Cloud computing has brought the tremendous power of supercomputers to small and medium-sized businesses so that they can focus on everyday issues such as analyzing financial risk, delivering personalized medical information and designing solutions.

Cloud computing refers to the delivery of hosted services via the Internet by networking large groups of servers and spreading data-processing chores among them.

Three specific characteristics differentiate cloud services from traditional hosting:

Cloud service is sold on demand, usually by the minute or by the hour. A consumer can take as much or as little of the cloud as he or she wants at any time. Cloud service is fully managed by the provider. A user needs only a personal computer and Internet access.

Cloud services are broadly divided into three categories:

Infrastructure as a Service (IaaS) provides virtual server instances with unique IP addresses and blocks of storage on demand. Amazon Web Services is an example. Platform as a Service (PaaS) offers a set of software and product development tools hosted on the provider’s infrastructure. Developers can create apps on the provider’s platform over the Internet. Force.com and GoogleApps are examples of PaaS. Software as a Service (SaaS) may be anything from Web-based email to inventory control and database processing. In the SaaS cloud model, the vendor supplies the hardware infrastructure and the software product and interacts with the user through a front-end portal.

Cloud computing makes supercomputing available to small and medium-sized businesses cost effectively and on demand. The advantage to cloud computing is that small and mid-sized organizations can run powerful applications without having to purchase software. The drawback is that the cloud is hosted and thus dependent upon an outside party.