Wednesday, September 19, 2012
Choosing the Right Telematics Provider
How Do I Choose the Right Telematics Company
By Michael T. Sprouse, President G&A Research, Inc.
I was reading a copy of Fleet Owner magazine the other day, trying to make sense of the world of telematics, and lo and behold; I received a call from an old fleet client of mine that I have done consulting for several times over the past few years.
“What can you tell me about telematics?” Jim asked of me.
Trying to buy some time so that I did not sound unprepared for his inquiry, I responded with my patented, “Jim, could you please clarify the nature of that question. There are many answers to that.”
Having deflected the conversation and bought some time to collect my thoughts, my friend, who owns a beverage company, with a fleet of 250 trucks, went on to say that, while he believed that telematics time has come and realized that he needed to make the move to reduce his operational expenses and get a handle on the overall management of his assets, his concern was over…”How do I BUY telematics and what should I look for in a company?”
Trying to sound like the ever wise and knowledgeable oracle of fleet management solutions, I replied, “Ahhh Jim, you have stumbled upon one of the great mysteries in the modern-day telematics that holds as many theories as a government conspiracy. Let me get back to you in a few weeks and give you a thorough report, so that you can have enough information to make the right choice for your company.”
My journey for the proverbial “Arc of the Covenant” led me to interview several fleet based companies of various industries, from trucking to sales organizations and fleet sizes of 30 to 1200 vehicles, as well as ten telematics companies, all of which were “pioneers” and self-described “industry leaders”.
Allow me to digress.
First, it is important to look back and reflect on the fleet based telematics market and how it has evolved to this point and is beginning to approach critical mass.
For the purpose of this article, I will take a “Telematics for Dummies” approach.
Much like technological innovations that hit the market every few years and spawn a host of companies looking to cash in on the “Gold Rush” of that industry, telematics really burst onto the scene about three and a half years ago.
And much like the previous races to acquire market space, a whole plethora of “pioneers” aligned themselves with an OEM and set out to grab as much market share as possible.
Companies began assembling sales teams, armed them with marketing lists that divided the country up into territories, and began calling on companies that met certain fleet size criteria.
If your company had a fleet size of 100 vehicles or more, you have been called once for each of those vehicles, if not more.
Telematics was a new and shiny toy that carried the promise of reducing fuel budgets through decreased idling times and safer driving habits and was very attractive to companies looking to reduce operational expenses.
The asset management aspect of keeping tabs on all of your vehicles was very appealing as well.
Once a web demo would show all of a companies vehicles and give a CEO or fleet manager the vision of how they could keep an eye on all of their employees, a company would then sign a three-year agreement with a telematics provider, have a solution installed and then begin trying to make sense of the myriad of data that began flooding the fleet managers desk top.
While many companies could see the advantages of telematics and the financial impact that a properly run system could provide, a majority of companies, over the past three years chose to take a “wait and see” approach, either believing it sounded too good to be true, or not willing to part with financial resources due to the precarious state of the economy.
Now three years later, the telematics industry is approaching critical mass and the mountain of evidence is nothing short of overwhelming.
In fact, as one CFO recently told me, “The very reason we did not make the move, was the very reason we SHOULD have made the move. We believe that waiting two years has cost us nearly a $500,000. That’s money we could have used for marketing or other infrastructure.”
So with the mystery of telematics no longer unsolved, the only question being asked now is, “What should I look for in a provider?”
What I found to be most interesting in my research of companies that had purchased a solution, was not dissatisfaction in the technology or the results but rather in their provider.
A common theme that I kept encountering was that once the contract was signed and the support and the “romance” ended, they were stuck with a solution that, while not as complete as they needed, still came with three years of monthly monitoring fees.
As one of my clients remarked, “I was told that I was purchasing the most complete solution, which I later found out that I wasn’t and then a month later, I couldn’t find my sales representative with a search warrant. Now I am stuck with minimal tech support and have to figure out on my own how to maximize the capabilities. I don’t have time for that. I have a company to run!”
His language was more colorful than that; however for the sake of this article……
So what I have compiled, after a couple of months of research which included conversations with 18 end users as well as 10 randomly chosen telematics providers is a helpful guide on how to choose a telematics provider that will be right for your company.
I would like to point out that, I purposely do not mention company names, as this paper is designed to simply be a guide based on my research and not an endorsement of any one company or solution.
If you are a company owner or fleet manager, first of all, let me start by saying, congratulations on making the conscious decision to move your fleet into the world of telematics technology.
CEO’s and Fleet Managers for all companies reviewed have universally seen and experienced, without exception, the impact of a successfully implemented telematics program to an organization, from simply a fiscal aspect to a safety and productivity bottom line.
However, it can be very confusing in the telematics world, with hundreds of providers and as many solutions. I hope to be able to help you in your decision-making process with this list of the most commonly asked questions that Managers said that they wished they would have asked or researched further before making their decision.
The following is a list of questions to ask you potential service providers and an explanation of why it is important to know.
Q: Are you partnering with a telematics company or a company that simply sells telematics devices?
A: There are many companies that simply sell devices and monitoring but no real service and long-term support. Do you want to work with a re-seller or a company that is constantly innovating and working closely with you in partnership to insure that you maximize your ROI?
Q: Is your provider a local company that can work closely with you and your team, even after you’ve signed the contract? Or will your consultant, who is only an account rep, not be able to help you beyond the signing of the contract?
A: This may seem redundant of the previous question, but it is important to make sure that once you sign the contract, you are in essence “married” to your choice for the next 3 years. You are going to need help and support as you learn more about the capabilities of your solution and how to use it within your company.
Q: Are future upgrades automatically included or are you married to current technology for the length of contract…unless you pay for an upgrade?
A: Ever bought the latest and greatest cell phone, only to have version 2.1 come out 30 days later? Ten you know the frustration, Technology is always changing and there is an old saying, “Today’s innovations are will be out of date as of yesterday.” Telematics is no different. It’s best to beginning to take advantage of today’s technology with a company that provides free firmware and software upgrades. Why wait 6-9 months for future advances when it is costing you money today?
Q: Are they a “Plug and Play” solution vs. a “Wired In” Solution?
A: It was interesting how companies that don’t offer a “plug and play”, will do everything they can to convince you that it could be the death of your company if you choose to go that route. The truth is that there are very good plug and play solutions that are fully robust and give you everything you need. The long-term benefits are that there is no installation costs (typically $100 per unit) and un-wiring and transfer costs (typically $150). “Plug and Play” solutions make transfer from one vehicle to another a 30 second procedure.
Q: Do the have “speed by street” capabilities?
A: Most telematics solutions offer a generic speed monitoring solution. That solution usually only allows a fleet manager to establish an interstate speed limit. The truth is that in today’s safety conscious environment we live in, speeding on a residential or business district street is even more dangerous that being 10 mph over the speed limit on the interstate.
Q: Do they have “Anti-Texting” capabilities?
A: This really needs no explanation. When your company has an accident that results in an injury or even worse, a fatality, the victims lawyers will subpoena your drivers phone records and attempt to match a texting incident or phone conversation to the time of the accidents occurrence. At that point it is simply “Game Over” from a financial perspective.
While every company I interviewed said that they had a “very strict” no texting policy, none of the companies I spoke with had the ability to enforce that policy, leading to the adage that “A policy that is unenforceable is not really a policy”. And with today’s new texting laws, your company could be subject to an $11,000 fine if your driver is observed to be in violation.
Q: Do they have seat belt notification?
A: I found it very rare when speaking to telematics providers that this feature existed but it in fact does. Obviously this is a safety related feature and will please many insurance companies that recognize the value of telematics in a fleet.
Q: Do they provide “real-time” ECM diagnostics?
A: Real time is just what it says…happening now! I spoke with a few fleet managers that shared stories with me of solutions that saved thousands of dollars in costly repairs by alerting them that there was trouble beginning to emerge in their fleet and they were able to treat the symptoms before they became illnesses that could shut down a vehicle for days, if not weeks. Lost productivity aside, maintaining the health of the fleet is just as important as maintaining our personal health before an incurable illness occurs.
Q: Can they generate IFTA mileage logs and reports?
A: How important is this? I was surprised to find out that it was one of the key benefits of a fully robust telematics solution. One fleet manager informed me that by automating this process, he took one weeks worth of effort, every quarter and reduced it to a few days for the entire year.
Q: Do they have H.O.S. (Hours of Service) reporting capabilities?
A: This is important, especially for trucking companies that are concerned with D.O.T. reporting. It’s also valuable from a productivity perspective. As one Fleet Manager told me, “I like to be able to look and see how many more hours my drivers have left so that I can make the best use of our available fleet.”
Q: Is the product made in North America?
A: This comes down to a dependability issue as well as language and semantics of your implemented solution.
Q: Is design and manufacturing under the same roof?
A: An important characteristic of your telematics provider for the purpose of innovation and expedition of those technological advances.
Q: Do they have a Software Development Kit (S.D.K.)?
A: Why is this important? No one fleet is exactly the same and every fleet manager has different needs and desires. An S.D.K allows your IT department to write code and interface with other applications that in play in your fleets form Garmin solutions to snow plows and devices that measure salt tonnage per street.
Q: Does your company have references…that you are familiar with?
A: In my research, I found that every telematics company I spoke with had a ready-made list of references. However, upon examining those lists, I realized that I had only heard of 1 out of each 10 that I was given. I realize that there are companies such as UPS, Orkin, Frito Lay and more that have devoted thousands of hours and months of test piloting to determine the proper solutions for their companies. Before I make an investment, or “go to the altar” with a provider, I want to make sure that I am not their guinea pig.
I hope that this has been helpful to you and sheds some light on your telematics search.
While there are variables to every situation and probably no one solution that is perfect for every company, it became my experience through research and interviews that these are questions and requirements that repeated themselves most often.
Michael T. Sprouse
President, G&A Research Institute