Cost effectiveness of commercial computing clouds

This paper presents the procedure for comparing costs of leasing IT resources in a commercial computing cloud against those incurred in using on-premise resources. The procedure starts with calculating the number of computers as depending on parameters that describe application's features and execution conditions. By measuring required execution time for different parameter values, we determined that this dependence is a second-order polynomial. Polynomial coefficients were calculated by processing the results of fractional factorial design. On that basis we calculated costs of computing and storage resources required for the application to run. The same calculation model can be applied to both a personal user and a cloud provider. The results will differ because of different hardware exploitation levels and the economy of scale effects. Such calculation enables cloud providers to determine marginal costs in their services' price, and allows users to calculate costs they would incur by executing the same application using their own resources.Leasing in cloud establishes a business relationship: buyer wants to reduce costs, and cloud provider wants to generate profit. This relationship will be realized if the buyer and the provider agree on a mutually acceptable fair price that can be determined by the symmetric mediation plan.All the steps in this procedure are integrated into CCCE method and represented as a process model.

► Commercial cloud computing cost benefit analysis is presented.
► The methodology considers cloud parameters and gives timeframe for the return of investment.
► Cloud execution time is approximated by second-order polynomial.
► The fair price is given in the context of symmetric mediation plan from game theory.