A procurement market to allocate cloud providers' residual computing capacity

Abstract

Commercial cloud providers are used to allocate computing resources to requesting customers according to the well known direct-sell, fixed-price mechanism. This mechanism is proved to be economically inefficient, as it does not account for the market's supply-demand rate. Nevertheless, providers will unlikely abandon a pricing mechanism which is very easy and cheap to implement in favour of alternative schemes. On the other end, none of the commercial providers adopting the fixed-price mechanism is able to allocate their overall computing capacity. Not selling a single virtual machine within a predefined time slot means a profit loss to the provider. Alternative mechanisms are therefore needed to sell what we call the "residual" computing capacity, i.e., the capacity which the provider is not able to allocate through direct-sell. We argue that auction-based sells may meet this need. In this paper the design of a procurement market for computing resources is proposed. Also, an adaptive bidding strategy has been devised to help providers to maximize the revenue in the context of procurement auctions. Simulations have been run to test the responsiveness of the strategy to the provider's business objective. © 2014 International Federation for Information Processing.