IaaS hosting is renting of server power from dedicated service providers. A typical IaaS subscription might include the server computation power and storage, network structure and a virtualization layer. Your business would then have to create virtual machines, install operating systems and any other software and perform maintenance and management of these systems. IaaS is ideal for businesses who require a fine level of control over their cloud environment, and IaaS providers frequently offer a range of additional infrastructure components to augment your service.
IaaS allows companies to operate with reduced costs as they do not have the constraint of purchasing and maintaining hardware. An additional benefit comes in the form of flexibility of capacity - companies can pay for as much or little storage or computing power as they need, and can vary this requirement on an hourly, weekly or monthly basis. This allows for greater use flexibility, and can also be practical for testing a new product prior to moving to a traditional server environment. The granularity of the billing of IaaS can come as a shock if you're not prepared, though - it can be easy to go over budget on costs you might not expect. Reliability is also a concern - your server's availability is fully dependent on your provider.