This functions in a way similar to utilities such as an electricity grid. A user just opens up a browser and accesses the required application and/or resource. The user then gets billed based on the usage, same as with utilities.
In order for this to work, providers offer data centers which simultaneously handle the resource requests from multiple clients. With everything in the data centers, the company does not need to have its own IT setup. This means companies can get rid of existing setups and the associated staff.