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Simply put, the cloud-computing model is the Internet-based delivery of IT services. These services can be software (applications) or hardware (processing power or data storage) and are accessed in an on-demand fashion. As such, companies can simply pay for what they need and nothing more.

Small businesses can save a fortune by using the cloud for their computer processing needs. Instead of splashing out on a brand-new superfast server, they can rent processing power of one of Amazon's cloud computers for as little as $0.03 per hour. The business will only pay for the time they use and as the cloud provider manage all installations and updates; the customer doesn't have to worry about maintenance or security issues.

The concept is that the customer can use cloud services to operate and trade effectively as it concentrates on its core competencies, whether that be manufacturing washing machines, making cakes or selling legal services -- rather than having to manage IT services across a network of servers that is beyond the customer's central area of expertise. Analyst firm Forrester says that this approach to placing server storage tasks in the hands of the cloud is the most substantial shift in IT so far this decade.