Service Level Agreement Violations in Cloud Storage: Insurance and Compensation Sustainability

Loretta Mastroeni, Alessandro Mazzoccoli and Maurizio Naldi
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Loretta Mastroeni: Department of Economics, University of Roma Tre, 00145 Rome, Italy
Alessandro Mazzoccoli: Department of Civil Engineering and Computer Science, University of Roma Tor Vergata, 00133 Rome, Italy
Maurizio Naldi: Department of Civil Engineering and Computer Science, University of Roma Tor Vergata, 00133 Rome, Italy

Future Internet, 2019, vol. 11, issue 7, 1-26

Abstract: Service Level Agreements are employed to set availability commitments in cloud services. When a violation occurs as in an outage, cloud providers may be called to compensate customers for the losses incurred. Such compensation may be so large as to erode cloud providers’ profit margins. Insurance may be used to protect cloud providers against such a danger. In this paper, closed formulas are provided through the expected utility paradigm to set the insurance premium under different outage models and QoS metrics (no. of outages, no. of long outages, and unavailability). When the cloud service is paid through a fixed fee, we also provide the maximum unit compensation that a cloud provider can offer so as to meet constraints on its profit loss. The unit compensation is shown to vary approximately as the inverse square of the service fee.

Keywords: cloud storage; service level agreements; insurance; compensations; refunds (search for similar items in EconPapers)
JEL-codes: O3 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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