Long-range Evaluation of Risk in the Migration to Cloud Storage

The economical evaluation of the benefits of cloud migration versus the decision to buy and manage the storage facilities in house is essential for the migration decision. Deterministic models have been proposed in the past, which fail to account for the essentially random nature of any future quantity involved in the decision. The random nature of future events also implies the insurgence of risks when the decision taken turns out to be wrong. Here we adopt a probabilistic model and employ it to assess the risk associated to either decision over an extended time period. We adopt the Value-at-Risk as a risk metric, and compare two decision variables, namely the mean and the median Differential Net Present Value. We show that though the two decision variables bear the same risk for most values of the range of leasing prices, the mean Differential Net Present Value abates the Value-at-Risk even by as much as 60% in the small region of leasing prices where there is large uncertainty between the two alternatives.