Economic aspects of hybrid cloud infrastructure: User organization perspective

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.