As a business, you want to offer your services in the cloud.
This has advantages in terms of business and infrastructure.
You can offer a service or some functionality at a price and can reach many more users.
In terms of infrastructure, the cloud provides an alternative to not have servers on-premises or in hosting providers (like Rackspace), and have a reduced IT department as such, NOC to be more precise.
Let the cloud provider handle redundancy and backups and all those overheads.
There is also a big saving on software required to run the servers.
You no longer need to license server software.
Services offered in the cloud come in multiple flavors.
These are XaaS services (where aaS stands for as a service), and these are Software-as-a-service (SaaS), Platform-as-a-service (PaaS), Infrastructure-as-a-service (IaaS).
A company might figure out that it wants to offer more than just a function point at a price and I will explain how one can go from a SaaS to a PaaS or IaaS.
Selecting what your offering is is a choice you have to make. You might decide that you want to only offer a SaaS. Not everyone can or wants to offer a PaaS or IaaS.
To have a PaaS, you can have some sort of framework that offers multiple function points in the cloud and one can extend these and offer their own services on top (SaaS). This is one step below a SaaS.
One can go further and be agnostic to the platform being run in the cloud, and be able to run Linux or Windows or whatever on these machines at will and you have an IaaS. Remember, this also includes different Windows versions and not just Linux and Windows.
Cloud services usually offer an IaaS, and you can spin up VMs there or install your own server software. It depends on the vendor and mostly they offer are a virtual box up (a virtualized box) in the cloud.
As of now, a few vendors offer this service, and those in order of popularity are:
AWS by Amazon at http://aws.amazon.com/
Azure by Microsoft at http://www.windowsazure.com
Managed Virtualization by RackSpace at http://www.rackspace.com/cloud/private/managed_virtualization, etc.
I shall talk more about where IaaS is nowadays, and what the possibilities are there.