By definition cloud computing is the use of computing resources (hardware and software) that are delivered as a service over a network (typically the Internet). For example, email. The name comes from the common use of a cloud-shaped symbol as an abstraction for the complex infrastructure it contains in system diagrams. Cloud computing entrusts remote services with a user’s data, software and computation.

End users access cloud-based applications through a web browser on a desktop, laptop or mobile app while the business software and user’s data are stored on servers at a remote location. Cloud computing allows companies to avoid upfront infrastructure costs, and focus on projects that differentiate their businesses instead of Hardware/Networks. Cloud computing allows enterprises to get their applications up and running faster, with improved manageability and less maintenance, and enables IT to more rapidly adjust resources to meet fluctuating and unpredictable business demand.

In the business model using software as a service (SaaS), users are provided access to application software and databases. Cloud providers manage the infrastructure and platforms that run the applications. SaaS is sometimes referred to as “on-demand software” and is usually priced on a pay-per-use basis. SaaS providers generally price applications using a subscription fee.

SaaS allows a business the potential to reduce IT operational costs by outsourcing hardware and software maintenance and support to the cloud provider. This enables the business to reallocate IT operations costs away from hardware/software spending and personnel expenses, towards meeting other goals. In addition, with applications hosted centrally, updates can be released without the need for users to install new software. One drawback of SaaS is that the users’ data are stored on the cloud provider’s server. As a result, there could be unauthorized access to the data.

Cloud computing relies on sharing of resources to achieve coherence and economies of scale similar to a utility (like the electricity grid) over a network. At the foundation of cloud computing is the broader concept of converged infrastructure and shared services.