techno-economic analysis of reliable ict networks and services

Techno-economic analysis of reliable ICT networks and services

Sofie Verbrugge

Invited talk DRCN2017Munich, Germany, March 9th 2017

Techno-economic analysissupports investment decisions

Techno-economic analysisis always done in a multi-actor context

Techno-economics analysisdeals with expected market and customer dynamics

Techno-economics analysistakes the impact of uncertain changes into account

Techno-economics analysisneeds to adapt to boundary conditions

BudgetTechnicalPolicyGeography/demographyEtc.

Investment decision based on innovationcan be situated on different layers in the network stack

7

Network

deployment

Infrastructure

deployment

Service deployment

and operations

Outline

• What is techno-economic analysis?

• How to make a quick assessment?

• What are appropriate cost models in an investment analysis?

• How to integrate more advanced concepts in an easy way?

• Where to find all information?

• Wrap-up and call for action

Business Model Canvasproposed by A. Osterwalder

9

Example: Irrigation monitoring systemsmart farming solution based on IoT

Example: Irrigation monitoring systembusiness model canvas

Key

PartnersKey

Activities

Key

Resources

Value

proposition

Customer

relationshipsCustomer

segments

Customer

channels

RevenuesCosts

sensor and network

deploymentpromise of better yield

continuous contract

irrigation experts

farmers

direct marketing

farming expositions

upfront deployment

fee

monitoring contract

sensors network deployment

data storage and analysis

app for the farmer

irrigation system vendorsnetworking

equipment

manpower

sensor vendors

implement logic

Template and explanation availablefor business model canvas

Outline

• What is techno-economic analysis?

• How to make a quick assessment?

• What are appropriate cost models in an investment analysis?

• How to integrate more advanced concepts in an easy way?

• Where to find all information?

• Wrap-up and call for action

Appropriate level of detail/abstractiondepends on available input data and goal of the model

Level of detail

Fractional

Function of driver

Dedicated dimensioning

ProcessesInfrastructure

Fractional cost modelingis on the highest abstraction level

Source: Orange – from FTTH pilot to pre-rollout in France

Determine fraction of overall costs to allocate to different partsbased on previous projects (pilots, other areas, etc)

Function of driver cost modelingis on the intermediate abstraction level

Examples of drivers:

installation length (50€/m)

customer base (1k €/cust)

…

combinations possible

Find the parameter that mainly drives the cost

This is the most common cost modeling approach!

Dedicated dimensioningis on the lowest abstraction level, thus gives most detail

20

Model in detail all resources that you need

based on detailed view of actual implementation

Customers ODF Slot

Open Access

ODF Slot

Optical SFP OLT Card Shelf

L2 Transport

CardL2 Switch

System Rack

Control Card

Central Office

Power Supply

1:1 ODF Rack

Open Access

ODF Rack

1:1

1:1

48:1

2048:1

2048:1

1:1

1:1

1:1

32:1

3:1 4:1

Drivers Granularities

Equipment

blocks

Detailed equipment modeling using ECMNexample: FTTH network

21

Open ECMN specification availablepart of FI-ware open specification

Net2Plan tool availableallows to model equipment per year

•Planning and evaluation of a multilayer IP-over-WDM network•Goal• Plan and allocate the resources

at the IP and optical layers for a given year• while minimizing the capital

expenditures (CAPEX) cost of the network

• Open source Java tool

• Developed at Universidad Politécnica de Cartagena

Detailed process modeling using BPMNexample: network repair process

24

Ex

tern

al

Ad

min

istr

ati

ve

Te

ch

nic

al

rem

ote

Te

ch

nic

al in

th

e f

ield

HW failure

SW failure

Create

TT

Report

problemProblem

on public

domain

Cable cut

Not previously reported

Already reported

Measure

lines

Log

Close

TT

External failure

+

CC repair

in fiber network

+

HW repair

in fiber network

+

SW repair

in fiber network

+

External repair

in fiber network

+

Fault diagnosis+

Fault isolation and

traffic recovery

activities

gateways

events

sequence

flowsswimlanes

Investment decision is about comparing incoming and outgoing cash-flows over time

26

2017 2018 2019 2020 2021

tijd

100

120

0

20

40

60

80

now year1 year2 year3 year 4 year5

current value of 100€ spent in the future

Net present valueis widely spread investment decision technique

27

(r = 3%)

ni

FC

)1(

C = current value

F = future value

i = discount rate

n = time period (years)

?0)1(0

n

tt

t

r

CFNPV

White paper and tutorial availablefor techno-economic analysis cycle

Model

Evaluate

Refine

Scope

Fractional

model

Driver-based

model

Net Present

Value

Costs

Detailed

dimensioning

Revenues

Payback

period

Internal rate

of return

Outline

• What is techno-economic analysis?

• How to make a quick assessment?

• What are appropriate cost models in an investment analysis?

• How to integrate more advanced concepts in an easy way?

• Where to find all information?

• Wrap-up and call for action

Real option theorymakes a distinction between 7 typical types of options (7S)

33

Flexible roll-out gives valueas shown by real options

+

phased decision

vs.

static roll-out

Value of flexibility = option value

Tutorial paper and presentation available concerning practical use of real options in ICT projects

Game theorymodels the impact of interaction

36

Game theory is a discipline aimed atmodeling situations in which decisionmakers have to make specific actionsthat have mutual, possibly conflicting,consequences.

Competition has big impactas shown by game theory

37

expected pay-off

vs.

actual pay-off in case of

competition

Online business game availablefor integration in Master course

Indirect effects can be modeledby socio-economic return on investment indicators (SEROI)

. Indicators

Jobs & Productivity

Rural demographics

Environmental impact

CommutingPublic health

Public savings

Digital service/innovat

ion

SEROISEROI

Socio-economic

return

Investment

Outline

• What is techno-economic analysis?

• How to make a quick assessment?

• What are appropriate cost models in an investment analysis?

• How to integrate more advanced concepts in an easy way?

• Where to find all information?

• Wrap-up and call for action

www.technoeconomicsportal.eu

41

www.technoeconomicsportal.eu

42

www.technoeconomicsportal.eu

43

Outline

• What is techno-economic analysis?

• How to make a quick for assessment?

• What are appropriate cost models in an investment analysis?

• How to integrate more advanced concepts in an easy way?

• Where to find all information?

• Wrap-up and call for action

Standard approaches can helpin order to tackle difficulties in techno-economic research

45

Multi-actor Uncertainty

DynamicsCase-specific constraints

Common templates and toolsneeded in order to take techno-economics research to next level

46

www.technoeconomicsportal.eu

Do you want to join?Do you have any questions?

sofie.verbrugge@ugent.be