Whenever a computing expert makes a diagram of an IT system, it's become standard practice to draw a picture of a big, fluffy cloud to represent the internet. Which is how the term "cloud computing" came about. The phrase is used to describe the process whereby elements of a company's computer needs--software applications, processing power or data storage--are provided via the internet as a service, rather than through an in-house IT system: It's about computing as a utility.
For example, instead of a piece of software being managed by your own staff, sitting on your own servers held on your premises, it is accessed through a web browser, with the actual data stored somewhere else in the world.
You may well have come across cloud computing and its various subgroups under other headings: utility computing, software-as-a-service, application service providers. What is common to all is the way that they challenge the traditional boundaries of an IT department. It is irrelevant where the hardware or software that supports the service actually is: it's just somewhere in the cloud, and that could as easily be a data center or server anywhere on the globe.
Source: News Factor, http://www.newsfactor.com/story.xhtml?story_id=121003Y7ACUB
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