The simplest way to think of the cloud is to think of it as a utility, like hydro. When you plug a device into a wall outlet, electricity flows. You didn't produce the electricity yourself. In fact, you probably don’t know, and don’t care where the electricity was generated. It's just always there when you need it.
The “cloud” works very similar fashion. Through an internet connection (equivalent to a plug in the wall for electrical), you can access your businesses apps. How this software gets to you, stored, and works doesn’t matter for most businesses. The thing that matters most is that it works great and benefits their business – just like electricity.
There’s a multitude of benefits in using the cloud. To keep with our hydro analogy, if your IT department does not run on a cloud, it's using its own hydro generator which is risky. Electricity generators can break, leak oil, they’re required to be regularly maintained, and if the service engineer is sick or hires someone new it could suffer. Since the costs of expanding and maintaining a cloud service is spread over the entire client base of the service, a quality and cost effective service is possible.