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Scalability is a distinctive function or system that defines its ability to manage and perform well and handle a larger volume of work without yielding to pressure.  Such systems can maintain efficiency even when tested by higher functional demands and expand with ease. The application is similar in every industry although it can mean differently in different organizations. 

In the financial sector, it is the ability of the institutions to handle increasing consumer applications while in the manufacturing and corporate market, it is the ability to meet a growth in sales with ease without compromise on efficiency and quality. in web hosting, scalability is an increase in resources to meet a sudden spurt of traffic. 

Scalability can be horizontal or vertical.  Horizontal scaling is a system where additional node with similar functionalities are added to an existing system and then restructured to ensure equal load in each of the node.   Web servers and SOA (service-oriented architecture) systems usually apply horizontal scaling to manage high traffic increase and distribute workload using load balancers. This ensures there is no pressure on one single node and assures of continuity and availability.

Vertical scaling can be achieved when it is expanded by adding more resources like memory, processing power, storage etc. This is again a normal practice adopted by the web hosting companies to add computing resources and build more virtual servers on the same hardware. 

Scalability is a necessity. A business grows over time and with it, the consumer needs increase. The market demands are not constant. They vary and to ensure stability in performance, scalability is required. Your business will require more of everything to meet and match the varying demands without faltering on quality and performance. Without scalability, your business can lose efficiency and can harm your business reputation. Scalability will improve cost savings and eliminate wasteful procurements.