Cloud computing is the term used for access on demand to IT resources, which includes servers, applications (physical or virtual) as well as development tools and storage for data. These IT resources are situated in a remote datacenter that is managed by cloud services providers. The cloud computing infrastructure is typically accessed by end users via secured connections. Cloud services are provided on an annual basis or charged according to usage.

Businesses that use cloud-based systems can reduce the costs and time involved in maintaining IT infrastructure, while freeing IT staff to concentrate on other valuable work. The savings that businesses can expect will depend on the type of system they decide to move to the cloud, as well as what those systems are replacing. A recent survey found that business and IT professionals reported savings of between 30 and 50% from switching to cloud.

There are a variety of cloud service models, such as Software as an Service(SaaS), Platform as a Serviceand Infrastructure as a Service. SaaS is the most familiar model, and is probably the one that companies are already using. It delivers the application-layer--software like CRM, email, and office software- through the internet, eliminating the need to upgrade or maintain hardware.

Another advantage is the ease with which businesses can scale up or down server size and disk space, and only pay for what they need as they require it. This rapid elasticity can be a key feature for agile processes as well as for swiftly introducing new technologies into production. Cloud vendors can also keep IT departments updated on the most recent technological advancements without the need to worry about costly hardware.