What Are Cloud-Based Applications? A Simple Guide for Business Leaders

According to Grand View Research, the global cloud application market was valued at over $8.74 billion in 2024 and is expected to grow at a CAGR of 23.8% by 2030. This growth is primarily driven by businesses' need for flexibility, scalability, and cost-efficiency. Indeed, cloud solutions are excellent in integrating with third-party services, they are easy to deploy, and their architecture allows them to quickly adapt to market changes.

Below, we will explain how cloud-based applications differ from web and native ones, reveal their business potential and implementation challenges, and share insights on when cloud app development will be the only viable option.

What Is a Cloud-Based Application?

So, what are cloud applications? In a nutshell, it is software that is deployed in a cloud infrastructure on remote servers. To access its functionality, the user only needs to open it in a web browser or a corresponding mobile application. In this case, all the data that the cloud-based app operates with is stored and processed remotely.

Unlike desktop and on-premise software, cloud solutions do not store data locally, on the user's device or the company's servers, respectively. Also, for their operation, there is no need to access the corporate network (as in the case of on-premise software) or reserve a large amount of user device memory (as in the case of desktop software). Finally, cloud applications are updated automatically, without requiring manual reinstallation or participation of the company's IT department.

The most popular cloud-based application examples are Google Drive, Zoom, and Salesforce. They do not require manual installation (although such an option still exists for mobile users), are constantly updated, and, in general, are accessible from any device connected to the Internet (and sometimes partially in offline mode).

How Do Cloud Apps Work?

Cloud-hosted software, as you may have already understood, has a unique approach to data storing, processing, and exchanging, which, in turn, determines the specifics of its implementation.

Remote data storage

In conventional desktop applications, data is located on local disks and, therefore, depends on a specific device. At the same time, in cloud solutions, data is located on remote servers in the data centers of cloud providers, which ensures high fault tolerance, instant data synchronization, and strong protection. For example, based on our experience, in the project for the logistics sector, we used cloud databases (in particular, for working with PostgreSQL, we chose AWS and Amazon RDS, respectively), which allowed the client's company to work with large volumes of orders and related data in real time.

Access via web browsers or mobile applications

In the case of cloud software, users do not have to install it manually, which is extremely convenient for distributed teams, employees working in the field, as well as partners and clients. By the way, this aspect was perfectly demonstrated in the same case – thanks to the cloud implementation, we provided a user-friendly user experience for drivers, both within the client’s company and outside of it (as one of the stages of development of this software, we presented it in the SaaS format so that the client could receive income from its sale to other businesses in the logistics niche).

Regular updates via the cloud

Developers can make changes to cloud applications without causing downtime – the same applies to eliminating vulnerabilities and expanding new functionality. At the same time, the user does not need to take any action to access the latest version of such software on their device, because updates occur on the server. Ultimately, this ensures a fast response to market trends and helps reduce costs due to the lack of need to support outdated versions.

Business Benefits of Cloud Applications

Based on the insights shared above, we can highlight the following benefits of cloud applications.

Scalability and flexibility

Cloud solutions can boast of top scalability and uptime – if the number of users grows, the computing power automatically increases and vice versa, so you do not overpay for unused space on the servers, nor are you forced to urgently implement expensive upgrades to on-premise servers.

Cost efficiency: CAPEX vs. OPEX

Creating and maintaining an in-house IT infrastructure requires capital investments (CAPEX); moreover, even if you already have it, you may need a major upgrade to work with larger volumes of data. At the same time, cloud applications work according to the OPEX model, which means that you only pay for the resources that you actually use. Thus, a business that chooses cloud development will be able to enter the market faster and with less investment.

Accessibility and predisposition for remote work

Cloud software is a perfect choice for hybrid and distributed teams, as their members can access its data and tools from anywhere where there is an Internet connection. Moreover, modern tech stacks for cloud development enable offline access to a number of an app’s functions, which will automatically pull updates to the server when the Internet connection is restored.

Quick app deployment and implementation of updates

Cloud applications can be deployed in stages, starting with an MVP, without compromising their architecture. This allows businesses to quickly test hypotheses on real users and gradually increase functionality as it is adopted by the target audience. Moreover, when introducing CI/CD practices in the development process, your technical team will be able to present new features every week or even more often.

Popular Business Use Cases for Cloud Apps

Now, it's time to consider the most typical use cases for cloud solutions.

Internal productivity tools

Cloud applications can help with document processing, maintaining business correspondence, in-team communications, task planning, and much more. As for the most famous solutions you can get inspiration from, these are Google Workspace and Microsoft 365.

CRM and customer support platforms

CRM systems like HubSpot or Salesforce also work in the cloud, which allows them to combine all points of contact with the client in a single space with minimal resources. What is noteworthy is that mobile-friendly cloud apps in such formats often transform into SaaS, due to which their owners manage to monetize the solutions once developed to solve internal business problems only.

Backends for e-commerce

Management of goods, orders, logistics, and users is easy to implement through cloud APIs and admin panels. For example, we have implemented backend as a service (BaaS) solutions for online stores based on AWS, which allowed our clients to smoothly scale according to the growing volume of orders without sacrificing performance.

Mobile applications for logistics and field services

Couriers, engineers working in the field, sales representatives, and other on-site specialists need stable access to data and digital services anywhere. Cloud solutions, in turn, can provide this, especially when implemented with the participation of alternative technologies such as GPS.

Cloud App vs Web App vs Native App

At first glance, all three types of applications – cloud, web, and native – can perform similar functions. However, to understand their differences, we decided to present you with a small cloud app vs web app vs native app comparison table.

Challenges to Consider with Cloud-Based Apps

In this section, we would like to briefly consider the challenges that cloud app development teams often face.

Data security and compliance

Cloud applications often deal with sensitive data that is vulnerable without proper protection. That is why they need to ensure compliance with GDPR, HIPAA, ISO, and other generally accepted standards. In our experience, we use end-to-end encryption (both in transit and at rest), work only with trusted cloud providers, and also build in access control and audit user activity.

Vendor lock-in

Being tied to a single cloud provider can lead to scaling limitations or increased migration costs in the future. To avoid this, we design cloud applications with a multi-cloud architecture in mind, using containerization and orchestration. We also create open-source solutions where possible to minimize dependence on specific platforms.

Network dependency

Without a stable network, users may lose access to the cloud application, especially in regions with poor internet connections. To fix this at the development stage, we implement local caching and intermediate data storage in the browser or on the device. We also add an offline mode with subsequent data synchronization when the connection is restored and, if necessary, resort to progressive data loading, using of CDN, and lazy loading.

Should You Build a Cloud App for Your Business?

Building cloud software for business is a strategic decision that should be justified by this business’s needs and constraints. In particular, the following are cases where a cloud application will be the best choice:

• You are going to build a product with a multi-tenant architecture. If you are building a software product as a service (e.g., CRM, ERP, TMS, etc.), cloud architecture will be the optimal option, as it provides centralized access and subscription management while allowing your tech team to upgrade the app  without user involvement;
• Your users are localized in different regions. Since cloud applications are hosted on geo-distributed servers, this will allow you to minimize delays and ensure fast content loading regardless of the location of a particular user;
• You expect rapid growth of your user base. If you have a strong marketing strategy and occupy a leading position in the market, your user base can easily grow tenfold or more in a year. Since upgrading on-premise infrastructure every year is irrational, you can gain the desired flexibility with the cloud;
• You need to implement some integrations with third-party services. Cloud applications very easily integrate with third-party APIs, including those for payment, analytics, mapping, and so on. This is especially true for e-commerce and B2B companies that do not have the time and other resources to implement a middleware (which is often necessary for other types of development);
• You want to minimize IT infrastructure costs. With cloud development, you do not have to pay for physical servers, as well as their support, cooling, and electricity – instead, your costs will be based on cost-efficient pay-as-you-go models.

At the same time, it is worth noting that cloud development is not a one-size-fits-all solution. Specifically, if you need to provide an instant response to user actions in your app without a network connection or ensure compliance with strict requirements for local data storage, this software format will definitely not suit you. Also, in case of a too limited budget, you can start with PWA and, as your app scales, move to cloud infrastructure after some time.

Conclusion

Today, cloud applications are perceived as the norm for businesses whose processes are based on digital infrastructures. Indeed, such software allows them to scale faster, save their resources, and sometimes even open up new monetization opportunities. If you are interested in creating such a solution, feel free to contact us, and we will guide you from the ideation stage to your app modernization and support.