead of waiting weeks for hardware.
  • Better collaboration and remote access. Work from anywhere, on any device.
  • Advanced security and resilience. Leading providers invest heavily in security and backup, though configuration is still your responsibility.
  • Built-in disaster recovery. Cloud backup and replication protect against data loss.

Risks and limitations to plan for

Cloud is not automatic. Watch for runaway costs from over-provisioning (cloud sprawl), vendor lock-in, dependence on internet connectivity, and shared-responsibility security, where the provider secures the platform but you must secure your data and access. A good provider manages cost, configures security correctly, and keeps you portable. Cloud security overlaps heavily with your broader cybersecurity services.

Managed cloud and why most SMBs use a provider

Running cloud well takes skills that are scarce and expensive, with a global shortfall of about 4.8 million cybersecurity and IT professionals[3]. A managed cloud provider handles setup, migration, security, cost control, and day-to-day management for a predictable fee, usually as part of a broader managed IT services agreement. If you are moving from on-premises, see our cloud migration guide.

How to choose a cloud provider

  • Have they assessed your existing systems and workloads before recommending a platform?
  • Do they manage cloud cost actively, not just set it up and walk away?
  • Is security configured to the shared-responsibility model, with backup included? Weak configuration is costly: the average data breach reached $4.88 million in 2024[2].
  • Will they keep you portable rather than locked in?
  • Can they show verified reviews from businesses your size?

Shortlist three, ask each the same questions, and compare. To start from a vetted, merit-ranked list, browse providers by city in the Best IT MSP directory.

Frequently asked questions

What are the main types of cloud services?
The three core models are Infrastructure as a Service (IaaS), where you rent compute and storage; Platform as a Service (PaaS), a ready environment to build apps; and Software as a Service (SaaS), fully managed applications you log into. Newer categories include Functions as a Service (serverless) and the broad Anything as a Service (XaaS).
What is the difference between public, private, and hybrid cloud?
Public cloud uses shared infrastructure from providers like AWS, Azure, and Google Cloud and is the most scalable and cost-efficient. Private cloud is dedicated to one organization, common where control or compliance demands it. Hybrid cloud blends public, private, and on-premises so each workload runs where it fits best.
Is the cloud secure for business data?
Yes, leading providers invest heavily in security, but cloud uses a shared-responsibility model: the provider secures the platform while you must secure your data, identities, and configuration. Most breaches come from misconfiguration or weak access controls, not the platform itself, which is why managed configuration and MFA matter.
How is cloud pricing structured?
Most cloud services use pay-as-you-go or subscription pricing, so you pay for the compute, storage, and software you actually consume. This removes large upfront hardware costs but can grow unpredictably without active cost management, which is why providers offer cloud cost optimization.
What is managed cloud?
Managed cloud is when a provider sets up, secures, optimizes, and runs your cloud environment for a predictable fee, instead of you doing it in-house. It covers migration, security configuration, cost control, monitoring, and support, and is often bundled into a managed IT services agreement.
What is the difference between cloud services and on-premises IT?
On-premises means you own and run the hardware in your building, carrying the upfront cost and maintenance. Cloud means a provider owns the infrastructure and you consume it as a service, scaling on demand and shifting cost from capital to operating expense. Many businesses use a hybrid of both.

Sources

  1. Gartner, Worldwide Public Cloud End-User Spending Forecast (Nov 2024). https://www.gartner.com/en/newsroom/press-releases/2024-11-19-gartner-forecasts-worldwide-public-cloud-end-user-spending-to-total-723-billion-dollars-in-2025
  2. IBM, Cost of a Data Breach Report 2024. https://www.ibm.com/reports/data-breach
  3. ISC2, 2024 Cybersecurity Workforce Study. https://www.isc2.org/research

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