Cost Efficiency of Hybrid Cloud Storage : Shortening Acquisition Cycle to Mitigate Volume Variation

Abstract

Hybrid cloud storage infrastructure, which combines cost-effective but inflexible private resources and flexible but premium-priced public cloud storage, allows organizations to operate cost-efficiently under demand volume uncertainty. The extant literature, however, offers a limited analytical insight into the effect that the variation of demand has on the cost-efficient mix of internal and external resources. This paper considers the storage capacity acquisition cycle, i.e. the interval at which the organization re-assesses and acquires additional resources, as a parameter shaping the optimal mix of resources. It introduces a model capturing the compound effect of the acquisition cycle and volume variation on the cost-efficiency of hybrid cloud storage. The model is analytically investigated to demonstrate its inherent regularities, and empirically evaluated in numerical experiments. The analysis indicates that shortening the acquisition cycle reduces the volume variability thus reducing the costs. The costs decrease further if shortening the cycle reduces the demand volume uncertainty.