alexei a.gaivoronski ikt Økonomi1 provision of mobile data services: portfolio analysis norwegian...

Alexei A.Gaivoronski

IKT Økonomi 1

Provision of mobile data services: portfolio analysis

Norwegian University of Science and Technology, Trondheim, Norway

[email protected]

Alexei A. Gaivoronski


IKT Økonomi 2

Design of composite service

• Telecommunications• IT services • ....


IKT Økonomi 3

Example of structural description of service provision


IKT Økonomi 4

Different constellations of roles


IKT Økonomi 5

Service architecture

risk

return

feasible set

R

x

eff icient f rontier

x0x1

x2

risk

return

feasi ble set

R

x

efficient f rontier

x0x1

x2

risk

return

feasi ble set

R

x

eff icient f ron tier

x0x1

x2

risk

return

feasible set

R

x

eff icien t frontier

x0x1

x2

risk

re turn

feasib le set

R

x

efficient frontier

x0x1

x2

risk

re turn

feasi ble set

R

x

eff icient f rontier

x0x1

x2

risk

return

feasible se t

R

x

efficient f rontier

x0x1

x2

risk

re turn

feasib le set

R

x

efficient frontier

x0x1

x2

risk

return

feasible se t

R

x

efficient f rontier

x0x1

x2

risk

return

feasible se t

R

x

efficient f rontier

x0x1

x2


IKT Økonomi 6

Services, roles and actorsusers services Components, enablers, roles

SPICE

actors


IKT Økonomi 7

Economic requirements• Platform should be attractive for all actors• Actors should feel incentive to join service

provision, that is they should want to join cooperative effort because they will benefit from it

• Services should provide to actors a competitive source of profit

• Risk/return considerations: risk that users will not accept the service as expected, cannibalizing, etc


IKT Økonomi 8

Approach of modern financial theory

• Actors participate in service(s) provision assuming roles and providing components for services

• Quantify cash flow, profits and risks• Each actor will select tradeoff between profit and risk

exposure according to its preferences• This will result in service portfolio for each actor• Coordination tools should assure that the actors will

select on their own accord participation in service provision in required proportion


IKT Økonomi 9

Risk/return tradeoff

risk

return

feasible set

R

x

efficient frontier

x0x1

x2


IKT Økonomi 10

Quantitative modelDescription of service

• Services consist of components which my be provided by different actorsN components indexed by i and M services indexed by j

ij - share of component i in service j.

Description of service through components:

• Service generate revenue vj

– Revenue sharing coefficients

– Actor who contribures with component i recieves revenue

j 1j , . . , Nj

j 1j , . . , Nj

ijv i


IKT Økonomi 11

Description of actors• Actors assume roles by providing service components• This incurs costs and brings revenue

K actors indexed by kcik – unit provision costs for actor k providing component i

Wik – provision capability of component i by actor k

xijk – the portion of provision capability for component i of actor k dedicated to participation in provision of service j.

Profit model for actor kxijkWik - the volume of provision of component i dedicated by actor k to

service j


IKT Økonomi 12

Profit model for actor k

– xijkWik/λij- volume of service j in which the actor k participates

– vjxijkWki/λij - the total revenue from this service

– vjxijkWkiγij/λij - the part of the revenue which goes to actor k

– Profit of actor k:

k j 1

M

v jx ijkW ik ij

ij x ijkc ikWik

j 1

M

x ijkW ikc ikv j ij

cik ij 1


IKT Økonomi 13

Profit model for actor k• Basic case: an actor provides only one

component– Profit

– Return

– Portfolio viewpoint: an actor chooses portfolio of services to which contribute

i W ic i j 1

M

x ijv j ij

ci ij 1

r i j 1

M

x ijv j ij

ci ij 1

x i x i1, . . . , x iM


IKT Økonomi 14

Portfolio viewpoint– Return coefficients associated with participation in

each service

– expected return coefficients

– expected return

• Risk that actual return will be different from expected return or even become loss

r ij v j ij

ci ij 1

ij ijE v j

ci ij 1

r i j 1

M

ijx ij j 1

M

x ij ijE v j

ci ij 1


IKT Økonomi 15

Efficient service portfolios

• Problem to solve for computing eficient frontier

minx StDev2 j 1

M

x ijv j ij

ci ij 1

j 1

M

x ij ijE v j

ci ij 1

j 1

M

x ij 1, x ij 0


IKT Økonomi 16

Next level: quantitative coordination

• What is necessary is that the whole service provision platform functions properly

• And this means that different actors should independently make decisions to participate in different services which nevetherless will provide coordinated result.

• Revenue sharing coefficients should be chosen in order to achieve this


IKT Økonomi 17

Coordinator (service provider) problem

Paper is available on Edition 1 of the model set


IKT Økonomi 18

Architecture of the DSS prototype

Mathematicalmodel

Top level algorithmsScenario generation

Postprocessing

Problem solvers

Data and userinterface

Data User interaction

Results presentation

Excel MATLAB

XPRESS

SQGCPLEX

results

dataUser intervention

Service modelDetailed service

structure, resources

Service description


IKT Økonomi 19

Screenshot 1 of demo of DSS prototype


IKT Økonomi 20

Screenshot 2 of demo of DSS prototype


IKT Økonomi 21

Example: business person on the move


IKT Økonomi 22

Risk/performance preferences

0.05

0.1

0.15

0.2

0.25

0.3

0 0.2 0.4 0.6 0.8

risk

prof

it


IKT Økonomi 23

Market shares

0

0.2

0.4

0.6

0.8

1

0 0.2 0.4 0.6 0.8

risk

plat

form

ser

vice

s


IKT Økonomi 24

Price competition

0

0.2

0.4

0.6

0.8

1

0.18 0.2 0.22 0.24 0.26 0.28 0.3 0.32 0.34

risk

plat

form

ser

vice

s

-10%-5%+510


IKT Økonomi 25

Summary

• Service design and planning constitutes a rich source of optimization problems under uncertainty

• They are not necessarily linear but they are worth solving

alexei a.gaivoronski ikt Økonomi1 provision of mobile data services: portfolio analysis norwegian...

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