By now, terms such as cloud hosting, cloud communications and cloud storage have become ubiquitous but what exactly is cloud computing?

Cloud computing refers to the delivery of on-demand computational resources through a computer network. These services are typically divided into three categories: Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS (News - Alert)). Cloud computing permits a functional separation between a user’s computer and the resources used.

An example of how it works is as follows. Part of the job of an executive manager at a large corporation is making sure that all employees have access to the right hardware and software and that the software licenses are in place. Without cloud computing, every time a new employee is hired, more software has to be bought and the manager has to check that the company’s current license allows another user to use the software. However, with cloud computing, workers can log into a Web-based service which hosts all the programs the user needs of his/her job so that instead of a manger installing a suite of software on each computer, he/she only has to install one application.

The benefits of cloud computing and cloud related services are vast from increased speed to market to organizational and compute flexibility to cost savings. Accordingly, many software company CEOs and CFOs have recently announced their belief that cloud computing will fuel the largest amount of spending in the software industry in the coming years.

In fact, the phrase cloud computing is becoming so commonplace that Gartner (News - Alert) Senior Analyst Ben Pring recently stated, “It's become the phrase du jour,” according to an InfoWorld report.

While cloud computing is taking the world by storm, analysts and experts have yet to come up with a solid definition for the practice. Some argue that cloud computing is simply an updated version of utility computing – basically virtual servers available over the Internet. Others think the term is a bit broader and contend that cloud computing refers to anything consumed outside the firewall, the InfoWorld article reports.

No matter the definition, the benefits to cloud computing seem undisputable as it offers reduced costs, scalability, remote access, disaster relief, increase storage, more mobility and high automation.