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Hybrid Cloud Computing Investment Strategies

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  • Tarun Jain
  • Jishnu Hazra

Abstract

Cloud providers such as Amazon, IBM, and Microsoft are leasing their computing resources to various businesses providing them an alternative to investing in expensive hardware. Although recent information systems research has examined pricing‐related issues in cloud computing, several important questions still remain. For example, how should buyers decide on the capacity portfolio of private and public clouds? What is the impact of the buyer’s demand uncertainty on the capacity portfolio decision? We address these questions in this study through a stylized model. Our analysis reveals that the investment in cloud infrastructure (private, public or hybrid) is based on the profile of the buyer’s demand. When a buyer faces demand with low mean, she relies on public cloud solutions. If the demand has high mean, then the buyer firm hosts applications on a private cloud. Implementing a hybrid cloud is the optimal strategy when the mean demand is in mid‐range. We find that high demand variability makes businesses to move toward public cloud solutions. We support these insights through examples from practice in the cloud computing industry.

Suggested Citation

  • Tarun Jain & Jishnu Hazra, 2019. "Hybrid Cloud Computing Investment Strategies," Production and Operations Management, Production and Operations Management Society, vol. 28(5), pages 1272-1284, May.
    • Handle: RePEc:bla:popmgt:v:28:y:2019:i:5:p:1272-1284
    DOI: 10.1111/poms.12991
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    Cited by:

    1. Bo Li & Subodha Kumar, 2022. "Managing Software‐as‐a‐Service: Pricing and operations," Production and Operations Management, Production and Operations Management Society, vol. 31(6), pages 2588-2608, June.
    2. Tarun Jain & Jishnu Hazra & T. C. Edwin Cheng, 2020. "Illegal Content Monitoring on Social Platforms," Production and Operations Management, Production and Operations Management Society, vol. 29(8), pages 1837-1857, August.
    3. Mingwen Yang & Varghese S. Jacob & Srinivasan Raghunathan, 2021. "Cloud Service Model’s Role in Provider and User Security Investment Incentives," Production and Operations Management, Production and Operations Management Society, vol. 30(2), pages 419-437, February.
    4. Li, Bo & Tan, Zhen & Arreola-Risa, Antonio & Huang, Yiwei, 2023. "On the improvement of uncertain cloud service capacity," International Journal of Production Economics, Elsevier, vol. 258(C).
    5. Manuel A. Nunez & Xue Bai & Linna Du, 2021. "Leveraging Slack Capacity in IaaS Contract Cloud Services," Production and Operations Management, Production and Operations Management Society, vol. 30(4), pages 883-901, April.

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