Evaluating cloud computing services from a total cost of ownership perspective

Purpose – Start‐up companies in particular can benefit from cloud computing services, since frequently they do not operate an internal IT infrastructure. The purpose of this paper is to present a total cost of ownership (TCO) approach for cloud computing services. Design/methodology/approach – The authors applied a multi‐method approach (systematic literature review, analysis of real cloud computing services, expert interviews, case study) for the development and evaluation of a formal mathematical TCO model. Findings – It was found that decision processes in cloud computing are conducted ad hoc and lack systematic methods. The presented method raises the awareness of indirect and hidden costs in cloud computing. Research limitations/implications – Some restrictive assumptions were made. For instance, cost types that focus on an existing internal IT infrastructure were hidden. Future research can combine risk and security aspects by means of a TCO approach. Additionally, benefits management in cloud computing is another new research field that can, for instance, be explored by means of cost‐benefit analyses. Practical implications – The analysis of relevant cost types and factors of cloud computing services is an important pillar of decision making in cloud computing. The software tool allows for an easy application of the TCO model with reasonable effort. Originality/value – The paper provides an evaluated mathematical model for the calculation of the TCO of cloud computing services. With this tool, decision makers are able to decide whether outsourcing into the cloud is monetarily attractive; to be more specific, whether the costs associated with cloud computing services are lower than with a pre‐existing infrastructure.