Cost-Benefit Analysis of Cloud Migration: Evaluating the Financial Impact of Moving from On-Premises to Cloud Infrastructure

Abstract

The migration from on-premises infrastructure to cloud-based solutions has emerged as a strategic imperative for organizations seeking operational agility and scalability. This paper presents a rigorous cost-benefit analysis framework to evaluate the financial implications of such transitions, focusing on both direct and indirect economic factors. A multi-dimensional model is developed to quantify capital expenditures (CAPEX), operational expenditures (OPEX), and hidden costs associated with legacy systems, juxtaposed against the elastic pricing models, scalability benefits, and risk mitigation offered by cloud platforms. The analysis incorporates temporal considerations, such as depreciation cycles and pay-as-you-go pricing, to project long-term financial outcomes. Methodologically, the framework integrates deterministic and stochastic elements to account for variable workloads, resource utilization patterns, and market volatility. Decision boundaries are established through comparative scenario analysis, evaluating break-even points across hybrid, private, and public cloud architectures. Empirical validation is performed through industry-agnostic case studies, demonstrating how workload criticality, data gravity, and compliance requirements influence migration economics. The results reveal non-linear relationships between scale factors and cost efficiency, particularly in environments with spiky demand curves. This work provides organizational decision-makers with a structured approach to assess cloud viability, optimize migration sequencing, and forecast return on investment under uncertainty. In sum, the study underscores the critical impetus behind adopting cloud platforms, enabling robust cost containment and flexible growth trajectories.