Automotive Fleet - Focus on Telematics Goals for Greater ROI
01/18/2013 - By Lauren Fletcher,
It’s been said before, yet the message bears repeating: Telematics is no longer just GPS tracking and vehicle routing. However, with so many options at a fleet manager’s fingertips, how do fleet managers select the right program, the best provider, and ensure a company achieves a return on its investment? According to the telematics industry experts, it all boils down to one simple directive: focus on the company’s goals.
Each fleet has differing needs, requiring unique approaches to achieve desired results. Focusing on the end goal of what a company requires from its investment in telematics will lead fleet managers through the path of least resistance when instituting a new program or modifying an existing one.
Identifying the Many Known (& Unknown) Benefits of Telematics
The benefits of telematics are common knowledge, including increased fuel savings, more efficient vehicle tracking and routing, and the ability to set geofencing parameters.
However, due to the growing needs of fleets around the country, telematics programs are evolving to encompass driver safety, increased employee productivity and efficiency, route compliance, and improved customer service, among others.
Driver safety is one recurring theme noted by several telematics providers.
“The age-old challenge with the mobile workforce is that you simply can’t get enough visibility into their day to provide meaningful feedback to drivers,” noted Karen White, senior vice president of Customer Solutions for GreenRoad. “How safely a driver arrived at a destination isn’t measured just by whether the driver crashed or arrived safely; we measure it maneuver by maneuver, every mile, based on forces exerted in the cab.”
According to White, with the aid of technology, you can overcome the mobile workforce dilemma and gain insight into how a driver is doing his or her job without being in the passenger seat.
“Having a device in a vehicle, acting as a coach, instantly helps drivers become more cautious on the roads,” agreed Todd Follmer, CEO of inthinc Technology Solutions, Inc.
“Safety is also of paramount importance to an organization, and it’s two- tiered: employee safety and the duty to ensure the safe operation of a vehicle on public roads,” according to Angela Vanek, project lead for Strategic Accounts at SageQuest, a branded offering of Fleetmatics.
One factor not typically connected with telematics is improved customer service. Again, while not a new feature, fleets are utilizing this aspect of their telematics programs in a new way.
“Our program clearly shows the closest driver to dispatch to a needed location. This can help validate service, helping verify that service was done. It can also help improve the response time to customers,” according to Todd Lewis, president of GPS North America.
This is especially key for emergency- or disaster-response situations, where immediate assistance can make a huge difference.
Telematics can also assist with compliance issues, including corporate policies, hours-of-service requirements, and seat belt laws, among others.
Finally, in the age of more available reports than minutes in a day, telematics can help take big data and make it useful.
“Fleets often have different sets of information. By integrating GPS data with fuel card usage and miles driven, you can get intelligent reports and insight into your business that can really drive savings,” according to Mark Wallin, VP of product management for Telogis. “Fleet managers need to be able to take all of this data and make it actionable.”
Time is definitely a concern for already busy fleet managers. “Managers typically think they are too busy to embark on yet another new project, swimming in data they don’t have the bandwidth to use,” White noted. “That’s why GreenRoad’s mantra is ‘Data into action.’ We focus on not just providing data, but on exception-based management that makes it truly actionable, with minimal effort.”
Follmer of inthinc also believes that improved driver efficiency is an up-and-coming benefit of vehicle telematics. “Managers are able to monitor performance, study trends, and identify areas of weakness in their fleets,” he noted.
Showing Management an ROI
Fleet managers should understand that there is no need to overspend on a solution. “Make sure you choose an easy-to-use, easy-to-understand solution,” noted Corinna Tutor, vice president of Integrated Marketing for Spireon. “Telematics can save time and money, not only on the road, but in the back office as well. Ensure the solution you select helps you use less administrative and management resources, in addition to being more efficient on the road.”
Vanek of SageQuest noted the benefit of increased efficiency as well. “In this economic climate, efficiency is key. The ability to easily understand how your fleet is operating and where your opportunities for operational improvement lie are paramount,” she said.
Ryan Driscoll, marketing manager for GPS Insight, cautioned against just selecting the lowest-cost provider, using gold and silver as an analogy.
“As our founder, Rob Donat, always says, if you can buy a bar of silver for $25, that’s a great deal and will provide a fantastic ROI. However, if you can alternatively buy a more expensive bar of gold for $40, your ROI is vastly more than if you purchased the bar of silver,” Driscoll said.
He noted that, while gold costs more up front, it will yield significantly more ROI if a small premium is paid. “We hear about this all the time,” he said. “Companies went with the lower-cost solution. However, it’s about the opportunity cost of not going with a solution that will really fit your cost of business challenges in a way that a higher-end (and slightly more expensive) solution does. And, we typically see those customers cancel and go with the higher-end solution once they determine this for themselves.”
Ryan Foisy, program manager for WEX Telematics, recommended using a scoring model to be sure fleet managers are making the right choice.
“Keep in mind, although you will likely achieve some level of savings with most solutions, in most instances, you get what you pay for,” he said. “In short, don’t make it all about price as this is an investment no matter how you slice it. So, be sure it’s the best fit for your company and specific business case. If the right solution is used properly, you will see tremendous results long term.”
As the old phrase goes, “you don’t know what you don’t know.” This is particularly apt for telematics, according to Vanek.
“My favorite part of each customer deployment I perform is the moment where I look at fleet performance data for the first time with my customer,” Vanek said. “Each customer I work with has an idea of how they think their fleet is operating, yet are stunned when they are able to actually look at the real data that shows them how their fleet is really operating.”
Driscoll noted that a GPS tracking solution can pay for itself in as little as one or two months, if used fully.
When selecting a telematics solution, Chris Ransom, director of sales engineering for Networkfleet, recommended fleet managers consider the experience and reputation of the vendor, if the application supports all vehicle types, what type of support is offered, and how easy the system is to install and use. “Fleet managers should also consider flexibility in pricing, such as monthly service plans with no up-front costs,” Ransom said.
The insights into greater efficiencies can help transform fleet operations and provide the ability to validate an ROI, which can result in real cost savings across the board in fuel, utilization, maintenance, insurance costs, and more, according to Ransom.
“First, drivers become more aware, drive safely, reduce speeding, and become overall more efficient. This not only reduces fuel costs, but can provide cost savings in labor or increased efficiency,” Ransom noted. “Revenue can also be increased through the ability to increase the number of stops each day, and a fleet may be able to reduce the number of vehicles by monitoring fleet utilization and vehicle usage, which can provide a savings of 5 to 10 percent.”
Marlene Waltz, director of solution sales at Sprint, noted that “significant increases in operational efficiencies can be found, not only in the fleet space, but savings and efficiencies that reverberate throughout the company as other departments benefit from the insights and process improvements as well.”
There is plenty of data available to support the implementation of a telematics system. “Today, the awareness of telematics is there. It’s all about pulling the trigger,” said Lewis of GPS North America.
Look at other company fleets’ successful use of telematics programs. “We urge our customers to point to the success of our current customers,” said Follmer of inthinc. “Barrick Gold Corp. reduced its incident rate by 68 percent within the first year of implementation. Cintas experienced an 85-percent reduction in speeding alerts and 89-percent improvement in seat-belt use after installing our technology.”
White of GreenRoad also urged fleet managers to look at the results of others. “The proof is in the pudding,” she said. “There is no substitute for the success stories of other fleets. We can connect prospective telematics adopters with other GreenRoad customers so they can discuss ROI measurements and results with their peers.”
Wallin of Telogis agreed and added this advice: “Work closely with your solution providers. They have the experience in the industry and with customers who have had success,” he said.
Fleet managers should also be sure they have focused on key goals, figuring out what they expect from the project. “Focus on one or two key goals for the business,” Wallin said. “If it’s driver safety, reduced operating costs, etc., there are so many benefits available. Focus on a few and really figure out what you need to achieve from the project. What are the goals, and how you can get the biggest bang for your buck?”
Colin Sutherland, VP of sales for Geotab also believes if it can’t be measured, it can’t be managed. “Telematics is an essential management tool based on recording precise information on how people and assets are used 24 hours a day,” he said. “Fleets should look at two high-level objectives — reducing expenses and improving the company’s revenue. To reduce expenses, fleets need to first target how and where fuel is consumed — from the fuel card purchase to the miles that are driven.”
When determining goals, Waltz of Sprint recommended “when working on the ROI, it’s important to recognize different businesses have differing goals that are most important to their bottom line, different issues they are trying to solve. It’s important to identify that ‘one thing’ that is most important to that business and build the ROI analysis around that, then work to address the other concerns and of the stakeholders and how the solution may help improve those areas as well.”
For example, a delivery fleet may want to focus on fuel efficiencies from optimizing routes and reducing idle time, while a service and repair fleet may care more about the ability to dispatch service personnel in a way that improves response time.
Telematics can also make a fleet manager’s job easier in two important ways: enabling drivers to self-improve through real-time feedback in the vehicle, and by providing managers with detailed visibility into their resources (both human and physical) when those resources are off the lot.
“It’s a step change in the mobile resource management experience,” White said. “There are huge wins to be had here, with some potentially surprising external results to boot. We’ve heard from customers whose employee retention soared as their manager engaged more with drivers who experienced a reduction in safety incidents and fewer crashes. When you engage your team — rather than watching them from behind the glass — and build a pervasive safety culture, good things happen.”
When evaluating or promoting a new telematics program, it is important to be able to measure the ROI, according to Tutor of Spireon. “You also need to ensure you partner with the right company. Look for a financially solid company driven by innovation that provides scalable technology to grow with your business, and its needs,” she said.
Lewis, an ex-service business owner himself, also noted the importance of a scalable program. “Scalability means that, for under $300, a company can implement the program and get a unit that gives them complete tracking, but provides the ability to add-on features later that they might not have wanted today, such as a mobile data terminal or simple GPS unit for dispatch and navigation.”
The bottom line, according to Tutor: “Get a system that is easy-to-use and easy-to-implement.”
Promoting Telematics to Management
The support of senior management is crucial to the successful deployment of any program, including telematics. Their involvement should be sought early on, and continue throughout the process.
“Involve C-Level management early to explain the savings. Don’t be overwhelmed by the investment, as savings will truly dwarf the investment,” according to Foisy of WEX Telematics. “Lean on your sales consultant to show how the savings will happen.”
Waltz of Sprint recommended identifying key stakeholders who may benefit from the data and improvements telematics can create. “Identify what information gaps and deficits you have today that, if filled, could increase the efficiency and productivity metrics,” she said. “Estimate the improvements and value of filling those gaps, such as what savings could be achieved, what additional revenue can be realized, and how many more widgets could get shipped out, etc.”
As Sutherland of Geotab noted, you can’t manage without measuring what’s going on, and this can be a key push for telematics. “Telematics is like having a supervisor in each vehicle recording all activity every minute of every day,” he said. “Today, telematics software is simple to use and identifies opportunities for savings and growth as well.”
To help promote telematics to management, you must continue to prove the ROI. Foisy shared three ways the ROI for telematics is typically proven:
- ROI in concept. This is a high-level look relying on study info from such sources as C.J. Driscoll & Associates, Aberdeen Group, or even Automotive Fleet magazine. If you can realize 10-20 percent in fuel savings, ROI should easily be achieved for most fleets.
- Rather than study data or a supplement to it, use an ROI calculator applying the fleet’s best estimates of data elements.
- Start small by piloting a few vehicles and prove savings.
“The rule of thumb is that for most fleets, the fuel savings alone get you a relatively quick ROI — if you believe that, then the rest is gravy,” Foisy continued. “In truth, it’s just the beginning of a meaningful, lasting change in your business.”
Fleet managers need to select a telematics program that can provide a variety of reports and information, noted Ransom of Networkfleet. “For example, Networkfleet provides the type of high-level reports, such as fleet utilization, that senior management needs to understand the impact of the program,” he said.
Push back from management is always a possibility, especially in terms of the cost of purchasing a new program, according to Driscoll of GPS Insight.
“We suggest focusing on the core business challenges you want to solve, and how telematics can help solve them. Then, look at how your company will save more than the actual product or technology costs. We recommend a pilot to help prove this,” Driscoll said. “Employee push back tends to be the ‘Big Brother’ issue, feeling as though they are not trusted. Management needs to explain the program is in place to save the company money and have the ability to back the driver up if the need arises.”
Foisy of WEX Telematics agreed that the most common challenge is driver push back or objection. “But, the good news is that a well thought-out and well-implemented game plan can actually shift the pendulum in the other direction,” he said. “I recommend engaging drivers early, setting up a reward system, stressing what is in it for them, and politely communicating driver policy.”
When looking at policy, Sutherland recommended not trying to invent a new policy. “Fleet managers need to look at what is already published and communicated to employees in the driver handbook, including cell-phone use and fuel card policies, and build on that,” he said.
Before implementing a telematics solution, fleet managers need to take the time to lay the groundwork, gathering information on current vehicle utilization and operating costs. “
This will be needed to compare costs before and after implementation, and to calculate ROI,” according to Ransom. “If possible, the utilization information should include vehicle usage, idle time, fuel consumption, mpg, total trips per day, and routing processes, in order to determine if every vehicle is being utilized efficiently.”
However, perhaps one of the most compelling factors to promote to management is the human factor. “One fatality is too many for any organization,” according to Follmer. “Systems like ours help prevent risky behavior and allow drivers to get home safely, every day.”
Even though telematics has come a long way from being thought of as simply vehicle routing and tracking, it’s still tough to get rid of the “Big Brother” or “spy technology” mentality.
“A common misperception is that telematics is only being used to monitor employees,” said Ransom of Networkfleet. “However, telematics actually helps ensure the safety of each driver. By making sure a vehicle is being used efficiently, is well maintained, and is running properly, it can help ensure the safety of the driver.”
Ransom continued, “Further, even though there is sometimes initial resistance from field personnel, telematics is almost always universally accepted a short time later. People quickly see improvements in efficiency, which makes their company stronger. Everyone has a stake in that.”
GreenRoad has also found that, based on its experience, 95-percent of the time drivers embrace the technology. “There are always a few drivers that resist, but the vast majority of drivers are true professionals interested in new technologies that can help them self-improve,” White said.
Vanek of SageQuest continued on the theme of driver acceptance and the “Big Brother” mentality, noting the biggest misperception that exists around utilizing telematics is the assumption that it is hard to bring this powerful tool into an organization and have it embraced and promoted to enact efficiency change.
“This couldn’t be farther from the truth,” she said. “Also, fleet managers need to overcome the ‘Big Brother’ perception associated with rolling out a telematics solution. SageQuest does not promote the use of the application as a monitoring tool; it is promoted for what it is — an efficiency tool. We work with fleet managers to ensure the solution is viewed as a tool, not a weapon.”
Fleet managers must avoid using the tool in a negative manner, and work to ensure employees are aware that the program is not intended to be an enemy.
“The positive intent on the operator should always be assumed,” Vanek continued. The data collected is, and should be, used as a method to streamline operations and improve revenue retention.”
White of GreenRoad commented, “No one wants a spy in their cab, and telematics often has that reputation.”
Many telematics applications offer drivers full visibility into the data their managers see, and, in some cases, they get to see it first.
Fleet managers may also be under the impression that telematics solutions are completely “plug-and-play,” and that, by simply installing a system in vehicles, all of their troubles will disappear. “We have found that companies with the highest ROI are those that have hired dedicated champions to look over the program, monitor the results, study the trends, and take appropriate action,” noted Follmer of inthinc.
Wallin of Telogis also agreed that dedicated resources are a necessity for a successful program. “Have dedicated resources. Program implementation should really have someone assigned to the project with a clear understanding of business objectives. It doesn’t work if you install the program and hope that magic happens. You need to have a plan and goals; and it’s dedicated resources that help.”
Additional misperceptions noted by Tutor of Spireon and Foisy of WEX Telematics are high start-up costs and expensive programs.
“Common misstatements include ‘it’s too expensive,’ or ‘they are all the same, therefore the lowest price wins.’ The decision should be weighted far more toward fit and effectiveness than price,” Foisy said. “Low-cost providers are risky and it tends to follow the old adage that you get what you pay for. There are many providers out there, so be methodical when making your choice.”
A recurring theme surrounding challenges related to instituting a telematics program was the lack of forward thinking and planning ahead.
“Fleets are most successful when they take the time to develop an internal deployment plan for telematics. In this plan, they identify what to focus on first and what they expect to master in the first few weeks, months, and years to realize the greatest ROI,” said Ransom of Networkfleet.
Finally, there is always the danger of data overload. “Leveraging the right data is a common challenge of fleet managers,” said Follmer of inthinc. “It is easy to draw quick conclusions from data without studying the trends and understanding the whole story.”
Remember, your organization has vehicles driving all over, most likely with your company logo on it. “Any operation of that vehicle is a reflection of the organization,” Vanek said.