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With operating system–level virtualization essentially creating a scalable system of multiple independent computing devices, idle computing resources can be allocated and used more efficiently.

Virtualization provides the agility required to speed up IT operations, and reduces cost by increasing infrastructure utilization.

Cloud computing relies on sharing of resources to achieve coherence and economy of scale, similar to a utility.

Third-party clouds enable organizations to focus on their core businesses instead of expending resources on computer infrastructure and maintenance.

Since the launch of Amazon EC2 in 2006, the availability of high-capacity networks, low-cost computers and storage devices as well as the widespread adoption of hardware virtualization, service-oriented architecture, and autonomic and utility computing has led to growth in cloud computing. The word cloud was used as a metaphor for the Internet and a standardized cloud-like shape was used to denote a network on telephony schematics.

With this simplification, the implication is that the specifics of how the end points of a network are connected are not relevant for the purposes of understanding the diagram.

Autonomic computing automates the process through which the user can provision resources on-demand.

In the 1990s, telecommunications companies, who previously offered primarily dedicated point-to-point data circuits, began offering virtual private network (VPN) services with comparable quality of service, but at a lower cost.Cloud computing extended this boundary to cover all servers as well as the network infrastructure.In early 2008, NASA's Open Nebula, enhanced in the RESERVOIR European Commission-funded project, became the first open-source software for deploying private and hybrid clouds, and for the federation of clouds.The main enabling technology for cloud computing is virtualization.Virtualization software separates a physical computing device into one or more "virtual" devices, each of which can be easily used and managed to perform computing tasks.

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