Alexei A.Gaivoronski IKT Økonomi1 Provision of mobile data services: portfolio analysis Norwegian University of Science and Technology, Trondheim, Norway Alexei A. Gaivoronski

IKT Økonomi2 Design of composite service Telecommunications IT services....

Alexei A.Gaivoronski IKT Økonomi3 Example of structural description of service provision

Alexei A.Gaivoronski IKT Økonomi4 Different constellations of roles

Alexei A.Gaivoronski IKT Økonomi5 Service architecture

Alexei A.Gaivoronski IKT Økonomi6 Services, roles and actors users servicesComponents, enablers, roles SPICE actors

Alexei A.Gaivoronski IKT Økonomi7 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

Alexei A.Gaivoronski IKT Økonomi8 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

Alexei A.Gaivoronski IKT Økonomi9 Risk/return tradeoff

Alexei A.Gaivoronski IKT Økonomi10 Quantitative model Description of service Services consist of components which my be provided by different actors N 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 v j –Revenue sharing coefficients –Actor who contribures with component i recieves revenue

Alexei A.Gaivoronski IKT Økonomi11 Description of actors Actors assume roles by providing service components This incurs costs and brings revenue K actors indexed by k c ik – unit provision costs for actor k providing component i W ik – provision capability of component i by actor k x ijk – the portion of provision capability for component i of actor k dedicated to participation in provision of service j. Profit model for actor k x ijk W ik - the volume of provision of component i dedicated by actor k to service j

Alexei A.Gaivoronski IKT Økonomi12 Profit model for actor k –x ijk W ik /λ ij - volume of service j in which the actor k participates –v j x ijk W ki /λ ij - the total revenue from this service –v j x ijk W ki γ ij /λ ij - the part of the revenue which goes to actor k –Profit of actor k:

Alexei A.Gaivoronski IKT Økonomi13 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

Alexei A.Gaivoronski IKT Økonomi14 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

Alexei A.Gaivoronski IKT Økonomi15 Efficient service portfolios Problem to solve for computing eficient frontier

Alexei A.Gaivoronski IKT Økonomi16 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

Alexei A.Gaivoronski IKT Økonomi17 Coordinator (service provider) problem Paper is available on Edition 1 of the model set

Alexei A.Gaivoronski IKT Økonomi18 Architecture of the DSS prototype

Alexei A.Gaivoronski IKT Økonomi19 Screenshot 1 of demo of DSS prototype

Alexei A.Gaivoronski IKT Økonomi20 Screenshot 2 of demo of DSS prototype

Alexei A.Gaivoronski IKT Økonomi21 Example: business person on the move

Alexei A.Gaivoronski IKT Økonomi22 Risk/performance preferences

Alexei A.Gaivoronski IKT Økonomi23 Market shares

Alexei A.Gaivoronski IKT Økonomi24 Price competition

Alexei A.Gaivoronski IKT Økonomi25 Summary Service design and planning constitutes a rich source of optimization problems under uncertainty They are not necessarily linear but they are worth solving