Cloud computing exhibits the following key characteristics:

• Agility improves with users' ability to re-provision technological infrastructure resources.
• Application programming interface (API) accessibility to software that enables machines to interact with cloud software in the same way the user interface facilitates interaction between humans and computers. Cloud computing systems typically use REST-based APIs.
• Cost is claimed to be reduced and in a public cloud delivery model capital expenditure is converted to operational expenditure. This is purported to lower barriers to entry, as infrastructure is typically provided by a third-party and does not need to be purchased for one-time or infrequent intensive computing tasks. Pricing on a utility computing basis is fine-grained with usage-based options and fewer IT skills are required for implementation (in-house). The e-FISCAL project's state of the art repository contains several articles looking into cost aspects in more detail, most of them concluding that costs savings depend on the type of activities supported and the type of infrastructure available in-house.
• Device and location independence enable users to access systems using a web browser regardless of their location or what device they are using (e.g., PC, mobile phone). As infrastructure is off-site (typically provided by a third-party) and accessed via the Internet, users can connect from anywhere.
• Virtualization technology allows servers and storage devices to be shared and utilization be increased. Applications can be easily migrated from one physical server to another.
• Multitenancy enables sharing of resources and costs across a large pool of users thus allowing for:
• Centralization of infrastructure in locations with lower costs (such as real estate, electricity, etc.)
• Peak-load capacity increases (users need not engineer for highest possible load-levels)
• Utilisation and efficiency improvements for systems that are often only 10–20% utilised.
• Reliability is improved if multiple redundant sites are used, which makes well-designed cloud computing suitable for business continuity and disaster recovery.
• Scalability and elasticity via dynamic ("on-demand") provisioning of resources on a fine-grained, self-service basis near real-time, without users having to engineer for peak loads.
• Performance is monitored, and consistent and loosely coupled architectures are constructed using web services as the system interface.
• Security could improve due to centralization of data, increased security-focused resources, etc., but concerns can persist about loss of control over certain sensitive data, and the lack of security for stored kernels. Security is often as good as or better than other traditional systems, in part because providers are able to devote resources to solving security issues that many customers cannot afford. However, the complexity of security is greatly increased when data is distributed over a wider area or greater number of devices and in multi-tenant systems that are being shared by unrelated users. In addition, user access to security audit logs may be difficult or impossible. Private cloud installations are in part motivated by users' desire to retain control over the infrastructure and avoid losing control of information security.
• Maintenance of cloud computing applications is easier, because they do not need to be installed on each user's computer and can be accessed from different places.

The five defining characteristics of cloud computing.

Characteristic 1: Dynamic computing infrastructure
Cloud computing requires a dynamic computing infrastructure. The foundation for the dynamic infrastructure is a standardized, scalable, and secure physical infrastructure. There should be levels of redundancy to ensure high levels of availability, but mostly it must be easy to extend as usage growth demands it, without requiring architecture rework. Next, it must be virtualized.

Today, virtualized environments leverage server virtualization (typically from VMware, Microsoft, or Xen) as the basis for running services. These services need to be easily provisioned and de-provisioned via software automation. These service workloads need to be moved from one physical server to another as capacity demands increase or decrease. Finally, this infrastructure should be highly utilized, whether provided by an external cloud provider or an internal IT department. The infrastructure must deliver business value over and above the investment.

A dynamic computing infrastructure is critical to effectively supporting the elastic nature of service provisioning and de-provisioning as requested by users while maintaining high levels of reliability and security. The consolidation provided by virtualization, coupled with provisioning automation, creates a high level of utilization and reuse, ultimately yielding a very effective use of capital equipment.

Characteristic 2: IT service-centric approach
Cloud computing is IT (or business) service-centric. This is in stark contrast to more traditional system- or server- centric models. In most cases, users of the cloud generally want to run some business service or application for a specific, timely purpose; they don’t want to get bogged down in the system and network administration of the environment. They would prefer to quickly and easily access a dedicated instance of an application or service. By abstracting away the server-centric view of the infrastructure, system users can easily access powerful pre-defined computing environments designed specifically around their service.

An IT Service Centric approach enables user adoption and business agility – the easier and faster a user can perform an administrative task the more expedient the business moves, reducing costs or driving revenue.

Characteristic 3: Self-service based usage model
Interacting with the cloud requires some level of user self-service. Best of breed self-service provides users the ability to upload, build, deploy, schedule, manage, and report on their business services on demand. Self-service cloud offerings must provide easy-to-use, intuitive user interfaces that equip users to productively manage the service delivery lifecycle.

The benefit of self service from the users’ perspective is a level of empowerment and independence that yields significant business agility. One benefit often overlooked from the service provider’s or IT team’s perspective is that the more self service that can be delegated to users, the less administrative involvement is necessary. This saves time and money and allows administrative staff to focus on more strategic, high-valued responsibilities.

Characteristic 4: Minimally or self-managed platform
In order for an IT team or a service provider to efficiently provide a cloud for its constituents, they must leverage a technology platform that is self managed. Best-of-breed clouds enable self-management via software automation, leveraging the following capabilities:

• A provisioning engine for deploying services and tearing them down recovering resources for high levels of reuse
• Mechanisms for scheduling and reserving resource capacity
• Capabilities for configuring, managing, and reporting to ensure resources can be allocated and reallocated to multiple groups of users
• Tools for controlling access to resources and policies for how resources can be used or operations can be performed

All of these capabilities enable business agility while simultaneously enacting critical and necessary administrative control. This balance of control and delegation maintains security and uptime, minimizes the level of IT administrative effort, and keeps operating expenses low, freeing up resources to focus on higher value projects.

Characteristic 5: Consumption-based billing
Finally, cloud computing is usage-driven. Consumers pay for only what resources they use and therefore are charged or billed on a consumption-based model. Cloud computing platforms must provide mechanisms to capture usage information that enables chargeback reporting and/or integration with billing systems.

The value here from a user’s perspective is the ability for them to pay only for the resources they use, ultimately helping them keep their costs down. From a provider’s perspective, it allows them to track usage for charge back and billing purposes.

In summary, all of these defining characteristics are necessary in producing an enterprise private cloud capable of achieving compelling business value which includes savings on capital equipment and operating costs, reduced support costs, and significantly increased business agility. All of these enable corporations to improve their profit margins and competitiveness in the markets they serve.