Cost of Telematics
Now that we are fully in the Information Age, we hear a lot about information overload. But when it comes to fleet management, there is no such thing as too much information. But how can fleet managers collect, store, and analyze all the information available and turn it into actionable insight? That’s where fleet management telematics comes in.
Telematics for fleet management gives you an easier way to compile information and use it to set key performance indicators (KPIs) and measure fleet performance against them. When you hear the words fleet management telematics, your first thought is probably how much does telematics cost, and is it worth it.
What Is Fleet Telematics?
Although telematics technology has been used in many areas for decades, it’s only in the last ten years that it’s become a phenomenon in fleet management. This technology combines telecommunications and informatics to uncover valuable insights into a fleet’s operations. A fleet telematics system has two components: a device installed on fleet vehicles and software that collects, stores, and transmits information.
Telematics is used to manage and monitor vehicle operations, location, and performance using the following tools:
- Sensors that detect driver actions such as aggressive acceleration, harsh braking, and more.
- GPS tracking that identifies vehicle location and speed.
- Engine diagnostics that collect information such as fuel efficiency and mileage.
The tools collect and store information, then transmit that information to software where it is easily accessible by fleet managers. This information can include:
- Vehicle location
- Vehicle usage
- Fuel consumption
- Excessive acceleration
- Idling time
- Harsh braking
- Hard cornering
- Vehicle maintenance information
Fleet managers can then use the information to make better decisions about their fleet. Telematics presents a big picture view of entire fleet performance and can zoom into vehicle performance metrics and driver behavior while on the road.
For more information on what is telematics, click here.
What Can Fleet Managers Do with Telematics?
- Track how long a truck sits idling, which helps identify and reduce excessive fuel usage and spend.
- Provide data that demonstrates improved safe driving behavior that can be used to potentially lower their insurance premiums.
- Set speeding thresholds to monitor and enforce adherence to safe driving behavior.
- Set real-time alerts that notify them when there are route delays, accidents, or unsafe or aggressive behaviors.
- Track driver hours of service (HOS) so that fleet managers can find out if a vehicle is driven after hours.
- Help fleets comply with the Federal Motor Carrier Safety Administration (FMCSA) requirements to use electronic logging devices (ELDs) to keep track of drivers’ hours.
- Monitor and verify expenses and time to detect timecard fraud and set up measurable goals.
How Much Average Cost Savings Can You Expect with Fleet Management Telematics
Although telematics solutions for fleet management are increasingly acknowledged as a worthwhile investment, you may still be wondering how much you can save on average if you implement this technology for your fleet. While the improvement in efficiencies across your fleet is immeasurable, here are four areas where the average savings are quantifiable.
1) Reduce Labor Costs
One of the main areas fleets that implement telematics see improvement is productivity. Fleets that don’t have access to telematics data to optimize productivity often end up spending as much as 12% more on labor. A robust telematics solution will give you a complete productivity analysis of your entire fleet, so you will know if your employees are spending their time appropriately, based on vehicle usage data.
Telematics gives you the ability to see if you are overstaffed or understaffed so you can optimize your teams to get things done faster with fewer employees or know when to take on more employees and reduce overtime.
2) Reduce Fuel Consumption Costs
Fuel costs are a huge chunk of your budget, and while you may not be able to control the price of fuel, with GPS tracking or engine usage data, you can optimize your drivers’ routes to reduce fuel consumption. Fleet managers that don’t leverage their fuel consumption data can spend as much as 40% more on fuel. With telematics, you’ll know when your drivers’ behavior, such as excessive idling, is wasting fuel coach them to improve.
3) Reduce Associated Accident Costs
You may think that associated accident costs are unavoidable, but in fact, this is not the case. Fleets that do not implement safety checklists or track sharp turns or impacts often see an increase of as much as 21.1% in associated accident costs.
Without telematics, fleet safety procedures can be difficult to enforce. But with the data this technology gives you, you can track reckless drivers that need to be coached or retrained, send alerts when licenses are due to expire, and protect drivers by implementing a safety checklist to complete before handling a vehicle.
4) Reduces Unexpected Maintenance and Repairs
Regular vehicle maintenance is a part of fleet management and shouldn’t be avoided. But additional maintenance or unexpected repairs due to aggressive driving behavior are an unnecessary cost that telematics can help you avoid. Not only can you stay on top of your regular maintenance schedule, but you can identify and mitigate aggressive driving behaviors that cause excess wear and tear on your fleet’s vehicles.
Telematics Cost Breakdown
There are several factors that determine how much a telematics solution costs.
- Fleet size
- Features of the telematics solution
- The vendor you choose
Additional costs could include:
- The hardware – telematics devices can be hardwired or plug-and-play
- The installation – some technologies will need professional installation to ensure the device and software are installed correctly.
- The monthly subscription – in addition to the device, telematics is Software as a Service (SaaS) and usually has a monthly fee for collecting and transmitting data as well as making it accessible in formats that allow analysis.
When it comes to the telematics costs, remember that telematics will require an up-front investment to install devices and implement the system, but the amount of detailed information and insights you get give you numerous opportunities to optimize your fleet operations in a way the provides significant cost savings.
How Plug and Play Makes Installation Simpler
With plug-and-play devices that can be easily installed, you can be up and running with telematics almost immediately. Devices that need a technician to install or a device that needs to be retrofitted will have higher installation costs.
Types of Contracts
Telematics pricing is often based on contracts, which can be a closed-end lease or an open-end lease. With a closed-end lease, you agree to a specific time period, three years, for example, and you pay a set monthly fee for that amount of time. An open-end lease is generally for a shorter amount of time. After the initial contract has ended, you have the option of continuing to use the system on a month-to-month basis. In this instance, the fee may increase, but you have the option of terminating it at any time after the initial term.
Monthly Subscription Fee
While the monthly subscription fee affects the cost of a fleet management telematics system, the information it provides is invaluable. This information is key to optimizing your operations and lowering your overall business costs, so it is essential to select a telematics solution that is robust and reliable. It is also essential to choose a solution that is flexible and customizable, so you get what you need and don’t pay for features you don’t use.
Extra Costs and Support
When implementing a telematics solution, there will be reasonably clear-cut costs that are easy to evaluate, such as the telematics device cost. Some devices transmit their data in real-time, others at 30-minute or hourly intervals.
One of the most beneficial features of telematics in its ability to receive and send information in real-time, so you can take immediate actions when needed. A device that sends information in real-time has complex technology built-in, so choosing a device that sends information at intervals may be cheaper, but you also lose the benefit of getting real-time insight.
Monitoring your fleet in real-time allows you to make an immediate adjustment, such as notifying your drivers when they are idling for long periods unnecessarily and wasting fuel. It can also incent drivers to act more responsibly since they know their driving behavior is tracked. You can start an incentive program based on this information to reward drivers who exhibit the best driving behavior. Another factor that can influence the telematics device cost is the number of data points you choose to monitor. For instance, a telematics device that only tracks the basics may cost less but will also provide less insight into things such as engine load, fuel consumption, and braking speeds.
Is Telematics Fleet Tracking Cost Worth It?
Planning and assessing what metrics you want to track is the best way to determine the value of a telematics system. A good telematics system can give you the insight you need to improve safety, reduce accidents, elevate customer service, and slash expenses. By researching all of the benefits of a telematics solution and weighing them against fleet tracking cost, you may see that in many instances, your return on investment (ROI) happens pretty quickly.
Choosing a Fleet Management Solution
When you state to research telematics pricing, you’ll find a range of prices. Be sure to evaluate each one carefully. Cheaper may seem better, but the cheaper option may provide the features you need or want, such as top-notch customer service, robust reporting, and the ability to see your data in a way that makes it easier to analyze. Basing your decision on price alone may end up costing you more than you planned for in lost time, wasted fuel, or unexpected maintenance issues. When you choose a solution-driven telematics system, it will help you make data-driven business decisions that, in turn, can save you money and help you realize a faster, better ROI from your telematics system.
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