Virtualization and cloud computing are often discussed interchangeably, but while they’re closely associated, these tech terms have crucial differences. Virtualization and cloud computing are similar technologies, but their differences are significant enough to affect your business decisions. This guide will help demystify the tech behind the jargon and help businesses determine which technology is right for them.
Cloud computing comprises software, hardware and high-level network resources that individuals and companies can access via the internet. A cloud computing service provider will make available several types of services that support a business’s needs. 
For example, a cloud service provider may use a software-as-a-service (SaaS) model to deliver software applications to client businesses. While the software isn’t installed on users’ desktops, they can access these applications in a web browser. 
Some corporate business clients may need more advanced services delivered over cloud computing. These platform-as-a-service (PaaS) offerings may include databases and virtual servers. Even more high-level cloud services are called infrastructure as a service (IaaS); these solutions support the components that make platforms and services function, such as physical servers, device storage and other networking components.
Cloud hosting, which stores your website remotely and uses the hosting service’s resources, can be an IaaS or PaaS solution.
Virtualization software separates computer environments from physical infrastructures so that you can run multiple operating systems and applications simultaneously on the same machine. For example, in a workspace virtualization model, if you do most of your work on a Mac but use select applications exclusive to PCs, you can run Windows on a virtual machine to access those applications without switching computers.
“Virtualization software … enables businesses to reduce IT costs while increasing the efficiency, utilization and flexibility of their existing computer hardware,” said Mike Adams, vice president of product and technical marketing at Ivanti.
Virtualization has many practical applications, with two main ones.
Virtualization is the fundamental technology that powers cloud computing. Virtualization is software that manipulates hardware, while cloud computing refers to a service that results from that manipulation. You can’t have cloud computing without virtualization. 
“Virtualization is a foundational element of cloud computing and helps deliver on the value of cloud computing,” Adams said. “Cloud computing is the delivery of shared computing resources, software or data – as a service and on demand through the internet.”
Most of the confusion about these terms occurs because virtualization and cloud computing work together to provide various services. The cloud can – and most often does – include virtualization products to deliver the computer service, said Rick Phillips, a consultant at the IT firm Weidenhammer.
According to Phillips, the difference is that a true cloud provides self-service capability, elasticity, automated management, scalability and pay-as-you-go service, which are not inherent in virtualization.
To best understand the advantages of virtualization, consider the difference between a private cloud in a virtualized environment and a public cloud.
A private cloud, in its own virtualized environment, gives users the best of both worlds. It can give users more control and the flexibility of managing their systems while providing the consumption benefits of cloud computing, said John Livesay, vice president and chief sales officer of InfraNet Technologies Group.
“Private cloud computing means the client owns or leases the hardware and software that provide the consumption model,” Livesay said. “You pay for resources as you go, as you consume them, from a [vendor] that is providing such resources to multiple clients, often in a co-tenant scenario.”
On the other hand, a public cloud is an environment open to many users, built to serve multi-tenanted requirements, Phillips said. “There are some risks associated here,” he added, such as having bad neighbors and potential latency in performance.  
With virtualization, companies can maintain and secure their own “castle,” Phillips said. This provides several benefits.
Virtualization isn’t right for every business. Consider the pros and cons of virtualization before incorporating the technology into your company.
Determining if virtualization is the best solution for a business requires an in-depth analysis of the organization’s specific needs and requirements. Livesay said you should also consider the following:
If you run a smaller operation and are looking to reduce costs on computing resources and upkeep, conduct an audit of your physical, on-location hardware. Are your server’s resources being utilized to their full potential? Could they take on the workload of another server that’s equally being underutilized? This could cut down on power consumption and upkeep costs.
“Businesses that work more on an OPEX [operational expenditures] model that have less IT staff and fewer security concerns are more cloud-oriented,” Livesay said. “Businesses that need greater control for integration and security or who work more on a CAPEX [capital expenditures] model would lean towards virtualization.”
While virtualization is the best solution for some organizations, a cloud solution offers several benefits more suitable for other businesses. Phillips said cloud solutions are best for businesses with the following needs.
According to Adams, business owners considering virtualization should consider the following questions:
A virtual phone number can keep your personal number private while making you accessible by phone anywhere, anytime.
Virtualization and cloud services are not end-all, be-all solutions. Like any other technology or service a business adopts, things can always change.
“While cloud computing and virtualization each have their own benefits, they are not competing approaches,” Adams said. “We view cloud computing as an evolution of virtualization. Customers who virtualize their hardware servers may adopt cloud computing over time for increased self-service, scale, service delivery levels and agility.”
The conversation over virtualization and cloud computing nowadays often leads to talk of “serverless computing,” which aims to eliminate user-end concerns about server upkeep, constraints and scalability. This is a full-managed service that often bills you for the resources you consume and the amount of time your code runs. 
This “pay for what you use” model may be expensive for smaller businesses right now, but it is becoming more affordable as the technology is developed.
Sandra Mardenfeld and Sara Angeles contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.
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