Question

Oil Slick Corp (OSC from hereon) is a company that is in the Oil and Natural Gas industry with multiple oil production rigs operating in the world. You are the CEO of this company. You are planning on constructing some highly complex oil rigs to explore oil opportunities off the west coast of the US. You have contracted with a specialist heavy engineering company to provide you the necessary oil rigs. You know that there is a very powerful set of solutions that can be "bolted on" to the rigs based on an emergent technological paradigm called The Internet of Things (IoT). There are two companies that offer IoT-based solutions to meet your needs. However, they have two very different business models. The solutions offered by both companies have the following features in common.

The companies place sensing devices - including sensors, optical image capture devices, material stress monitoring devices, etc. - on the oil rigs. These devices constantly monitor the external environment (temperature, moisture, wind speed and shear, etc.), material conditions (load factors, metal stress and fatigue, etc.) as well as numerous other aspects of the functioning of the projects. The data from these sensing devices can be used by OSC to monitor a variety of key factors about the performance of the rig. The two companies are Pacific Engineering Corp (PEC), and Atlantic Engineering Corp (AEC). While both PEC and AEC offer these services, their business models are very different.

PEC will sell the product-service bundle to its clients (companies like OSC). PEC's engineers will come in and study the rig and understand your (OSC) needs and then come up with a solution that consists of hardware and software components. They will charge an upfront fee for their services as well as for the products (hardware and software) that they will charge you. This fee is the full price of their IoT system. Once you buy the system, you may modify it as you please and add additional features to the software if you want (PEC will give you the full specifications of the Application Programming Interface or the API for you to link your enterprise wide software to their solutions). PEC will also train your data analytics experts on how to use the data that comes out of this system. They will charge you for the training. If they come up with upgrades, you will need to buy those upgrades using the same pricing scheme (upfront price). But once you buy their software you are at full liberty to modify it as you please for your company's use at the original site at which it was installed (but not resell it to other companies).

AEC on the other hand, operates a very different business model. AEC's engineers too will come in and study the oil rig and understand your (OSC) needs and then come up with a solution that consists of hardware and software components. However, they have a very different pricing model. They will charge you a fee to install their hardware, software and data transmission systems (this is roughly 20% of PEC will charge as its upfront price). Beyond this they will charge you no upfront, fixed fees. All additional fees will be based on 'pay-per-use' (think of it as the 'pay by the drink' model) where they will charge you based on the actual volume of usage.

AEC defines usage as the extent to which you access the data that comes out of their systems. The data will go to a private cloud hosted by AEC and AEC will update your company dashboards based on this data. Every time you log in and use the dashboards, they will charge you a fee. They too will train your data analytics team on using their data feeds, for which they will charge an amount that covers their costs (roughly equal to 20% of the training fees charged by PEC). But each time your data analytics team accesses their data feeds, they will charge you a price for the access. They have a call center that will support you and provide tech support and an analytics team that will work with you develop additional applications (if you want). For all of these services they will charge you a price based on actual usage.

1.   Give two different reasons in favor of choosing PEC.

2.  Give two different reasons in favor of choosing AEC.

Answer 1

Ans 1. Reasons for choosing PEC-

1. PEC definately charges fees but once if you pay their fees they also give you access to modify the software of you want to which is absolutely great.
2. PEC will aslo train my data analytics experts which would be appreciated.

Ans 2. Reasons for choosing AEC-

1. They will charge comparatively less than than PEC.
2. They will charge for their hardware and software and after it they will charge pay per use which is nice idea and would be beneficial I will not have to pay extra money of anything I did not use.