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Scheduling Flexible Demand in Cloud Computing Spot Markets

Author

Listed:
  • Robert Keller

    (University of Bayreuth)

  • Lukas Häfner

    (University of Augsburg)

  • Thomas Sachs

    (University of Bayreuth)

  • Gilbert Fridgen

    (University of Bayreuth)

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 have temporal flexibility to execute their jobs before a specific deadline. In this paper, the authors apply real options analysis (ROA), which is an established valuation method designed to capture the flexibility of action under uncertainty. They adapt and compare multiple discrete-time approaches that enable cloud customers to quantify and exploit the monetary value of their short-term temporal flexibility. The paper contributes to the field by guaranteeing cloud job execution of variable-time requests in a single cloud spot market, whereas existing multi-market strategies may not fulfill requests when outbid. In a broad simulation of scenarios for the use of Amazon EC2 spot instances, the developed approaches exploit the existing savings potential up to 40 percent – a considerable extent. Moreover, the results demonstrate that ROA, which explicitly considers time-of-day-specific spot price patterns, outperforms traditional option pricing models and expectation optimization.

Suggested Citation

  • Robert Keller & Lukas Häfner & Thomas Sachs & Gilbert Fridgen, 2020. "Scheduling Flexible Demand in Cloud Computing Spot Markets," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 62(1), pages 25-39, February.
    • Handle: RePEc:spr:binfse:v:62:y:2020:i:1:d:10.1007_s12599-019-00592-5
    DOI: 10.1007/s12599-019-00592-5
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    References listed on IDEAS

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    Cited by:

    1. Gilbert Fridgen & Marc-Fabian Körner & Steffen Walters & Martin Weibelzahl, 2021. "Not All Doom and Gloom: How Energy-Intensive and Temporally Flexible Data Center Applications May Actually Promote Renewable Energy Sources," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 63(3), pages 243-256, June.

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