Is Cloud Bursting/Hybrid Cloud Advantageous to a Firm Who Has On-Site Capacity?

Cloud bursting is a hybrid computing resource model in which a firm firstly uses its own internal computing resources and then bursts to a public cloud for extra resources as needed. This paper develops quantitative models to examine whether a firm who has on-site capacity can be benefited from cloud bursting. If a firm adopts a hybrid cloud, while it benefits from immediate, extra computing resources, and scalability, but it assumes the risks of security threats and service outages from this external resource. If a firm uses only a private cloud, while security threats and service outage risks may be far lower than with a hybrid cloud, it may lose the opportunity to profit due at peak times due to limited resource capacity. Overall, we show that firms can benefit from the hybrid clouds if risk is considerably low while firms would benefit from using the private clouds if risk is considerably high. Interestingly, firms may display counterintuitive cloud deployments when facing risk of outage that one firm deploys a hybrid cloud and another deploys a private cloud when risk of outage is considerably low and both firms prefer the hybrid clouds when risk of outage is considerably high.