Virtualization and cloud computing are major buzzwords right now. Every business, no matter how small or large, should know at least some of the benefits of cloud computing. When virtualization gets thrown into the mix things get trickier, but they don’t have to be confusing.

There are some clear and basic differences between virtualization software and the much larger realm of cloud computing. In fact, we just covered an announcement about the latest version of Red Hat’s (News - Alert) Enterprise Virtualization solution, which is basically designed to bridge the gap between virtualized datacenter infrastructure and private cloud environments. While the two can run in harmony and be seamlessly integrated on common infrastructure thanks to solutions like Red Hat’s, there are definitely some major distinctions.

A recent article from Business News Daily provides a very simple definition of virtualization. Basically, it is software that separates physical infrastructure to create a variety of dedicated resources, like multiple operating systems and applications, which may be run at the same time. This lets organizations reduce their IT costs since less hardware and infrastructure are needed to run a large variety of systems and software.

Incidentally, virtualization is also the main technology that powers cloud computing. It is driven by virtual machines (VMs), which act as a software implementation of a physical machine, and execute programs just like a physical machine. However, VMs are separate from actual physical infrastructure, enabling servers, workstations, storage and other systems to operate independently of the physical hardware layer. This is accomplished by installing a hypervisor or virtual machine monitor (VMM) at the hardware layer, through which VMs are run.

Once virtualization is in place, cloud computing services and solutions may be easily and rapidly developed and deployed.  "Virtualization is a foundational element of cloud computing and helps deliver on the value of cloud computing," said Mike Adams, director of product marketing at VMware, which specializes in virtualization as well as cloud software and services. "Cloud computing is the delivery of shared computing resources, software or data — as a service and on-demand through the Internet."

According to Rick Phillips, vice president of compute solutions at IT firm Weidenhammer, the cloud most often does include virtualization products to deliver services. "The difference is that a true cloud provides self-service capability, elasticity, automated management, scalability and pay-as you go service that is not inherent in virtualization," he added.

Basically, cloud solutions are a good fit for those businesses that need outsourced IT administration and management. Moving routine IT tasks to a service provider helps free up internal company resources to focus on core business objectives. Getting set up with cloud services is easy and cost effective, since many providers offer services on a pay-as-you-go basis. Finally, cloud solutions are a good fit for organizations seeking scalability, since IT capacity may be temporarily scaled up or down depending on fluctuating requirements.