On-demand computing is a delivery model in which computing resources are made available to the user as needed. The resources may be maintained within the user’s enterprise, or made available by a cloud service provider. When the services are provided by a third-party, the term cloud computing is often used as a synonym for on-demand computing.

The on-demand model was developed to overcome the common challenge to an enterprise of being able to meet fluctuating demands efficiently. Because an enterprise’s demand on computing resources can vary drastically from one time to another, maintaining sufficient resources to meet peak requirements can be costly. Conversely, if an enterprise tried to cut costs by only maintaining minimal computing resources, it is likely there will not be sufficient resources to meet peak requirements.

The on-demand model provides an enterprise with the ability to scale computing resources up or down with the click of a button, an API call or a business rule. The model is characterized by three attributes: scalability, pay-per-use and self-service. Whether the resource is an application program that helps team members collaborate or additional storage for archiving images, the computing resources are elastic, metered and easy to obtain.

Many on-demand computing services in the cloud are so user-friendly that non-technical end users can easily acquire computing resources without any help from the organization’s information technology (IT) department. This has advantages because it can improve business agility, but it also has disadvantages because shadow IT can pose security risks. For this reason, many IT departments carry out periodic cloud audits to identify greynet on-demand applications and other rogue IT.