The good news is that many companies are experiencing rapid growth. The bad news is that they are challenged to grow their IT capacity.
Often this growth outstrips the capital budget of an organization and the capabilities of the IT team to install and maintain the necessary equipment.
Cloud vendors offer solutions to these challenges. They have a variety of offerings from co-location (colo) to private cloud to public cloud.
In a colo situation the vendor offers floor space and bandwidth to customers. Typically they also provide networking and nominal operational support. The customer provides the computing equipment.
For private clouds the vendor provides dedicated hardware and shared networking and support. The customer provides the operating systems and applications. The agreement with the vendor can allow for surge capacity and second site backup/recovery.
Public clouds are similar to private clouds except the hardware is shared among customers.