1. Cloud Computing modelling and adoption Maurizio Naldi Universit`a di Roma Tor Vergata DATA, DIGITAL BUSINESS MODELS, CLOUD COMPUTING AND ORGANIZATIONAL DESIGN Paris 24-25 November 2014 2. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 2/18 Introduction 3. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 2/18 Introduction 4. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 2/18 Introduction 5. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 2/18 Introduction 6. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 2/18 Introduction 7. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 2/18 Introduction 8. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 2/18 Introduction 9. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 2/18 Introduction 10. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 2/18 Introduction 11. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 2/18 Introduction 12. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 2/18 Introduction 13. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 2/18 Introduction 14. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 2/18 Introduction 15. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 3/18 In-house costs 16. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 4/18 Costs in the in-house solution 17. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 4/18 Costs in the in-house solution 18. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 4/18 Costs in the in-house solution 19. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 4/18 Costs in the in-house solution 20. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 4/18 Costs in the in-house solution 21. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 4/18 Costs in the in-house solution 22. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 5/18 Costs of outsourcing 23. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 6/18 Pricing models 24. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 6/18 Pricing models 25. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 6/18 Pricing models 26. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 6/18 Pricing models 27. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 6/18 Pricing models 28. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 7/18 Decision criteria 29. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 8/18 The evaluation approach 30. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 8/18 The evaluation approach 31. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 8/18 The evaluation approach 32. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 8/18 The evaluation approach -200000 -100000 0 100000 200000 300000 400000 Differential NPV [$] 0 1x10-6 2x10-6 3x10-6 4x10-6ProbabilityDensityFunction 33. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 9/18 Decision criteria 34. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 9/18 Decision criteria 35. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 9/18 Decision criteria 36. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 9/18 Decision criteria 37. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 9/18 Decision criteria 38. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 9/18 Decision criteria 39. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 10/18 Errors 40. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 10/18 Errors 41. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 11/18 Risk analysis 42. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 11/18 Risk analysis 43. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 11/18 Risk analysis 44. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 11/18 Risk analysis 45. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 11/18 Risk analysis 0 5 10 15 20 Initial memory requirement [TB] 0 0.1 0.2 0.3 0.4 0.5 0.6 Errorprobability Median Mean Decision criterion 46. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 11/18 Risk analysis 0 5 10 15 20 Initial memory requirement [TB] 0 0.1 0.2 0.3 0.4 0.5 0.6 Errorprobability Median Mean Decision criterion 0 5 10 15 20 Initial memory requirement [TB] -2E5 0 2E5 4E5 Value-at-risk Median Mean Decision criterion 47. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 11/18 Risk analysis 0 5 10 15 20 Initial memory requirement [TB] 0 0.1 0.2 0.3 0.4 0.5 0.6 Errorprobability Median Mean Decision criterion 0 5 10 15 20 Initial memory requirement [TB] -2E5 0 2E5 4E5 Value-at-risk Median Mean Decision criterion 0 5 10 15 20 Initial memory requirement [TB] -2E5 0 2E5 4E5 6E5 8E5 1E6 1.2E6 1.4E6 CVaR Median Mean Decision criterion 48. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 12/18 Risks after adoption 49. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 13/18 Fighting unavailability: a multicloud arrangement 50. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 13/18 Fighting unavailability: a multicloud arrangement 51. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 13/18 Fighting unavailability: a multicloud arrangement 52. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 13/18 Fighting unavailability: a multicloud arrangement 53. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 13/18 Fighting unavailability: a multicloud arrangement 54. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 13/18 Fighting unavailability: a multicloud arrangement 55. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 13/18 Fighting unavailability: a multicloud arrangement 56. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 14/18 Protection against unavailability 57. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 14/18 Protection against unavailability An insurance scheme can be devised to cover the losses due to unavailability 58. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 14/18 Protection against unavailability An insurance scheme can be devised to cover the losses due to unavailability Premium computation using the expected utility approach 59. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 14/18 Protection against unavailability An insurance scheme can be devised to cover the losses due to unavailability Premium computation using the expected utility approach Exponential utility function Constant Absolute Risk Aversion (CARA) property 60. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 14/18 Protection against unavailability An insurance scheme can be devised to cover the losses due to unavailability Premium computation using the expected utility approach Exponential utility function Constant Absolute Risk Aversion (CARA) property Loss proportional to overall unavailability 61. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 14/18 Protection against unavailability An insurance scheme can be devised to cover the losses due to unavailability Premium computation using the expected utility approach Exponential utility function Constant Absolute Risk Aversion (CARA) property Loss proportional to overall unavailability Markovian ON-OFF service model 62. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 14/18 Protection against unavailability An insurance scheme can be devised to cover the losses due to unavailability Premium computation using the expected utility approach Exponential utility function Constant Absolute Risk Aversion (CARA) property Loss proportional to overall unavailability Markovian ON-OFF service model 63. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 14/18 Protection against unavailability An insurance scheme can be devised to cover the losses due to unavailability Premium computation using the expected utility approach Exponential utility function Constant Absolute Risk Aversion (CARA) property Loss proportional to overall unavailability Markovian ON-OFF service model 64. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 14/18 Protection against unavailability An insurance scheme can be devised to cover the losses due to unavailability Premium computation using the expected utility approach Exponential utility function Constant Absolute Risk Aversion (CARA) property Loss proportional to overall unavailability Markovian ON-OFF service model 1 2 3 4 Number of clouds 1000 1200 1400 1600 1800 2000 Totalcost 65. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 15/18 Protection against price rises 66. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 15/18 Protection against price rises 67. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 15/18 Protection against price rises 68. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 15/18 Protection against price rises 69. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 15/18 Protection against price rises 70. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 15/18 Protection against price rises 71. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 15/18 Protection against price rises 0 1 2 3 4 5 Duration [years] 0 10 20 30 NormalizedPremium 72. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 16/18 Protection against overall costs 73. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 16/18 Protection against overall costs 74. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 16/18 Protection against overall costs 75. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 16/18 Protection against overall costs 76. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 16/18 Protection against overall costs 77. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 16/18 Protection against overall costs 78. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 16/18 Protection against overall costs 5 6 7 8 9 10 No. of years 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 InsurancePrice/DNPV 5 TB 10 TB Initial memory 79. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 16/18 Protection against overall costs 5 6 7 8 9 10 No. of years 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 InsurancePrice/DNPV 5 TB 10 TB Initial memory 0 0.1 0.2 0.3 Error probability 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 Price/DNPV 5 TB 10 TB Initial memory 80. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 17/18 References 1. Maurizio Naldi, Loretta Mastroeni. Economic decision criteria for the migration to cloud storage. European Journal of Information Systems, 2014. 2. Loretta Mastroeni, Maurizio Naldi. Pricing of insurance policies against cloud storage price rises. ACM SIGMETRICS Performance Evaluation Review, Volume 40 Issue 2, September 2012, pp. 42-45 3. Maurizio Naldi. Balancing Leasing and Insurance Costs to Achieve Total Protection in Cloud Storage Multi-Homing. 11h International Conference on the Economics of Grids, Clouds, Systems, and Services GECON 2014, Cardiff, UK, September 16-18, 2014. Lecture Notes in Computer Science, Springer. 4. Maurizio Naldi. Forecast Uncertainty in Procurement Decisions for Cloud Storage. 16th International Conference on Computer Modelling and Simulation UKSim 2013, Cambridge, March 26-28, 2014, pp. 237-242 5. Maurizio Naldi, Loretta Mastroeni. Cloud Storage Pricing: A Comparison of Current Practices. International Workshop on Hot Topics in Cloud HotTopiCS 2013 (4th International Conference on Performance Engineering), Prague, 20-21 April 2013, pp. 27-34 6. Maurizio Naldi. The availability of cloud-based services: is it living up to its promise ? 9th International Conference on Design of Reliable Communication Networks DRCN 2013, Budapest, Hungary, March 4-7, 2013, pp. 282-289 7. Loretta Mastroeni, Maurizio Naldi. Long-range Evaluation of Risk in the Migration to Cloud Storage. IEEE Conference on Commerce and Enterprise Computing CEC 2011, Luxembourg, 5-7 September 2011, pp. 260-266 8. Loretta Mastroeni, Maurizio Naldi. Storage Buy-or-Lease decisions in cloud computing under price uncertainty. 7th EURO-NGI Conference on Next Generation Internet NGI 2011, Kaiserslautern, Germany, 27-29 June 2011 81. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 18/18 Conclusions 82. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 18/18 Conclusions A stochastic DNPV approach can be employed to take migration decisions in the face of uncertainty 83. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 18/18 Conclusions A stochastic DNPV approach can be employed to take migration decisions in the face of uncertainty Three metrics help us evaluate the ensuing risk 84. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 18/18 Conclusions A stochastic DNPV approach can be employed to take migration decisions in the face of uncertainty Three metrics help us evaluate the ensuing risk Post-adoption risks have been investigated, related to: 85. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 18/18 Conclusions A stochastic DNPV approach can be employed to take migration decisions in the face of uncertainty Three metrics help us evaluate the ensuing risk Post-adoption risks have been investigated, related to: 1. Cloud storage price rises 86. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 18/18 Conclusions A stochastic DNPV approach can be employed to take migration decisions in the face of uncertainty Three metrics help us evaluate the ensuing risk Post-adoption risks have been investigated, related to: 1. Cloud storage price rises 2. Cloud unavailability 87. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 18/18 Conclusions A stochastic DNPV approach can be employed to take migration decisions in the face of uncertainty Three metrics help us evaluate the ensuing risk Post-adoption risks have been investigated, related to: 1. Cloud storage price rises 2. Cloud unavailability 3. Overall cost uctuations 88. Cloud insurance Maurizio Naldi Introduction Costs Decision criteria Risks after adoption Conclusions 18/18 Conclusions A stochastic DNPV approach can be employed to take migration decisions in the face of uncertainty Three metrics help us evaluate the ensuing risk Post-adoption risks have been investigated, related to: 1. Cloud storage price rises 2. Cloud unavailability 3. Overall cost uctuations Pricing methods have been devised for Insurance policies