As the variety of applications increases so does the complexity of delivering and managing those applications also increases, many organizations tried to manage that complexity by standardizing on a fixed portfolio of applications in a locked-down configuration. This approach reduces the IT labour costs, but the restrictions involved lead to a frustrating user experience and constraints on flexibility and business agility. Thus This paper presents a better solution that would enable IT to deliver and manage applications at reduced cost while enabling flexibility and agility. Here the concept of application virtualization which is a part of virtualization and how application virtualization is used by cloud computing to deliver application with fast speed, reliability and flexibility shall be discussed.