Total Cost of Ownership Evaluation for Network Centric Systems of Systems

Total Cost of Ownership
Evaluation for
Network Centric
Systems of Systems
Dr. ing. Marco Lisi

27th PRICE Annual International Symposium
14-16 November 2007 – Naples, Italy
13/11/2007

All rights reserved © 2007, Telespazio

Summary

•
•
•

•

Over the past three decades, services have become
the largest part of the industrialized world economy
Service systems, i.e. systems meant to deliver valueadded services, are network centric and
computational systems
Two major paradigm shifts are taking place:

– from platforms (or individual systems) to systems of
systems;
– from a performance-based acquisition strategy to a
capability-based acquisition strategy.

The definition of effective cost models for systems of
systems and the evaluation of their Total Cost of
Ownership are new and challenging tasks.
13/11/2007


2

Presentation Outline

•
•
•
•
•
•
•
•
•
•

The Dawn of a Service Economy
Network-Centric Systems for Value-Added Services
What is a System of Systems?
Systems of Systems Cost Model
Systems of Systems Complexity Factors
Through-Life Capability Management
Systems of Systems CAPEX and OPEX Cost Factors
Systems of Systems Total Cost of Ownership Tradeoff’s
Conclusion
13/11/2007


3

The Dawn of a Service Economy

•

Over the past three decades, services have become the
largest part of most industrialized nations’ economies

•

“As goods become more information-intensive and
interactive and are continually upgraded, they change
character. They lose their status as products and
metamorphose into evolving services.”
Jeremy Rifkin, “The Age of Access”

•

Many products are being transformed into services
and, in general, products integrate a higher and higher
service component into them.
13/11/2007


4

Network-Centric Systems for
Value-Added Services

•
•
•

•

In nowadays “flat world”, the provision of value-added
services is increasingly derived from information
easily accessed and being shared at high speed
This implies the development of complex, integrated,
highly networked systems or “systems of systems”
The network centric paradigm, originally conceived in
a warfare environment, is extending itself to Homeland
Security and to other critical ICT infrastructures (such
as Air Traffic Management, Emergency and Disaster
Management, Electrical Distribution Management, etc.)
Net-centricity will be soon applicable to all future
systems for the provision of value-added services.

13/11/2007


5

From Platforms to
Systems of Systems

13/11/2007


6

From Network-Centric Warfare
Systems …

13/11/2007


7

…To Network-Centric “Welfare”
Systems

13/11/2007


8

What is a “System of Systems”?

•

•
•
•
•

A “system of systems” is the aggregation of normally
independent systems to achieve an emergent
behaviour that is not evident in the individual systems
(Nota Bene: emergent phenomena are typical of
complex systems)
The “systems of systems” paradigm: “the ensemble is
greater than the sum of its parts”
Systems of systems are highly networked or “networkcentric”
Systems of systems are “open” (no clear boundaries)
Systems of systems are developed and deployed
worldwide. Extensive logistics and maintenance
support capabilities are therefore required.
13/11/2007


9

Network Centric
System of Systems Architecture

System A

System B
System B

13/11/2007

SoS Network


System C

10

Some Definitions of
“System of Systems”

•

“… an integrated force package of interoperable
systems acting as a single system to achieve a
mission capability. Typical characteristics include a
high degree of collaboration and coordination, flexible
coordination
addition or removal of component systems, and a netsystems
centric architecture…” [Naval “Systems of Systems”
architecture
Systems Engineering Guidebook, 2005]

•

“Systems of systems exist when there is a presence of
a majority of the following five characteristics:
operational and managerial independence,
geographical distribution, emergent behavior, and
evolutionary development.” [Sage and Cuppan 2001]
development

13/11/2007


11

Characteristics of Network-Centric
Systems and Systems of Systems

•
•
•
•

Software intensive (typical software dimension for a
network-centric system: about 25 million lines of code)
Capability-based rather than equipment-based
Enterprise organization rather than traditional
structured hierarchy
Operational performances are very important:

–
–
–
–
–
–
–
–

Quality of Service (QoS)
Reliability
Safety
Security
Flexibility
Expandability
Interoperability
Resilience.
13/11/2007


12

System of Systems Cost Model

CostSoS =
CostSE&Integration+
+[Σ (individual systems costs) + (network cost)] ×
× Π (complexity factors)
Nota Bene: while for individual systems costs and for
network cost presently available cost
estimating tools may suffice, there is a
dramatic lack of even semi-qualitative rules
for estimating the complexity factors of a
system of systems.
13/11/2007


13

Estimating System of System
Engineering (SOSE) Effort
Size Drivers
Cost Drivers

COSOSIMO

SoS
Definition and
Integration
Effort

Calibration

Size Drivers:
Cost Drivers:
• # of SoS-related requirements; • # of domains involved;
• # and complexity of KPI’s;
• # of stakeholder organizations;
• # of distinct interface protocols; • size and scale of the SoS;
• # of independent system
• non-functional requirements;
component organizations;
• project constraints;
• # of SoS user scenarios;
• level of security certification (if
• # of unique component systems. any) required.
13/11/2007


14

The Net-Centricity Factor

•

•
•

In a network constituted of 2 elements, A and B, there
is one bi-directional link to be considered, with its
associated interface:
AB
In a 3 elements network-centric system, links (and
interfaces) become 3:
AB
AC
BC
More generally, the number of links and associated
interfaces to be considered in a network-centric
system constituted of N elements (or a “system of
systems” with N individual systems) is:
(N×(N-1))÷2
(e.g.: a system with 10 elements implies 45 network
connections to be integrated and verified).
13/11/2007


15

Metcalfe’s Law (in reverse)

Robert Metcalfe began talking about his law around 1980,
and George Gilder dubbed it a law in "Metcalfe's Law and
Legacy," Forbes ASAP, 13 September 1993.
13/11/2007


16

The Complexity Factor

•

•
•

In a system constituted of 2 elements, there are 3
“objects” (operational states) to be considered: the 2
elements plus their interaction
A
B
AB
In a 3 elements system, the objects to be considered
become 7:
A
B
C
AB
AC
BC
ABC
More generally, the number of “objects” to be
considered in a system constituted of N elements (or a
“system of systems” with N individual systems) is:
2N - 1
(e.g.: a system with 10 elements implies 1023 “objects”
to be analized and verified)
13/11/2007


17

Complexity vs. Number
of System Components

13/11/2007


18

How Much Does Complexity Cost?
Effort to completion

Effort (man-hours)

1600000
1400000
1200000
1000000

Model

800000

Observed

600000
400000
200000
0
0

500

1000

1500

2000

2500

Number of Requirements

The project cost in terms of man-hours is
proportional to the cube of the number of
requirements
13/11/2007


19

The Human-System Interaction Factor

13/11/2007


20

“Systems of Systems”
and Information Security (1/2)

•
•
•

All critical infrastructures of our society rely on ICT
systems, rendering them more intelligent but more
vulnerable at the same time
Cybercrime caused about US $67 billion to US
companies in 2004, according to an estimate based on
the Federal Bureau of Investigation’s 2005 Computer
Crime Survey
Information security is a “must have” option not only for
“dual use” systems, but in general for all those systems
constituting critical infrastructures or devoted to
emergency services, disaster recovery, crisis
management, homeland security, environment
monitoring and control.

13/11/2007


21

and Information Security (2/2)

•
•
•
•
•

Security standards often demand that a system be
disconnected from all networks before it can be given
the highest security rating
In a “system of systems”, based on an “open”
architecture, trusted and untrusted domains need to
co-exist and operate together
A connected machine (system) is a vulnerable
machine (system). But a “system of systems” is
inherently “network-centric”
This apparent contradiction must be resolved, finding
the optimum balance between protection of
information and availability of it
Need for security certification standards, encryption
techniques, “air gap” and firewall technologies, secure
gateways and network routers.
13/11/2007


22

The Common Criteria Standard

•
•
•

The Common Criteria (ISO/IEC 154082005) define the international standard
for performing and documenting the
security certification of an ICT system
The Common Criteria define a set of
seven “Evaluation Assurance Levels”
An EAL 1 Common Criteria Evaluation
requires a small set of assurance
activities and provides a relatively low
level of confidence in the product
protection, whereas an EAL 7
Common Criteria Evaluation requires a
large set of activities which provide a
very high level of confidence.
13/11/2007


23

Common Criteria Certification:
Cost Impacts

•
•
•
•
•
•
•
•

Long time required for the execution of the
evaluation/certification process
High cost of the evaluation/certification process
Need for “air-gap” technologies at the boundaries
between trusted and untrusted domains
Availability of jointly certified hardware and software
platforms
Severe limitations in the use of commercial off-the-shelf
(COTS) software products
Limitations in the use of commonly adopted
communications protocols (e.g. TCP/IP)
Loss of certification because of minor modifications or
obsolescence of both hardware and software
Need for “encapsulation” techniques for the utilization of
non-certified components.
13/11/2007


24

Through Life Capability Management

•
•
•
•

Through-Life Capability Management (TLCM) means
an approach to the acquisition and in-service
management of a capability over its entire life-cycle,
from cradle to grave
TLCM means evaluating a capability not just in the
terms of a single piece of equipment, but as a “system
of systems”
TLCM is specifically able to address through-life
issues and the added complexity of “systems of
systems”
The adoption of a TLCM approach implies the
evaluation of all the costs involved in the utilization of
a capability over its entire life-cycle, a.k.a. Total Cost
of Ownership.
13/11/2007


25


•
•
•
•
•

Operators, including government establishments and
commercial entities, are emphasizing reduced total cost of
ownership of A&D systems
This even more applicable to systems of systems because
of their service-oriented nature
The Total Cost of Ownership (TCO) approach asks for cost
trade-off’s throughout the total life cycle
An optimum balance must be found between non-recurring
(CAPEX) development and integration costs and operating
(OPEX) costs
Scalable architectures, design for reliability/
maintainability/supportability, interface standardization
(physical and protocol levels) and SOA (Service-Oriented
Architecture) technologies are promising “best practices”
to achieve the total cost of ownership reduction goal.
13/11/2007


26

The Total Cost of Ownership
Lifecycle

Ac q
u

nce
tena
Ma in t
Cos

isi ti
on

Cos

t

Operating Costs

TCO Lifecycle

is
D
t
os
lC
sa
po

13/11/2007

p
Su

t
or
p


t
os
C

27

The Total Cost of Ownership Iceberg

13/11/2007


28

Non-Recurring (CAPEX) Cost Factors
in Systems of Systems

•

Factors affecting the non-recurring costs of systems
of systems (mainly the integration effort) are:

– Number of stakeholder organizations involved
– Number of domains involved (business functions and
solution technology)
– Number and variegation of classified domains
– Number of geographical sites
– Number of users
– Number of unique architectural components
– Number of physical components
– Level of security certification (if any) required.

13/11/2007


29

Operating (OPEX) Cost Factors
in Systems of Systems

•

Factors affecting the operating costs of systems of
systems are:

–
–
–
–
–
–
–
–
–
–
–
–

Cost of training
Costs associated with failure or outage (planned or
unplanned)
Costs of security breaches
Costs of safety
Cost of disaster preparedness and recovery
Real estate occupation
Energy
Maintenance (including spare parts inventory)
Upgrading due to obsolescence of h/w and s/w
Communications fees (e.g. lease line expenses)
Quality assurance
Decommissioning.
13/11/2007


30

Lifecycle Cost vs. MTBF Trade-Off

COST
MINIMUM LCC
LCC
(LIFE CYCLE COST)

NON RECURRING
COST

LOGISTICS AND
MAINTENANCE
COSTS

MTBF
(RELIABILITY)

13/11/2007


31

Conclusion

•
•

•
•

The definition of cost drivers, CER’s and of an
effective cost model for network-centric systems and
systems of systems is a challenging and urgent task
Given the service-oriented nature of systems of
systems, non-functional and operational requirements
assume predominant importance. Their impacts on
cost and schedule need to be carefully analyzed and
modeled
Customers are increasingly emphasizing the need for
a reduced total cost of ownership of A&D systems
“Best practices” of systems architecting and
engineering must be applied to achieve the total cost
of ownership reduction goal.
13/11/2007


32

Estimating Cost of SoS’s:
Mission Impossible?

13/11/2007


33

Traditional
Chinese

Thai

Gracias

Thank
You

Russian

Spanish

Obrigado
Brazilian
Portuguese

English
Arabic

Danke

Grazie
Korean

Italian

Simplified
Chinese

Merci

German

French

Japanese
13/11/2007


34

Total Cost of Ownership Evaluation for Network Centric Systems of Systems

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Andere mochten auch

Andere mochten auch (20)

Ähnlich wie Total Cost of Ownership Evaluation for Network Centric Systems of Systems

Ähnlich wie Total Cost of Ownership Evaluation for Network Centric Systems of Systems (20)

Mehr von Marco Lisi

Mehr von Marco Lisi (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

Total Cost of Ownership Evaluation for Network Centric Systems of Systems