The computing and storage takes place on servers in a data center, instead of locally on the user device. This is why a user can log in to their Instagram account on a new phone after their old phone breaks and still find their old account in place, with all their photos, videos, and conversation history.

For businesses, switching to cloud computing removes some IT costs and overhead: for instance, they no longer need to update and maintain their own servers, as the cloud vendor they are using will do that. This especially makes an impact for small businesses that may not have been able to afford their own internal infrastructure but can outsource their infrastructure needs affordably via the cloud.