Blog: Transform businesses with strategic SLAs

Transform businesses with strategic SLAs

SLAs and business transformation in the same sentence – doesn’t sound right, does it? Well. There is, however, more to the matter if you look at SLAs (Service Level Agreements) through the lense of IoT business models.

Many vendors see their SLA as a necessary evil as few of their clients really understand the SLAs before signing up for services. Most companies have signed up for various cloud services and often it seems as though there is no real consequence in SLAs whether solution A or B is chosen. Using SLAs as a strategic competitive advantage can however be possible if Internet-of-Things (IoT) business models and technologies are utilized in the right way.

Connected products are Service by Design

IoT enables products to be updated on a regular basis. The traditional R & D product life cycle focusing on major product releases, now shift focus to integrating maintenance and upgrades into one continuous development process (if you are interested in this subject you should read this blog: A product’s life starts when unwrapped and powered on)

Launching connected products with endless possibilities for updates mean that the R&D organization must embrace in-market maintenance and upgrades and therefore the SLAs become business critical. Products and the R&D organization's mindset should therefore support service "evolvability" - so new services can be deployed in already in-market products.

The SLA will instead of a disclaimer be perceived as a business model and value proposition encompassing the business and organization structure. It becomes responsible and business critical for the entire organization, spanning R&D, Support, Production, Finance, Sales and Marketing.

Example: Company ”Acme Group” is producing gutters and downspouts. For certain customers it is of great importance to avoid unnecessary water in their building foundation and unnecessary moist. ”Acme Group” wishes to differentiate their premium product by adding connectivity to their gutter installations. This enables them to warn customers when big cloudbursts occur in their area, when the pipes are blocked and when the pipes have tilted. ”Acme Group” can now leverage their premium product by adding not only subscription based online-services but also offering technicians to oversee their installations and if necessary change or clean pipes. By adding SLAs to a connected product they can now offer entirely new services with a steady income stream. The new business area demands changes to the existing organization and the SLAs are now strategic and business critical.

Utilizing SLAs are not a zero-sum game

Utilizing SLAs in a strategic way enable companies to develop a service-based business model that saves money for the customer and utilize resources more effectively – thus avoiding a zero-sum game. This is achieved by offering services that are business critical to the user and not “nice-to-have connected add-on features” that do not provide significant business value (e.g. the rain gutter relaying “it is raining” and nothing about how much and the state of the pipes). You can read more about connected products and data value here Internet-of-Things and The Elusive New Oil.

Further down the road this will enable “Acme Group” and many other “traditional” companies to offer services instead of products by applying data analytics to their business. By analyzing the data they can risk-manage maintenance, predict breakdowns and pro-actively change spare parts. “Acme Group” and other companies may even extend their business further by applying the IoT business model “Sensor-as-a-Service”.

Bottomline: by connecting products and applying strategic SLAs, companies can transform their business so that resources are utilized effectively and new service-driven business areas are created.

More information:

Managing Partner Jakob Appel,, +45 26 17 18 58

Positioning technologies currently applied across industries:

Global Navigational Satellite System: Outdoor positioning requires line-of-sight to satellites, e.g. GPS: the tracking device calculates its position from 4 satellites’ timing signals then transmits to receiving network
–    via local data network, e.g. wifi, proprietary Wide Area Network
–    via public/global data network, e.g. 3G/4G

Active RFID: A local wireless positioning infrastructure built on premises indoor or outdoor calculates the position based on Time of Flight from emitted signal & ID from the tracking device to at least 3 receivers or when passing through a portal. The network is operating in frequency areas such as 2.4 GHz WiFi, 868 MHz, 3.7 GHz (UWB – Ultra Wide Band), the former integrating with existing data network, the latter promising an impressive 0.3 m accuracy. Tracking devices are battery powered.

Passive RFID: Proximity tracking devices are passive tags detected and identified by a reader within close range. Example: Price tags with built-in RFID will set off an alarm if leaving the store. Numerous proprietary systems are on the market. NFC (Near Field Communications) signifies a system where the reader performs the identification by almost touching the tag.

Beacons: Bluetooth Low Energy (BLE) signals sent from a fixed position to a mobile device, which then roughly calculates its proximity based on the fading of the signal strength. For robotic vacuum cleaners an infrared light beacon can be used to guide the vehicle towards the charging station.

Dead Reckoning: Measure via incremental counting of driving wheels’ rotation and steering wheel’s angle. Small variations in sizes of wheel or slip of the surface may introduce an accumulated error, hence this method is often combined with other systems for obtaining an exact re-positioning reset.

Scan and draw map: Laser beam reflections are measured and used for calculating the perimeter of a room and objects. Used for instance when positioning fork-lifts in storage facilities.

Visual recognition: The most advanced degree of vision is required in fully autonomous vehicles using Laser/Radar (Lidar) for recognition of all kinds of object and obstructions. A much simpler method can be used for calculating a position indoor tracking printed 2D barcodes placed at regular intervals in a matrix across the ceiling. An upwards facing camera identifies each pattern and the skewed projection of the viewed angle.

Inertia: A relative movement detection likewise classical gyroscopes in aircrafts now miniaturised to be contained on a chip. From a known starting position and velocity this method measures acceleration as well as rotation in all 3 dimensions which describes any change in movement.

Magnetic field: a digital compass (on chip) can identify the orientation provided no other magnetic signals are causing distortion.

Mix and Improve: Multiple of the listed technologies supplement each other, well-proven or novel, each contributing to precision and robustness of the system. Set a fixpoint via portals or a visual reference to reset dead reckoning & relative movement; supplement satellite signal with known fixpoint: “real time kinematics” refines GPS accuracy to mere centimetres; combine Dead Reckoning and visual recognition of 2D barcodes in the ceiling.

LoRaWAN: A low power wide area network with wide reach. An open standard that runs at unlicensed frequencies, where you establish a network with gateways.

Sigfox: A low power wide area network reminiscent of LoRa. Offered in Denmark by IoT Danmark, which operates the nationwide network that integrates seamlessly to other national Sigfox networks in the world.

NFC: Used especially for wireless cash payments.

Zigbee: Used especially for home automation in smart homes, for example. lighting control.

NB-IoT: Telecommunications companies’ IoT standard. A low-frequency version of the LTE network.

2-3-4G Network: Millions of devices are connected to a small SIM card, which runs primarily over 2G, but also 3G and 4G.

Wifi: The most established standard, especially used for short-range networks, for example. in production facilities.

CATM1: A low power wide area network, especially used in the United States.