Scheduling Flexible Demand in Cloud Computing Spot Markets : A Real Options Approach

Titelangaben

Keller, Robert ; Häfner, Lukas ; Sachs, Thomas ; Fridgen, Gilbert:
Scheduling Flexible Demand in Cloud Computing Spot Markets : A Real Options Approach.
In: Business & Information Systems Engineering. Bd. 62 (2020) Heft 1 . - S. 25-39.
ISSN 1867-0202
DOI: https://doi.org/10.1007/s12599-019-00592-5

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Abstract

The rapid standardization and specialization of cloud computing services have led to the development of cloud spot markets on which cloud service providers and customers can trade in near-real-time. Frequent changes in demand and supply give rise to spot prices that vary throughout the day. Cloud customers often possess temporal flexibility in executing their jobs up to an individual deadline. In this paper, we apply real options analysis (ROA), which is an established valuation method designed to capture according flexibility of action under uncertainty. We adapt and compare multiple discrete-time approaches that enable cloud customers to quantify and exploit the monetary value of short-term temporal flexibility. We contribute to literature by guaranteeing cloud job execution on variable-time requests in a single cloud spot market, whereas existing multi-market strategies may not fulfill requests when outbid. Analyzing a large set of example scenarios for the use of Amazon EC2 spot instances, we demonstrate that our approaches exploit existing savings potential to a considerable extent of up to 40 percent. Moreover, we demonstrate that ROA which explicitly considers time-of-day-specific spot price patterns outperforms traditional option pricing models and expectation optimization.