Demand Heterogeneity in IT Infrastructure Services: Modeling and Evaluation of a Dynamic Approach to Defining Service Levels.

Author List: Sen, Sagnika; Raghu, T. S.; Vinze, Ajay;
Information Systems Research, 2009, Volume 20, Issue 2, Page 258-276.
A key feature of service-oriented models of information technology is the promise of prespecified quality levels enforceable via service level agreements (SLAs). This poses difficult management problems when considerable variability exists in user preferences and service demand within any organization. Because variance in expectations impact service levels, effective pricing and resource allocation mechanisms are needed to deliver services at the promised quality level. In this paper, we propose a mechanism for SLA formulation that is responsive to demand fluctuations and user preference variance, with the objective of maximizing organizational welfare of the participants. This formulation features a dynamic priority based price-penalty scheme targeted to individual users. An analytical model is presented and evaluated for effectiveness of a proposed dynamic priority-based pricing scheme vis-à-vis a baseline fixed-price single-quality level SLA. Simulations using data from an existing SLA is used to provide evidence that the proposed dynamic pricing scheme is likely to be more effective than a fixed-price approach from a system welfare perspective.
Keywords: IT services; outsourcing; service level agreements; simulation
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#195 0.297 pricing services levels level on-demand different demand capacity discrimination mechanism schemes conditions traffic paper resource expected based constraints solution latency
#211 0.175 service services delivery quality providers technology information customer business provider asp e-service role variability science propose logic companies especially customers
#44 0.096 approach analysis application approaches new used paper methodology simulation traditional techniques systems process based using proposed method present provides various
#191 0.083 model models process analysis paper management support used environment decision provides based develop use using help literature mathematical presented formulation
#284 0.076 users user new resistance likely benefits potential perspective status actual behavior recognition propose user's social associated existing base using acceptance
#159 0.062 systems information objectives organization organizational development variety needs need efforts technical organizations developing suggest given effective designing lack help recent
#262 0.052 impact data effect set propensity potential unique increase matching use selection score results self-selection heterogeneity evidence measure associated estimate leads