While “cloud computing” has been reverberating as a hot topic in the telecom and IT trade press for years, you know it is reaching critical mass when USA Today writes about it.

In fact, that story about how small businesses are able to leverage a host of services and applications delivered from the cloud is a good example of how confusing this phrase can be. Is the cloud a network-based application? Is it a service creation environment? Or is it the hardware and networks for service delivery? Or is it all of those things?

Today, cloud computing is typically delineated into three main categories—Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS). Let’s take a quick look at each:

  • IaaS is the lowest level of service and offers a customer the ability to consume virtual computing resources on demand. The number of processors, memory and storage can be configured on demand in an elastic fashion to best match the needs of a customer’s specific application. An example IaaS provider is Amazon Web Services.
  • PaaS is the next level of cloud capability and offers a full development platform upon which a customer can develop and deploy an application, ranging from Web to business and social applications as well as vertical- or technology-specific ones. A LAMP platform is a good example of a PaaS.
  • SaaS is at the highest level and offers a customer access to a full turnkey application as a service. The service provider hosts all hardware, software and data allowing customers seamless access to the service at any time and from any location. Given their customer-facing nature, SaaS players are the most familiar to people from pioneers like Salesforce.com to Google Apps.

To over simplify it from my view – IaaS is actually the cloud itself, the baseline hardware and software for building and delivering applications. PaaS is an application development environment created within that cloud while SaaS takes a finished application and turns it into a turnkey, utility-like service for simple consumption over the Internet.

While they play different roles, all three combine to form the basis for cloud computing and show that as services become more automated and turnkey, the level of control and customization is typically reduced in exchange for greater simplicity in the consumption and use of the service.