Migration to Cloud as Real Option: Investment Decision under Uncertainty

Abstract

If cloud is so good then why aren't companies using it more? In this paper we look at how companies should make a decision to move some IT services or their IT infrastructure into the cloud. The move may initially look attractive in that it offers cost benefits but there is also considerable uncertainty, not least around security and information stewardship. Within the paper we propose the use of a real option model to help think about when to switch to cloud based on the expected benefits, uncertainties and the value a company puts on money.