{"id":3224,"date":"2019-08-12T16:10:26","date_gmt":"2019-08-12T14:10:26","guid":{"rendered":"http:\/\/en.advancedfleetmanagementconsulting.com\/?p=3224"},"modified":"2019-08-12T16:10:26","modified_gmt":"2019-08-12T14:10:26","slug":"making-the-roi-case-for-telematics","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2019\/08\/12\/making-the-roi-case-for-telematics\/","title":{"rendered":"Making the ROI Case for Telematics"},"content":{"rendered":"

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Photo: Getty\/ijeab<\/em><\/b><\/p>\n

Making the ROI Case for Telematics<\/h2>\n

Often the toughest job a forward-thinking fleet manager has is \u201cselling\u201d leadership on the idea of telematics. And the numbers bear this out. Only 30% to 40%<\/a> of fleets are currently using a telematics solution.<\/p>\n

That\u2019s the bad news. The good news is that after being commercially available for more than a decade, there is plenty of data available to show that telematics provides a positive return on investment (ROI) to organizations that thoroughly plan and execute a telematics implementation.<\/p>\n

For example, 30% of respondents of a Bobit Business Media and Verizon Connect survey said they experienced a positive telematics ROI in six months or less. Similarly, a C.J. Driscoll and Associates study found that overall 66% of fleets reported having recouped the investment<\/a> in their telematics solutions.<\/p>\n

These are the types of real-world, hard numbers you\u2019ll need to provide to company leadership and stakeholders as you make your case for a telematics solution. The operative words here are \u201cmaking a case.\u201d It isn\u2019t enough to simply ask for telematics because it\u2019s what others are doing. Your business leaders operate in a world of profit and loss, and you need to convince them that investing in a new, potentially disruptive technology makes good fiscal sense.<\/p>\n

Measuring Value<\/h4>\n

It\u2019s been said over and over, but it bears repeating: You can\u2019t manage what you can\u2019t measure.<\/p>\n

This is fundamental to making the case for a telematics solution to company leadership. Without a data-driven technology such as telematics it is nearly impossible to have a full, to-the-penny accounting of both a fleet\u2019s expenses and how it is helping to generate revenue. With this data, changes can be made to the operation to eliminate waste and improve productivity.<\/p>\n

There are three ways that ROI<\/a> for telematics is typically demonstrated:<\/p>\n

    \n
  1. ROI in Concept<\/strong>: This is a high-level look relying on industry data from sources (see examples above) such as C.J. Driscoll & Associates, the Aberdeen Group, or industry publications, such as Automotive Fleet or Business Fleet. These sources present well-researched data from across industries, giving a sense of expected ROI outcomes that others have realized.<\/li>\n
  2. ROI Calculator<\/strong>: With an ROI calculator, you\u2019ll be able to estimate \u2014 based on your fleet\u2019s available data \u2014 the best-case cost-saving scenarios.<\/li>\n
  3. ROI in Practice<\/strong>: While this will mean outlaying some funds and committing a portion of the fleet to a telematics implementation, conducting a pilot will provide real-world proof that a telematics solution is right for your fleet. During the pilot, concentrate on a core business challenge you want to solve, e.g., cutting idling or improving utilization. At the end of the pilot, which may cover several months, review the data and see if telematics helped to solve the stated problem and any secondary benefits that may have occurred. For example, if you cut idling time, you may find that maintenance costs have also been lowered.<\/li>\n<\/ol>\n

    Making the Safety Argument<\/h4>\n

    For many fleets, adding telematics is often motivated by a need to decrease risk. While the human factor\u2014that is eliminating injuries and fatalities\u2014is a compelling argument, there is a financial component to cutting risk.<\/p>\n

    The costs associated with a fleet injury-related crash averages about twice the rate for a non-vehicle related workplace injury \u2014 and rises exponentially if there is a fatality<\/a>.<\/p>\n

    The costs of an average work-related crash increases by a factor of 10 depending on severity according to statistics from the Network of Employers for Traffic Safety (NETS). According to the organization\u2019s most recent publicly available statistics, a non-injury, bent-metal crash will cost about $5,900, an injury-related crash will cost about $65,000, and a fatality crash will cost about $672,000. A judgement of liability could push these costs into the stratosphere. It is not unheard of to have multi-million-dollar awards in the wake of particularly high profile or severe crashes.<\/p>\n

    A high-profile crash may also bring with it significant, unfavorable publicity that could have long-term implications for the company\u2019s brand and its profitability further compounding the costs of a crash.<\/p>\n

    Cutting a single injury or fatality crash will not only avoid unnecessary human suffering, but will save the company significant out-of-pocket expenses that goes right to the bottom line.<\/p>\n

    Increased Productivity<\/h4>\n

    Lowering costs is one thing, but telematics also offers fleets more than savings \u2014 increased productivity.<\/p>\n

    Most telematics systems offer numerous productivity-related features, including:<\/p>\n