What Is Cloud Computing and What Service Types Exist for Business

Many vendors label almost any internet-based service as cloud, including rented servers whose capacity cannot be changed without help. That habit creates very different understandings around the budget table, and the gap usually surfaces only once an ERP migration to the cloud runs into trouble. This article applies an established standard to test what genuinely qualifies as cloud computing and how its service types are classified.

In short: Cloud computing is a model for delivering shared computing resources, covering servers, storage, networking, and applications, available on demand, scaled up or down quickly, and billed according to usage. The NIST SP 800-145 standard defines it through five essential characteristics, three service models, and four deployment models.

What makes a service genuinely cloud?

Not everything reached over the internet deserves the cloud label. The National Institute of Standards and Technology (NIST) sets out five essential characteristics that must all be met at once, and together they work as a quick test against any vendor pitch. The document positions itself as a comparison tool rather than a compliance certification.

That definition was published in SP 800-145 in September 2011.

1. On-demand self-service: the customer provisions computing capacity unilaterally and automatically, with no human interaction with the provider.
2. Broad network access: capabilities are available over the network through standard mechanisms, from mobile phones to workstations.
3. Resource pooling: resources are pooled to serve many customers on a multi-tenantbasis, reallocated dynamically as demand shifts.
4. Rapid elasticity: capacity is added and released quickly, sometimes automatically, and often appears unlimited to the customer.
5. Measured service: usage is tracked through meteringcapabilities, then monitored and reported transparently for both parties.

This test has practical consequences. A virtual server whose capacity can only be changed by raising a ticket fails on-demand self-service. A flat monthly bill with no usage report fails measured service. Because all five characteristics must hold, such a service does not match the NIST definition of cloud.

It is more accurately described as hosting.

Cloud Service Types and Deployment Models: Two Axes That Often Get Confused

Cloud is classified along two axes: the type of service being consumed, and for whom and where the infrastructure runs. Many articles blend the two into a single list. NIST separates them from the outset through three service models and four deployment models, because each answers a different question.

The first axis is the type of cloud service. Software as a Service (SaaS) delivers applications that are ready to use

Platform as a Service (PaaS) provides a platform for building and running applications. Infrastructure as a Service (IaaS) supplies the underlying infrastructure: virtual servers, storage, and networking. A full comparison of the three, including where management responsibility ends, deserves its own discussion.

The second axis, the deployment model, explains where and for whom the infrastructure runs. Here is the practical comparison:

The location row corrects a common misconception: private cloud does not automatically mean servers sitting in your own office, because NIST allows a private cloud to be located off-premise and operated by a third party.

NIST also lists a fourth model, community cloud, aimed at organizations that share concerns such as mission or compliance. In Indonesia, this model is rarely offered commercially. Personal data protection obligations (Law No. 27 of 2022) often push certain workloads towards private or hybrid cloud. Industry-specific case studies show the same pattern.

What Are the Business Benefits of Cloud Computing?

The main benefit of cloud computing is not simply cost savings, but the shift of spending from capital to operational budgets, capacity that tracks demand, and the ability to stand up new environments without waiting on a hardware procurement cycle. All of these come from rapid elasticity and measured service, not from where the servers sit.

IDC projects that global public cloud services spending will pass USD 1 trillion in 2026, growing at roughly 21% a year.

Cloud is not always cheaper. For stable, predictable workloads, particularly in companies that already run a data center with an established team, cloud costs can be higher. Savings materialize only when elasticity is actually used, because unused capacity still has to be paid for. The real question, then, is how much your workload fluctuates, not how large the discount is. Dependence on connectivity is a consequence of the model, not a flaw in it.

What Does This Mean for Core Systems Such as ERP?

These characteristics and deployment models become far more consequential when the system being moved is a core one: finance, inventory, production. Within the SAP ecosystem, cloud ERP arrives as SAP S/4HANA Cloud, and the deployment choice shapes how much room there is for customization, how compliance is handled, and how downtimeis planned.

RISE with SAP is SAP's offering for migrating core systems to cloud ERP, aimed at customers looking to modernize their on-premise landscape.

FAQ (Frequently Asked Questions)

What is the difference between cloud computing and ordinary hosting or a rented server?

Use the five essential characteristics in NIST SP 800-145 as your reference. A rented server whose capacity can only be changed through a ticket and that is billed flat each month fails two of them: on-demand self-service and measured service. Cloud requires self-provisioning without provider intervention, plus measured usage.

Is company data safe in the cloud?

Security depends on the deployment model chosen and how responsibility is divided, not on the cloud itself. Data and identity remain the company's responsibility. Control over data location has become a primary criterion; Gartner projects global sovereign cloud IaaS spending will reach USD 80 billion in 2026.

Conclusion

Cloud computing is defined not by where the servers sit but by a delivery model that meets five essential characteristics. The central question is not “cloud or not cloud” but which deployment model fits each workload. Recognized as Best RISE and Best Cloud Partner (2021), Soltius supports companies in moving core systems to the cloud through its Migration services.

To discuss how ready your core systems are for the cloud, including RISE with SAP options, visit soltius.co.id.