As mentioned earlier, Cloud computing model is created so that customers pay only for usage; not for investment in hardware, software licenses, upgrades, maintenance fees, and man-power cost to run the service in-house. A major reason for this shift is the increasing commoditization of IT. Internet has become cheaper and available everywhere, cost of IT platforms have reduced substantially, hardware could be commoditized, storage has become cheaper, virtualization technologies have become common and affordable, increasing adoption of open source software, abstraction for the users, and lastly increased standardization of IT. Additionally there has been a constant pressure to cut IT costs (largely because in most organizations, IT is still a cost centre rather than a profit centre).
From an architectural standpoint, Cloud computing includes dynamic delivery of capabilities (or services) in the form of applications (Software as a Service), Platform services (Platform as a Service), and Infrastructure services (Infrastructure as a Service).
Cloud service provides expose these services mostly through a web interface. All the consumers need to do is have a stable internet connect, and subscribe to these services. Basically they are leasing the services and return them when they no longer need them.
