Modeling and Economic Analysis of the Cloud Brokering Platform Under Uncertainty: Choosing a Risk/Profit Trade-off

Alexei A. Gaivoronski (), Darijus Strasunskas (), Per J. Nesse (), Stein Svaet () and Xiaomeng Su ()
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Alexei A. Gaivoronski: Norwegian University of Science and Technology, 7491 Trondheim, Norway
Darijus Strasunskas: Norwegian University of Science and Technology, 7491 Trondheim, Norway
Per J. Nesse: Telenor Research and Future Studies, N-1331 Fornebu, Norway
Stein Svaet: Telenor Research and Future Studies, N-1331 Fornebu, Norway
Xiaomeng Su: Telenor Research and Future Studies, N-1331 Fornebu, Norway

Service Science, 2013, vol. 5, issue 2, 137-162

Abstract: This paper develops models for the analysis of a cloud brokering platform under conditions of risk and demand uncertainty, focusing on controlling the risk of not delivering the quality of service required by users. Such risk can occur as a result of inherent limitations of the best-effort connectivity. We take the approach of modern portfolio theory and show how the trade-off between risk and profit can be chosen by selecting efficient connectivity portfolios that combine the best-effort connectivity of different grades with premium-grade connectivity. We provide theoretical analysis of connectivity portfolio models and related insights delivered by numerical experiments that utilize the measurements of Internet traffic.

Keywords: cloud service broker; carrier-grade connectivity; best-effort traffic; portfolio of connectivities; risk/profit trade-off; portfolio theory (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:inm:orserv:v:5:y:2013:i:2:p:137-162

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