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Cloud computing refers to availability of dynamically scalable IT enabled capabilities (hardware and software) from third party vendors over a network. The keyword here is 'dynamically scalable'. In simple terms, what this means is that you can ramp up or ramp down these third party resources as and when needed. The physical hardware / software may reside on different machines / networks across different geographical locations. Cloud computing provides services like infrastructure, software, storage and even the OS platform as a service. Typically, these services are accessed over the Internet. Different cloud providers have developed various access models to these services. While large companies can afford to establish and run their own capabilities, it is not practical for small and medium sized players.
The cloud model differs from traditional outsourcing in that customers do not hand over their own IT resources to be managed. Instead they plug into the cloud, treating it as they would an internal data center or computer providing the same functions.
Cloud computing can be an effective strategy to reduce the IT operations and management costs of a company.
Cloud Computing Technology
Cloud computing has been made possible because of recent development in web technology. At the communication level, it has been made possible due to the development of protocols like http, SOAP, XML and REST. Essentially, these technologies allow various programs to talk to each other. At the infrastructure level, cloud computing is based amalgamation of many other concepts like on virtualization and grid computing. These advances have made it possible for several machines, which physically might be (and generally are) miles away act in a seamless fashion.
Benefits of Cloud Computing include reduced infrastructure costs. Since cloud computing works over a network, the downside is the security threat due to less data control. .