Building a vehicle fleet isn’t easy or inexpensive, and managing that same fleet can prove even more time-consuming, labor-intensive and costly. Fortunately, in the Digital Age many fleet owners can turn to telematics, which is a series of technologies that provide information on where vehicles are, how they are performing and more.
Because knowledge is power, many fleet entrepreneurs expect telematics to lower their various costs and improve services significantly. But does it?
Telematics technologies are not free — in fact, depending on the level of technology installed and how it is implemented, telematics solutions can cost even more than the fleet itself. Before deciding about whether they need telematics to manage their fleet, entrepreneurs should research whether the costs associated with telematics are worthwhile and how they can gain a favorable return on investment with the tech.
Costs Associated With Telematics
The cost of telematics seems relatively straightforward, but they do accumulate fast. Not only do businesses need to acquire the hardware used to gather telematics data, such as fuel levels and consumption, acceleration and braking speeds, engine load, odometer value and more, but businesses also need to pay telematics firms to install the hardware properly in each vehicle so the data collected is accurate. What’s more, telematics solutions require software tools that aggregate and analyze the data collected, so businesses can gain insights from it more easily. Access to the data platform — and the tech installed in vehicles, for that matter — is gained through a monthly subscription fee.
As expected, it is possible to find telematics solutions for exceedingly cheap, but as is often the case with tech, one gets what they pay for. Thus, lower-cost monthly plans might provide access to a smartphone app that fleet drivers must use to collect simple data like speed, driving time and direction. Meanwhile, more expensive solutions will see accelerometers and other advanced tools installed at various points throughout a vehicle for a holistic view of vehicle performance and health.
On top of these costs, many businesses find it a worthwhile expense to hire a dedicated telematics manager onto their staff. This professional will have experience working with the kinds of data produced and collected through telematics, so businesses can get the most insight from their telematics efforts. However, hiring not just a salaried employee but one with this unique and crucial expertise isn’t cheap.
Fortunately, telematics provide more than a major item on expense reports. Despite these expenses, telematics can have significant positive impacts on fleet-based businesses — if businesses implement telematics the right way.
How to Have a Positive ROI
The key to having a positive return on investment when it comes to telematics is planning. By researching the benefits of telematics, entrepreneurs can better understand their potential outcomes and set their expectations for the technology appropriately. To be more specific, entrepreneurs in this field should:
Recognize the Cost Benefits of Telematics
While telematics does come with costs, it can slash expenses in other areas. For instance, fuel consumption can be drastically reduced through the proper application of telematics, driver safety can improve, lowering insurance costs, and it is possible to optimize routes, which shortens delivery times or otherwise optimizes trip performance.
Set Goals for Telematics
Because telematics can accomplish so much, it is important for entrepreneurs to prioritize their goals before they settle on a single solution. As always, goals should be quantitative, meaning they should rely on precise numbers, and they should have a strict timeframe for achievement.
Reevaluate Established Business Models
Telematics allows businesses to experiment with previously untested business models. For example, leasing companies can venture into short-term rentals thanks to improved information on vehicle use and customer needs. For entrepreneurs who hope to offer solutions across the mobility spectrum, this flexibility can be clutch.
Share the Costs of Telematics
Telematics isn’t just beneficial for companies; it is also advantageous for customers, drivers and anyone else who comes into contact with the fleet. Thus, businesses should consider sharing the costs of the technology with those who utilize the vehicles. Corporations tend to be especially interested in vehicles equipped with telematics, so B2B fleets are wise to offer this service ready-to-use.
Telematics is expensive, but virtually all fleet managers find the expense well worthwhile. Still, it is wise to weigh the expense with the benefits to find solutions that are ideal for business and customer alike.
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