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Development of a bundling and resource re -allocation model in on demand business

Fei Qi, University of Nebraska - Lincoln


Web Services technology enables a Service-Oriented Architecture (SOA) with features such as "Just-in-Time" integration and "On-Demand" software/IT service provisioning. The objective of this dissertation is to study how to achieve optimal effectiveness when implementing this new technology. To the best of this researcher's knowledge, this is one of the earliest attempts to investigate Web Services from an economic perspective. The first sub-topic of this study is about how to apply bundling strategy for SOA implementation in the context of On Demand Business. This study proves that, it does not matter whether tight (there is no limitation for non-core components' internal price in a composition) or loose (there is limitation for non-core components' internal price) bundling strategy, composing non-core components is superior to non-composing strategy. Tight composition is more profitable but less feasible in practice. Loose composition is less profitable but more acceptable to customers. This study also indicates that monopoly of core components is the precondition to achieve advantages of the composition strategy of non-core components. The concept of null space is adopted to prove related conclusions. How to allocate resources to where they are needed is increasingly an important topic for academic society because the business/computing environment becomes even more dynamic. Traditional optimization methods can not provide satisfactory decisions in the dynamic environment. Market mechanisms may replace the dominance of hierarchy in resource allocation. In the second part of this study, previous research is reviewed and a new internal market mechanism is provided. The new mechanism is based on principle-agency theory and the auction approach. The proof of its advantage is based on a primal-dual algorithm. This mechanism is designed to make up some points not adequately considered in previous studies. This study shows that the designed mechanism will lead to an equilibrium and optimal solution.

Subject Area


Recommended Citation

Qi, Fei, "Development of a bundling and resource re -allocation model in on demand business" (2007). ETD collection for University of Nebraska - Lincoln. AAI3252831.