Procuring cloud services: An economic analysis of multi-cloud strategy

Posted: 29 Mar 2021

See all articles by Tarun Jain

Tarun Jain

Indian Institute of Management (IIMB), Bangalore

Jishnu Hazra

Indian Institute of Management (IIMB), Bangalore

Ram Gopal

University of Warwick

Date Written: January 11, 2021

Abstract

Various federal agencies use reverse auctions to procure cloud infrastructure services offered by major public cloud providers such as Amazon, Google, and Microsoft. Although recent research in information systems have studied operational issues in cloud computing, these papers have not analyzed the interaction between vendor base decisions when these cloud capacity instances are procured through the reverse auction mechanism. Therefore, several important research questions are still unaddressed. For example, how should client firms decide the number of cloud providers to be selected from the bidding competition? Along with sourcing on-demand requirements from multiple cloud providers, how should client firms decide on private cloud capacity investments? Our analysis reveals that higher heterogeneity in the vendor’s cost structure leads to fewer cloud vendors chosen for the award of the contract. Interestingly, and somewhat counter-intuitively, we find that higher cost heterogeneity may increase or decrease private cloud investments. We find that if the number of cloud providers in the cloud computing market is very few, then the federal agencies may implement a pure private cloud investment strategy. However, if the number of vendors is very large, the client firm may adopt a public cloud computing strategy. If the number of cloud providers is moderate, implementing the hybrid cloud computing strategy is appropriate for the client firms.

Keywords: cloud computing, multi-cloud strategy, private cloud, hybrid cloud, bidding

Suggested Citation

Jain, Tarun and Hazra, Jishnu and Gopal, Ram, Procuring cloud services: An economic analysis of multi-cloud strategy (January 11, 2021). Available at SSRN: https://ssrn.com/abstract=3813307

Tarun Jain (Contact Author)

Indian Institute of Management (IIMB), Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India

Jishnu Hazra

Indian Institute of Management (IIMB), Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India

Ram Gopal

University of Warwick ( email )

West Midlands, CV4 7AL
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
163
PlumX Metrics