For understanding How Cloud computing works, first you must understand – What is Cloud computing? and Benefits of Cloud computing, second you should understand the different types of Cloud offering like Infrastructure as a Service (IaaS), Platform as a Service (PaaS), Software as a Service (SaaS) or must say “X as a Service, (XaaS)” or “Anything as a Service”.

The fist building block of Cloud is infrastructure where The Cloud will be implemented. It is a wrong assumption that environment should be virtualized, but cloud is a way to request resource in on-demand way. If you have a solution to provide resource in on-demand way on bare metal, then it is also a Cloud service. This infrastructure supports different types of Cloud Service like IaaS, PaaS, SaaS etc.
To provide these services you need Operating System Service, which will be charged with requested service.
Business System Service (BSS) – This is mainly used to validate the request and create the invoice for the consumed services. There are multiple metrics, which are used to create the invoice like Number of users, CPUs, Memory, Storage, I/Os usage hours/month etc.

Cloud Service Creator and Consumer

A Cloud computing environment provides interfaces and tools for the cloud service consumers or users.

How Cloud computing works in reality

For accessing Cloud services, first step is to register on Cloud service provider portal and create an account. Now login into portal and you can order your services though the Cloud service consumer area. These services had been created by Cloud service provider. These services can be a simple virtual machine (VM), some network component, an Application service or any platform service etc.

Business System Service (BSS)

The Cloud provider will validate your request through Business System Service (BSS), if the validation is OK (like Credit Card detail, Contract etc.), Service provider will provide the requested service through Operating System Service.

To access these all service Cloud service provider will provide you a credentials to access or make any request for service. Monthly invoice get generate for services used by you.