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Cloud computing explained :

Cloud Architectures address key difficulties surrounding large-scale data processing. In traditional data processing it is difficult to get as many machines as an application needs.

Second, it is difficult to get the machines when one needs them.

Third, it is difficult to distribute and coordinate a large-scale job on different machines, run processes on them, and provision another machine to recover if one machine fails.

Fourth, it is difficult to auto scale up and down based on dynamic workloads.

Fifth, it is difficult to get rid of all those machines when the job is done. Cloud Architectures solve such difficulties.

Benefits of Cloud Computing :

Almost zero upfront infrastructure investment.

If you have to build a large-scale system it may cost a fortune to invest in real estate, hardware (racks, machines, routers, backup power supplies), hardware management (power management,cooling), and operations personnel. Because of the upfront costs, it would typically need several rounds of management approvals before the project could even get started. Now, with utility-style computing,there is no fixed cost or start up cost.

Just-in-time Infrastructure.

In the past, if you got famous and your systems or your infrastructure did not scale you became

a victim of your own success. Conversely, if you invested heavily and did not get famous, you became a victim of your failure. By deploying applications in-the-cloud with dynamic
capacity management software architects do not have to worry about pre-procuring capacity for large scale systems. The solutions are low risk because you scale only as you grow. Cloud Architectures can relinquish infrastructure as quickly as you got them in the first place (in minutes).

More efficient resource utilization.

System administrators usually worry about hardware procuring (when they run out of capacity) and better infrastructure utilization (when they have excess and idle capacity). With Cloud Architectures they can manage resources more effectively and efficiently by having the applications request and relinquish resources only what they need (on-demand).

Usage-based costing.
Utility-style pricing allows billing the customer only for the infrastructure that has been used. The customer is not liable for the entire infrastructure that may be in place. This is a
subtle difference between desktop applications and web applications. A desktop application or a
traditional client-server application runs on customer’s own infrastructure (PC or server),
whereas in a Cloud Architectures application, the customer uses a third party infrastructure and gets billed only for the fraction of it that was used.

Potential for shrinking the processing time.
Parallelization is the one of the great ways to speed up processing. If one compute-intensive or data intensive job that can be run in parallel takes 500 hours to process on one machine, with Cloud Architectures, it would be possible to spawn and launch 500 instances and process the same job in 1hour. Having available an elastic infrastructure provides the application with the ability to exploit parallelization in a cost-effective manner reducing the total processing time.

The below link helps to understand how the team at Vembu Technologies have in their endeavor to explain their online backup software to facilitate backup service providers to make use of Amazon cloud computing.

http://www.vembu.com/storegrid/amazon-cloud-backup.php