In general, it is the ability of any system to perform under increased workload or to be enlarged to accommodate that growth. A well scalable system will be able to perform with same efficiency with increased or enhanced workload.
In the context a business, scalability is measured as organization’s ability to grow in terms of revenue without impacting the contribution margin (revenues - variable costs). As the business grows, operational complexities increase. Hence, the cost and effort involved in managing the resources of the company affects the performance of the company. Those companies which can manage their resources efficiently with increase in size can scale up quickly.
In Information technology, scalability refers to the ability of hardware, software to handle increased number of requests without compromising on performance.
For example, a well scalable system will be able process more transactions by adding new devices, processors.