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Business & Economics

CALCULATING THE TOTAL COST OF OWNERSHIP OF RUNNING CLOUD INSTANCES IN IaaS CLOUDS
Vladan Martic, Ognjen Radovic, Milica Delibasic, Slavko Rakocevic

ABSTRACT: Cloud computing is based on a revolution of new technologies, significant unused computing capacity in corporate data centres, and the development of a highly capable Internet data communications infrastructure. This paper is intended to investigate strengths, weaknesses, opportunities, and threats (SWOT analysis) for the cloud computing industry. To be precise, this paper examines and presents research methodology for SWOT analysis and data preparation for modelling the Total Cost of Ownership (TCO) of running cloud instances in IaaS clouds using the GARCH model for forecasting monthly volatility based on the number of daily transactions. To achieve these objectives, research was conducted, and the results of simulating the calculation of total costs and the suggestions for estimating the number of reserved instances were presented. The paper is based on the hypothesis that cloud computing costs are considerably lower than costs created by providing their computing. It is also based on the auxiliary hypothesis that the best choice of pricing model depends on whether there are large fluctuations in the number of transactions. In this regard, there is a need to understand the various issues concerning both the perspectives of the providers and the consumers of that technology. The research results suggest that GARCH models can be successfully used with historical data on the number of daily transactions. Also, the research results indicate the best pricing model in situations where there are large fluctuations in the number of transactions or if the number of transactions is relatively stable.

KEYWORDS:  cloud computing, SWOT analysis, total cost, Ownership of Running Cloud Instances.

JEL classification:  O33.