Optimizing Cloud Costs

Cloud computing consumers make a gradual switch from traditional systems to cloud architecture. Consumers wish to minimize their operational costs, in addition to elimination of the need to make large investments developing in information systems and computing infrastructures. Cloud computing service providers offer their consumers several costing models mainly pay-per-use and monthly fixed prices. Cloud consumers pricing models are based on actual consumption using pay-per-use prices or in other cases choosing fixed monthly prices when risk minimization considerations are taken. On the other side of the equation cloud providers wish to maximize their revenues. We claim cloud providers are offering technological services in ways that eliminate free market competition, thus preventing consumers from achieving the minimal prices they are wishing to get.

Cloud computing services are composed of services organized according to a hierarchy of software application services, beneath them platform services which also use infrastructure services. Providers currently offer software services as bundles consisting of services which include the software, platform and infrastructure services. Providers also offer platform services bundled with infrastructure services. Bundling services prevent customers from splitting their service purchases between a provider of software and a different provider of the underlying platform or infrastructure. This bundling policy is likely to change in the long run since it contradicts economic competition theory, causing an unfair pricing model and locking-in consumers to specific service providers. In this presentation we assume the existence of a free competitive market, in which consumers are free to switch their service among providers. Our model is aimed at the potential customer who wishes to find the optimal combination of service providers which minimizes his costs.

We propose three possible strategies for implementation of the model in organizations. We formulate the model and illustrate its advantages compared to existing pricing practices used by cloud computing consumers.