Economic aspects of hybrid cloud infrastructure: User organization perspective

Abstract

Adoption of cloud infrastructure promises enterprises numerous benefits, such as faster time-to-market and improved scalability enabled by on-demand provisioning of pooled and shared computing resources. In particular, hybrid clouds, by combining the private in-house capacity with the on-demand capacity of public clouds, promise to achieve both increased utilization rate of the in-house infrastructure and limited use of the more expensive public cloud, thereby lowering the total costs for a cloud user organization. In this paper, an analytical model of hybrid cloud costs is introduced, wherein the costs of computing and data communication are taken into account. Using this model, a cost-efficient division of the computing capacity between the private and the public portion of a hybrid cloud can be identified. By analyzing the model, it can be shown that, given fixed prices for private and public capacity, a hybrid cloud incurs the minimum costs. Furthermore, it is shown that, as the volume of data transferred to/from the public cloud increases, a greater portion of the capacity should be allocated to the private cloud. Finally, the paper illustrates analytically that, when the unit price of capacity declines with the volume of acquired capacity, a hybrid cloud may become more expensive than a private or a public cloud.

Revenue Models in Cloud Computing

“…A private cloud involves the customer's internal data center, where the software is installed and used in a centralized manner within the organization, that is, the software is not made publicly available [1,10]. In the case of a hybrid cloud, a firm using a private cloud may, for example, offload part of the workload to a public cloud and in that way acquire more computing capacity [10,16,20].…”

Costs of Using Hybrid Cloud Infrastructure: Towards a General Framework

“…The cost-efficient division between the private and the public portions of the infrastructure is achieved when the time of using the public infrastructure is inversely proportional to the premium charged by the public infrastructure service provider. It has two implications: i) the greater the premium, the greater the portion of private cloud infrastructure, and ii) the greater the fluctuation of the demand, the greater the cost benefit of the hybrid cloud as compared with the fully private cloud infrastructure [8,4].…”

“…Let us assume that the intensity of the interaction between the private and the public portions of the hybrid infrastructure is reflected in the volume of data transfered between them. It was found that, the greater the intensity of interaction, the greater the private portion of the hybrid infrastructure that should be acquired in order to minimize the overall costs [4].…”

“…the infrastructure resources being underutilized most of the time. The hybrid cloud gives the opportunity to increase the utilization of the private cloud resources and hence minimize the overall infrastructure costs [8,4].…”

“…The cost of the cloud infrastructure was studied in several works, where a number of factors determining whether the hybrid solution brings cost savings were identified: -The degree of demand fluctuation [8,4] and demand growth predictability [9]; -The pricing models applied to the private and public resources [8,4]; -The communications overheads and the effect of volume discounts in the above pricing [4], as well as the expected trends in pricing [7,3]; -The net present value of money related to the expected lifetime of solution [7,3]; -The start-up costs and/or the costs of transforming the current solution towards enabling a hybrid solution [3].…”