Matching Economic Efficiency and Environmental Sustainability: The Potential of Exchanging Excess Capacity in Cloud Service Environments

Excess capacity is a major problem for service providers. While manufacturers e.g. can produce on stock to fully utilize their capacity, the service industry traditionally faces the problem of idle capacity resulting in economic and environmental inefficiencies. Recent technological developments offering dynamic information and integration capabilities may help, as they enable an on-demand exchange of excess capacity. To examine the possible benefits of corresponding excess capacity markets, we examine a capacity related optimization problem of a service provider with and without relying on excess capacity. Therefore we build a mathematical model based on queuing theory which is evaluated with a discrete-event simulation applying the situation of providers for banking transaction services. By solving the optimization problem we found reasonable benefits of excess capacity markets concerning the economic and environmental perspective. Being a first quantitative approach, the model thereby builds the basis for empirical validation and further theoretical research.