Technical types may already understand the following, but the distinction may be lost on the managerial and executive class. In my current line of work I run into misunderstandings about what cloud computing means, and when working with clients I start with this simple distinction.
Are you moving to cloud-based services, or cloud-hosted infrastructure?
Cloud services include offerings like Microsoft's Office 365. You get email, Sharepoint, and Lync, with no servers to manage. Your IT team can manage the settings of the services themselves, but they do not have access to the servers that host them.
The consequences of a move to cloud services are that you no longer have to maintain these servers (email, Sharepoint, and Lync), but there are certain things that your IT team cannot do, which they might have if they were still using actual servers.
Alternately, cloud infrastructure means you are still going to build servers, but they will be hosted in the cloud. Microsoft's Azure offering, as well as Amazon Web Services, both offer this. Your servers are virtualized and hosted in vendor data centers, and your team can build and manage services on these servers just as they did on-premise. From an operations perspective, very little changes other than the location of these servers.
Put another way, cloud services is taking your laundry to have someone else clean it, and cloud infrastructure is going to the laundromat and using the machines there. Not a perfect analogy, but it'll do.
So which approach is right for you?
As is usually the case, it depends. What are your goals with going to the cloud? What services do you need?
In both cases, you're no longer on the hook for buying expensive hardware that will last three to six years, monitoring that hardware to make sure it doesn't go down, and managing the life cycle of that hardware. This is all hosted in the cloud now. This can save capital costs, this can save rents on floor space, electric, and temperature controls, and this can reduce labor costs if you don't need server engineers for other reasons.
In the case of cloud services, you're also no longer managing updates to the operating system and other software, or ensuring security updates are installed, because these things are all included in the service. Your vendor says, "I will give you email", for example. That's it. You get email, with no concern about what boxes are used to provide it. You do still need engineers to manage those services - someone to create new mailboxes, create mailing lists, and so on, in this example - but they're managing the house, not the foundation, so to speak.
In the case of cloud infrastructure, you still need engineers to build and maintain these servers, as well as understand the cloud service itself. This is more common in businesses where significant infrastructure exists to support platforms that are not commonly offered as services. For example, a company whose primary product is an online classroom-management service, or a database used to manage mining operations across the world.
What about privacy? With the growth of the cloud, as well as the globalization of business and commerce, privacy protection has become a concern - not just for citizens but for companies as well. Where is my data, is the common refrain. I'll write about that in more detail later. For now I'll just say, it's a valid concern and should be brought up in discussions with cloud vendors.
Hopefully this simple distinction will serve to clarify discussions with vendors, and also between engineering leads and business managers. Moving to the cloud offers significant savings in operations and capital. Knowing what kind of cloud you need, and which you're moving to, helps to understand those savings in the first place.