30 Jan 19

The ROI of Telematics: an investment that keeps on giving

The Return on Investment (ROI) of telematics can be difficult to quantify. Some of the gains are straightforward, but others result from incidents not happening. In any case, data only does the talking – it’s up to the fleet manager to do the walking.

Basically, the cost of telematics pertains to the hardware, the installation of this hardware, the monthly subscription fee and the use of the data platform. As such, the price per vehicle depends on the fleet size, the contract duration, the type of device and the functionalities offered by the platform.

You could connect your fleet for less than €10 per month per vehicle if you are happy with a basic device and a platform that enables basic fleet management functionalities. If you have a fleet of 2,500 vehicles, that corresponds to an investment of roughly €1 million strung out over four years (the average contract duration). That may seem prohibitive, but there are plenty of ways to make telematics worth your company’s while – depending on the type of fleet and the way vehicles are used, evidently.

Just collecting and analysing data won’t cut it, though. It’s all about determining the baselines, setting your goals, picking your tools and acting upon the results.

Set your goals, pick your weapon

Before starting to measure the big bottom-line results, you need to identify your company’s goals, establishing what you expect to achieve. You could for instance track your current fuel costs, customer satisfaction rate, insurance costs, and so on – only then will you get a comprehensive view on the return on your investment.

Wincanton, the UK’s largest 3PL company, decided to install integrated cameras in all its 4,500 trucks and vans. “We were looking for the right tools to change our drivers’ behaviour,” explains Carl Hanson, Fleet Director. “The key thing for us was to obtain accountability. A driver who logs on, is engaged and able to change his behaviour as long as you provide training. The app tells you where to focus your attention, but the video helps you do the training by bringing the incident to life.”

The tricky part is quantifying costs associated to events that are not happening. “It’s too soon to come to any conclusions: we did a trial in January and we started with three contracts; we are now on a roll out programme across the business. What’s really quite difficult to measure is accidents that have not happened as opposed to those that have in the past.”

Sharing the costs

Leasing companies are increasingly equipping their vehicles with telematics devices. “EU regulation allows them to do so in the realm of asset management and for fleet management offering too– as long as you collect and use the data according to the GDPR law,” explains Nicola De Mattia, CEO of Targa Telematics.

For leasing companies, telematics has a double value proposition. “On the one hand, telematics enables indirect monetisation due to a better asset management and improved internal processes. You can better manage the contract, follow up on SMR, manage accidents and insurance claims. All of this ultimately results in a vehicle that is kept in shape and therefore yields maximum resale value in the remarketing process,” adds Nicola De Mattia.

“On the other hand, there is the direct monetisation aspect: leasing companies can sell telematics fleet management solutions to their customers – at a reasonable price because the cars come equipped with the hardware and software in any case. This ready-to-use solution perfectly serves the requirements of small and medium fleets, while big corporates might be willing to implement telematics themselves: the leasing company installs the device, the telematics provider makes APIs  available for them to customise the solution.”

New business models

Moreover, telematics allows leasing companies to implement new business models that ultimately benefit their customers too. “Leasing companies are venturing into the short-term rental business and are inventing new business models to cover the entire mobility spectrum. Telematics helps towards this change. By integrating the technology that enables car sharing, for instance, you open the path to peer-to-peer car sharing. If you rent your vehicle to someone else, you get a discount on your monthly rate,” concludes Mr De Mattia.

10 financial benefits of telematics for fleets

Direct (measurable):

  • Fuel and mileage fraud detection
  • Better contract management
  • Route optimisation and vehicle use optimisation
  • Lower insurance premiums thanks to pay-how-you-drive
  • Easier route administration business-private

Indirect (costs avoided)

  • Behavioural coaching to help lower fuel consumption, wear and tear, accident rate; enhance compliance
  • Vehicles in better shape maximise the residual value of the car
  • Theft prevention and stolen vehicle recovery
  • Predictive maintenance and repair: less downtime, less costs
  • Increased customer satisfaction through better service
Authored by: Dieter Quartier