Total Cost of Ownership Evaluation for Network Centric Systems of Systems

13/11/2007 All rights reserved © 2007, Telespazio

Total Cost of Ownership Evaluation for

Network CentricSystems of Systems

Dr. ing. Marco Lisi

27th PRICE Annual International Symposium14-16 November 2007 – Naples, Italy

13/11/2007 All rights reserved © 2007, Telespazio 2

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 value-added 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.


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• Total Cost of Ownership• Systems of Systems CAPEX and OPEX Cost Factors• Systems of Systems Total Cost of Ownership Trade-

off’s• Conclusion


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.


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.


From Platforms toSystems of Systems


From Network-Centric WarfareSystems …


…To Network-Centric “Welfare”Systems


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 “network-centric”

• 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.


Network Centric System of Systems Architecture

System BSystem B

System A

System CSystem BSoS Network

System BSystem B

System A


System BSystem B

System A



Some Definitions of“System of Systems”

• “… an integrated force package of interoperableinteroperablesystems acting as a single system to achieve a mission capability. Typical characteristics include a high degree of collaborationcollaboration and coordinationcoordination, flexible flexible addition or removal of component systemsaddition or removal of component systems, and a netnet--centric architecturecentric architecture…” [Naval “Systems of Systems” 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, operational and managerial independence, geographical distribution, emergent behavior, and geographical distribution, emergent behavior, and evolutionary developmentevolutionary development.” [Sage and Cuppan 2001]


Characteristics of Network-CentricSystems 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.


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 fornetwork cost presently available costestimating tools may suffice, there is adramatic lack of even semi-qualitative rulesfor estimating the complexity factors of asystem of systems.


Estimating System of SystemEngineering (SOSE) Effort

Size Drivers

Cost Drivers

SoSDefinition andIntegrationEffort

Calibration

COSOSIMOSize Drivers

Cost Drivers

SoSDefinition andIntegrationEffort

Calibration

COSOSIMO

Size Drivers:• # of SoS-related requirements;• # and complexity of KPI’s; • # of distinct interface protocols;• # of independent systemcomponent organizations;

• # of SoS user scenarios;• # of unique component systems.

Cost Drivers:• # of domains involved;• # of stakeholder organizations; • size and scale of the SoS;• non-functional requirements;• project constraints;• level of security certification (if

any) required.


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).


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.


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)


Complexity vs. Number of System Components


How Much Does Complexity Cost?

Effort to completion

0200000400000600000800000

1000000120000014000001600000

0 500 1000 1500 2000 2500

Number of Requirements

Effo

rt (m

an-h

ours

)

ModelObserved

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


The Human-System Interaction Factor


“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.


“Systems of Systems” 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, findingthe optimum balance between protection of information and availability of it

• Need for security certification standards, encryptiontechniques, “air gap” and firewall technologies, securegateways and network routers.


The Common Criteria Standard

• The Common Criteria (ISO/IEC 15408-2005) 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.


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.


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.


“Systems of Systems” Total Cost of Ownership

• 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.


The Total Cost of OwnershipLifecycle

Acqu

isiti o

n C

ost

Disposal Cost Support Cost

Main tenance

Cost

Operating Costs

TCO Lifecycle


The Total Cost of Ownership Iceberg


Non-Recurring (CAPEX) Cost Factorsin 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.


Operating (OPEX) Cost Factorsin 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.


Lifecycle Cost vs. MTBF Trade-Off

COST

MTBF(RELIABILITY)

LCC(LIFE CYCLE COST)

NON RECURRINGCOST

LOGISTICS ANDMAINTENANCE

COSTS

MINIMUM LCC


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.


Estimating Cost of SoS’s:Mission Impossible?


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