Webb, G. Kent

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San Jose State UniversitySJSU ScholarWorksFaculty Publications Management Information SystemsJanuary 2000Location of Network ComponentsG. Kent WebbSan Jose State University, g.webb@sjsu.eduFollow this and additional works at: https://scholarworks.sjsu.edu/mis_pubPart of the Management Information Systems CommonsThis Article is brought to you for free and open access by the Management Information Systems at SJSU ScholarWorks. It has been accepted forinclusion in Faculty Publications by an authorized administrator of SJSU ScholarWorks. For more information, please contact scholarworks@sjsu.edu.Recommended CitationG. Kent Webb. "Location of Network Components" Issues in Information Systems (2000): 446-452.LOCATION OF NETWORK COMPONENTS Kent Webb, San Jose State University, webb_k@cob.sjsu.edu ABSTRACT The high cost ofcomputer network components, such as processors and circuits, resulted in the host-based computing model that dominated.from the 1950s into the 1980s. Users shared the cost ofexpensive mainframe computers. Dramatic reductions in the price ofthese network components allowed for the emergence ofpersonal computers and the client-based computing model during the 1980s. The drive to reduce the cost ofcommunications among client computers in organizations contributed to the client-server architecture that currently dominates the market. This paper develops an economic location model ofcomputer-communications networks calibrated with historic data. The model can be used to speculate on future trends. Keywords: Network Computing, Location Cost, Optimal Design, System Economics INTRODUCTION Two issues that have attracted much current attention and which may impact the location of network components in the future are the high labor costs associated with current systems and the dramatic improvement in the speed and price ofnetwork communications. The issue of growing labor costs has been addressed in the context of the Total Cost ofOwnership, with current estimates that 60 to 80 percent of the expense ofoperating a business computer network are associated with administration and support. At the same time, improvements in the price to performance ratio for data communications, processing, and storage over the past few years have dramatically changed the network environment. Within the framework of the client-server model, the high cost ofuser support has already encouraged a movement to the thin client modeL Technology companies are busy creating the technology that would move this trend forward to the network computer. Sun Microsystems, for example, has recently demonstrated a computer card that looks like a typical credit card, but which allows a computer user to carry his most recent desktop in his wallet. Silicon Graphics is working on technology for computing fabrics, a business model similar to the time sharing systems that were familiar in mainframe environments. The network computers in this model would not contain processors, but would connect through the Internet to share processing, storage, and software. These new network models may succeed in changing the computing environment if they provide sufficient economic benefit to organizations and individual users. This paper proposes a model grounded in economic location theory and drawing on optimization tools that can be used to investigate network configurations. At least two general areas ofliterature contribute to solutions of network modeling problems. The literature on network economics provides support for problems related to standards (2, 4, 7, 446 Memory,m Processor, pInput/Output, i Storage, s LOCATION OF NETWORK COMPONENTS IACIS2000 12), Reale economies {1, 15, 16, 17), &nd market §tructure (3,10, ll, 14). The technical literature on networks examines the physical structure ofnetworks ( 6, 8) and tools for numerical optimization (5, 9, 13, 18). THE GENERAL MODEL Consider a group ofcomputer users (U) distributed over an area that can be connected by a single bus, represented by a line. Users may incur a cost in traveling to an input/output (I) device that allows for access to a processor (P) that is linked to memory (M) and storage (S). Bringing computer resources to users through a network involves costs related to transmission speed and distance. The labor costs required to support the system are related to the number ofusers and the complexity of the system. The optimal system design that minimizes total systems cost, C, subject to service and technical constraints is defined as: where, I; the cost of input/output device i. PP the cost ofprocessorp. Mrn the cost ofmemory at location m. S, the cost of storage at location s. Lu,i,p,m,sthe labor cost to suppor user u, input/output device i, processrp, memory m, and storages. Uu,; the cost to user u on the network to have access to input/output device i I;,p the cost to network input/output device i with processor p. Pp,p the cost to network processors p Mm,p the cost to network memory at location m with processor p. S,,p the cost to network storage at location s with processor p. Figure I illustrates the basic model for a familiar situation ofa single user sitting in front ofan input/output device attached to a processor supported with memory and storage. Figure 1: The General Model for u,i,p,m and s =1 In Figure 2, the model is expanded to illustrate two users in a client/server architecture who share a printer. As the relationships that drive costs in the network model change over time, the optimal network configuration changes. 447 Memory, 1 Processor, 1Input/Output, 1 Storage, 1 P1,2 Memory,2 Input/Output, 2 Processor, 2 Storage, 2 p2,3 Memory,3 Input/Output, 3 Processor,3 Storage, 3 IACIS 2000 LOCATION OF NETWORK COMPONENTS Figure 2: The General Model for a Client/Server Network with Two Usen and a Shared Printer MODEL DETAILS AND DATA The following section specifies details of the network cost elements following the activity based costing approach that ties cost to specific cost drivers. For each variable affecting system cost, the cost drivers are discussed and parameter estimates are provided. Components Costs (1, P, M, S) Prices for input/output (1), processing (P), memory (M), and storage (S) have generally declined over time while quality has improved. Representative prices appear in Table I for the 1970 to 2000 time frame. The price of an input/output device reflects the average configuration of either a terminal with keyboard or a printer. Processing prices include a CPU with necessary supporting hardware such as a printed circuit board. Memory and storage prices are for standard configurations in this example, but a more detailed version ofthe model would relate prices to speed and size. 448 LOCATION OF NETWORK COMPONENTS 	 JACJS2000 Users' needs for processing, like their transport costs, will vary among individuals and can be approximated using a probability distribution. Processing resources come in discrete bundles, computer processor units. Measurement ofprocessing unit resources is more complicated than elements like storage which are commonly measured in bytes. Instructions per second is perhaps the most commonly accepted measure. An approximation can be made as in the following equation that looks at the cost of a processor, p, and the number ofusers, k, which can be supported by a single processor. In the case of personal computers k = 1. Pi = p8(llka) (2) where, Pa is the cost ofa central processing unit ofarchitecture type a k. 	 is the number of users that can be supported by a single processor ofarchitecture type a, minimintion ofthis cost element requires that k be an interger The Users' Costs (Uu,i) Users incur travel costs to processing facilities that include the users' time and the cost of transportation. U._;= u.Du.t (3) where, Uu,i the cost to user u on the network to have access to the input/output device at location i. U/ the estimated cost to user u for traveling each unit of distance to the input/output device a location i. Costs are distributed following the lognormal. Du,i the distance in feet between user u and processing capacity at location p. Distances are assumed to be uniformly distributed. Travel costs per unit distance will vary among users reflecting differences in the cost of time for different individual users. The simulations developed in this paper rely on a log-normal distribution ofuser cost, a common approach for estimating income and wage distributions. In this example users are assumed to be uniformly distributed over the network. The impact of alternative distance distributions is a common thread in the location literature. The Network Cost (I1,po P,,, Mm,po S.,..) Notations with two subscripts in this model indicate a network connection. For example, Ii,p specifies the network cost for input/output device ito be connected to processor p. Memory and storage are both connected to processors, indicated respectively by Mm,p or Ss,p· Network costs are typically a function ofdistance and speed measured commonly in bits per second. Some technical constraints require integer solutions, such as the limited number of speeds available in the market. For example, modems currently operate at 56kbps, 33 kbps, and 28 kbps. Users need for network speed will vary, with some users applications requiring higher speed network connections, and could be modeled with some distribution like the log-normal. 449 IACIS 2000 LOCATION OF NETWORK COMPONENTS Equation 4below makes the simplifying ~\llllption that network conne~o11:1 oper11te lit 11 standard speed so that the cost ofthe network connection is related to the cost per unit distance, n, separating the user u and processorp. Also that there is fixed cost of setting up the connections, a, including tenninal equipment In the case ofwireless connections, which are often not cost sensitive to changes in distance over a certain range, all of the costs may be associated with the fixed cost. l;,p = lli,p +n;,pD~P (4) where, I;,p the cost to network input/output device i with the processor p. a;,p the fixed cost of a network connection between input/output device i and processorp. n;,p the cost ofnetworking per unit distance from input/output device i to processor p D~p the distance in feet between input/output device i and processor p. Following this same format, network cost equations are developed for processors (Pp,p), memory (Mm,p). and storage (Ss,p). The notation assumes that a processor can be linked to other processors (Pp,p) and that memory and storage are linked to processors (Mm,p or Ss,p)· The technical literature provides a lot a detail for expansion ofthe model in this area. Table 1 contains estimates ofhistorical values for network components and labor. Network connection and user access costs are described in Table 2. There are also technical and service constraints for many ofthe model parameters. Cost estimates and model equations are combined into a spreadsheet used to fmd the minimum network cost defined in Equation 1. Table 1: Estimated Costs for Network Components and Labor {in doUars, annual) Parameter I p M s LperUser L per Component Year 1970 325 10,000 10000 4000 1500 200 1980 250 3500 600 900 1500 250 1990 150 300 80 250 1500 300 2000 60 100 40 25 1500 400 Table 2: Estimated Costs for Network Connections and User Costs (in doUars, annual, distance costs are per foot) Parameter !li,p ll;,p ap,p Ilp,p llm.p Dm,p &s,p Ds,p Uu,i Year 1970 20 7 50 20 80 35 70 25 .001 1980 14 5 35 15 60 25 50 18 .002 1990 10 3 25 1,1 55 18 45 13 .003 2000 8 2 20 8 45 14 35 9 .004 450 LOCATION OF NETWORK COMPONENTS IACIS2000 CONCLUSION Given the high cost ofconnecting network components during the early period of computing, a single processing unit located in the middle of a network is shared among users. As the cost of processing comes down, processors tend to be clumped among high cost users. With further reductions in processor cost, processors are distributed throughout the n,etwork, giving rise to the client/server model that is sensitive to high network costs. In the new model, with network costs coming down rapidly, labor costs begin to dominate leading to a more centralized network design (thin client) with fewer components. The general model presented here can be used as a framework to evaluate alternative future network configurations. Better estimates of user and labor costs are two important improvements among the many that could be implemented to improve the reliability ofmodel solutions. REFERENCES l. Agkuardum, Elletra, (1995) "Discontinuous Adoption Paths with Dynamic Scale Economies," Economica, vol62, pp 541-549. 2. Aldophi, Hendrik and Jens Kleinemeyer, (1996) "International Standardization- History and Organizations." in An Introduction to Standards and Standardization, W. Hesser and Alex Inklaar ( eds.) Berlin: Beuth 3. 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