White PapersTelematics is delivering real benefits though the technology is in its infancy. The menu of available services is set to explode, which poses a challenge for business managers.
They need to be clear about the information they require, otherwise they risk disappearing in a sea of unused data.
Telematics: The 21st century solution to cutting and controlling fleet costsA revolution in the delivery of IT bringing cost savings, simplicity and productivity to SMBsUntitled DocumentWhite Paper: Telematics: The 21st century solution to cutting and controlling fleet costs Produced on behalf of Genesis Communications November 2008 Contents Executive summary ....................................................................................................................................................... 3 Introduction .................................................................................................................................................................. 4 Telematics the 21st century business solution .......................................................................................................... 4 Business benefits fuel savings .................................................................................................................................... 5 Business benefits journey planning/productivity ....................................................................................................... 5 Business benefits safe staff and safe vehicles ............................................................................................................ 5 Expert comment ............................................................................................................................................................ 6 Business benefits vehicle security .............................................................................................................................. 6 Business benefits wholelife costs ............................................................................................................................... 6 Management reports .................................................................................................................................................... 7 Expert comment 1 ......................................................................................................................................................... 7 Expert comment 2 ......................................................................................................................................................... 7 Expert comment 3 ......................................................................................................................................................... 7 Telematics the drivers friend ..................................................................................................................................... 8 Vehicle telematics the future ..................................................................................................................................... 8 Expert comment ............................................................................................................................................................ 9 Marketplace consolidation ............................................................................................................................................ 9 Conclusion ................................................................................................................................................................... 10 About Genesis Communications ................................................................................................................................. 11 Untitled DocumentWhite Paper: Telematics: The 21st century solution to cutting and controlling fleet costs Produced on behalf of Genesis Communications November 2008 Executive summary Telematics is starting to revolutionise the way in which companies run their vehicles and employees drive them. The evolution of telematics is in its infancy. But, companies that have already introduced telemetry systems to their fleet operations are already reaping significant financial dividends through a range of operating efficiencies. Despite this, the raft of services currently available remains small compared with what is around the corner, according to industry experts. Meanwhile, as the menu of available services explodes there is universal agreement that telematics should not be used to snoop on employees. Instead, businesses are being advised to discuss the use of telematics with their employees and obtain agreement for data to be held. While telematics systems undoubtedly improve vehicle and driver operating efficiencies, it remains vital that fleet decision-makers decide in what areas of business operations they want to use the technology. The range of data that is downloadable is huge and, for the first time, enables fleet chiefs to gain real-time cost control over their fleet. But, if fleet decision-makers do not set aside time to analyse the data and use it to improve fleet operating efficiencies then the benefits will be lost. Top fleet consultants agree that fleet chiefs should decide what they need from a system and buy no more or they will disappear in a sea of unused data. Untitled DocumentWhite Paper: Telematics: The 21st century solution to cutting and controlling fleet costs Produced on behalf of Genesis Communications November 2008 Introduction Cost control is the number one priority for companies as they battle for business amid economic turmoil that has not been seen for at least a generation. With the onset of recession, the onus is inevitably on fleet decision-makers to keep operating costs under control while simultaneously ensuring that their vehicle fleet functions at peak efficiency and effectiveness. Meanwhile, customer demands must continue to be met with deliveries, appointments and meetings expected on time, every time , while at the same time striving to improve corporate productivity against the rising tide of traffic congestion. If that seems like the impossible dream for fleet chiefs and company bosses, while simultaneously they grapple with escalating fuel budgets, ever-tougher occupational road risk management legislation, rising insurance premiums and a myriad of other vehicle and employee issues, then help is very much at hand. Telematics is the solution and go-ahead organisations are discovering that in today s 24/7 hi-tech world, satellite technology has a crucial role to play in cutting costs, boosting legislative compliance and improving business efficiency and ultimately productivity. Telematics the 21st century business solution Telematics had a troubled introduction to the fleet world as drivers battled against its arrival due to perceived Big Brother connotations. However, a decade or more on and the spy in the cab has become established as a must have in the armoury of many fleet decision-makers as they utilise the track and trace systems to improve fuel economy, boost productivity, limit at-work driving risk exposure and reduce their organisation s transport carbon footprint through effective journey and mileage management. Simultaneously, drivers seem to have accepted that far from being the enemy within, telematics can be their friend in the event of them having to defend themselves against accusations of speeding or failing to deliver an order on time, for example. Today, there are a myriad of telematics systems on the market. They range from in-vehicle systems that can be linked to satellite navigation as well as boasting a two-way driver-to-office communications option, to hand-held PDA (personal digital assistant)/mobile phone devices that are perhaps more suitable for monitoring productivity and providing lone worker protection. Crucially, whatever system is chosen Internet access provides real-time data on vehicles and employees. This, for example, can be crucial to forewarn customers of a revised delivery or meeting time. Additionally, information recorded enables a wealth of data to be analysed detailing every aspect of a journey. This could include start/stop times, distance travelled, speed, acceleration and braking data. Not only will that information give office-based managers a record of a driver s behind-the-wheel behaviour and their whereabouts, but it will enable comprehensive management reports to be compiled and analysed providing optimum control. However, use of the data comes with a warning. Professor Peter Cooke, KPMG professor of automotive management and head of the Centre for Automotive Management at The University of Buckingham, said: Telematics is becoming hugely important, particularly as we move through recession. But employees must be taught about its uses and systems should not just be installed and left unmanaged. Untitled DocumentWhite Paper: Telematics: The 21st century solution to cutting and controlling fleet costs Produced on behalf of Genesis Communications November 2008 Telematics has a big future and is becoming increasingly important in terms of cutting costs and obtaining optimum effectiveness and efficiency out of vehicles. But there must be a clear distinction between managing vehicles and managing people. The UK is becoming an increasingly litigious society and people s perception is that they are being constantly watched. Training employees on the uses of telematics and the benefits to both themselves and the business of the systems is hugely important. The Data Protection Act, human rights and privacy laws mean that the technology should not be used as a snooping tool. Companies should have policies and procedures in place to put employees minds at rest on these issues. Business benefits fuel savings Rocketing fuel prices have turned the spotlight on the need for improved journey management to keep petrol and diesel bills under tight control. With fuel price volatility being predicted for the foreseeable future, the recent cut in pump prices should provide no excuse for fleet decision-makers to take their eye off the budget control ball. Fleets already utilising telematics technology are reaping fuel bill savings of up to 20% as the technology ensures destinations are reached first time, every time and bad practices such as driver idling and unauthorised vehicle use are significantly reduced. Business benefits journey planning/productivity Crucial to saving fuel and reducing a company s carbon footprint is journey planning and the elimination of unnecessary miles. Telematics technology enables more efficient journey and delivery schedules to be compiled and that can boost productivity by up to 15% with response times to customer requests for help improved. Additionally, changes to pre-arranged schedules - as a result of traffic congestion or an additional appointment - can be instantly confirmed with drivers, and linked satellite navigation means that no mile is wasted in the re-routing process. Business benefits safe staff and safe vehicles With 200 deaths or serious injuries a week in road crashes involving people driving a car, van or truck on business, more people are killed and seriously injured on Britain s roads while driving on behalf of their employer than in any other work-related activity. As a result, the range of legislation now impacting on businesses is massive as the Government and European Union continually encourages companies to improve the way they manage their vehicles and staff safety. Implementation of the Corporate Manslaughter and Corporate Homicide Act in April 2008 increased the focus on occupational road risk management, which was already under the microscope as a result of tougher laws governing employee hours under the Working Time Directive as well as existing health and safety regulations. Telematics devices enable organisations to compile a thorough driver and vehicle audit in accordance with health and safety related at-work driving legislation as journey distances and times can be pro-actively recorded and then managed. Meanwhile, because drivers are aware of data being recorded in relation to driving style - speed, braking and acceleration - they tend to be safer and smoother when behind the wheel. Untitled DocumentWhite Paper: Telematics: The 21st century solution to cutting and controlling fleet costs Produced on behalf of Genesis Communications November 2008 This manifests itself in two ways: Fewer road accidents which means reduced insurance premiums with anecdotal evidence suggesting savings of up to 30% and reduced operating costs with vehicle wear and tear kept to a minimum. Equally, for drivers who continue to speed or drive erratically or dangerously, then the data gathered can be used to provide targeted driver training solutions. And, in the event of a crash, the data recorded, for example in relation to braking and acceleration, could be vital evidence in a court case or an insurance claim in proving a driver s guilt or innocence. A further corporate benefit of recording drivers hours - in addition to putting safety first - is that the monitoring of overtime claims is tighter and can, in some cases result in significant savings in additional staff payments. Expert comment Stewart Whyte, managing director of long-established fleet consultancy Fleet Audits, said: Fleet operators must understand what action they are going to take in different areas of the business with the information that telematics units give them. In relation to safety, if they discover their company s top salesman is constantly breaking speed limits then companies must have the bottle to issue warnings and take disciplinary action. If that same employee is then involved in a fatal road crash, police officers will be asking questions of the business. A company that knew an employee was consistently speeding and failed to take action could find themselves having to defend corporate manslaughter charges due to gross negligence . Business benefits vehicle security Vehicle theft remains a major concern for many companies. However, a telematics device provides improved asset protection and a 24/7 watch over each vehicle enabling fleets to be tracked in the event of theft and ultimately recovered by the police. The Home Office says that vehicles fitted with security devices, including telematics systems, are 10 times safer than vehicles without. According to Government statistics thefts of, and from, vehicles has dropped by 61% since they peaked more than a decade ago and part of the reason is the sophisticated technology now fitted to cars, vans and trucks. Again another aid to saving money and cutting insurance premiums. Business benefits wholelife costs Vehicle wholelife costs should be the focal point for fleet management best practice. However, they can rapidly escalate out of control if vehicles are not serviced and maintained in accordance with manufacturer schedules. Telematics devices enable fleet department staff to accurately log all vehicle mileage and systems can be set or a message sent to a driver s mobile phone to remind staff that a service is imminent. As a result, the risk of unforeseen repair bills or in-life or end of contract recharges on leased vehicles caused by poor service history is eliminated. Untitled DocumentWhite Paper: Telematics: The 21st century solution to cutting and controlling fleet costs Produced on behalf of Genesis Communications November 2008 Management reports Most telematics systems have a menu of services that businesses can choose whether or not they sign up for. Typically, after the initial cost of the technology - including fitment for in-vehicle devices - there will be a monthly charge that may or may not cover the full range of services available. It is important that fleet chiefs check out exactly what services are available for the charge incurred. Vehicle and driver information recorded by the technology is relayed via the Internet to any desktop PC, where it can be viewed in easy to understand reports by managers. The data can then be used to build up an accurate picture of the performance of both vehicles and drivers. Information can be sliced and diced and topped and tailed to produce a wide cross-section of management reports. For example, exact petrol or diesel usage on a vehicle-by-vehicle basis across the fleet can be compared, enabling the identification of fuel-hungry vehicles. This could result in a vehicle maintenance lapse being identified and subsequently resolved or driver training for a particularly heavy right-footed driver being introduced. Equally, by comparing the data from the telematics system with key business performance indicators, new company practices could be introduced to realign previously established business methods to boost corporate efficiencies and customer service. Ultimately, overall management flexibility in relation to the fleet, drivers and customers will be improved. Expert comment 1 Stewart Whyte, managing director of long-established fleet consultancy Fleet Audits, said: The volume of data delivered from a telematics system is huge. At the outset fleet operators must be very clear about what they want to measure - fuel use, drivers hours etc. - and then use the information gathered to evaluate everything against those handful of priorities. Fleet operators should be sceptical about what the technology can do and should not give it free reign but be disciplined in its use and the area of operation they want to interrogate. Employees who are going to study the data must be trained and given time to analyse the information on the identified big issues . They can then make recommendations based on their findings to revise current practices. If time is not going to be set aside to enable this to happen then don t use telematics. Expert comment 2 Professor Colin Tourick, a management consultant specialising in leasing and fleet management and author of Managing Your Company Cars , said: Telematics stops drivers from being out of management control. Meanwhile, the ability to store journey, route, speed, mileage and fuel consumption details allows problems to be pinpointed quickly and solutions introduced. Telematics allows fleet managers for the first time to gain real-time cost control over their fleet. Expert comment 3 Professor Peter Cooke, KPMG professor automotive management and head of the Centre for Automotive Management at The University of Buckingham, said: Telematics enables fleet managers to become managers of personal business mobility. When introducing systems, fleet bosses should start by using data to manage miles driven, which will also help trim fuel costs, and then gradually widens the scope of the technology. Untitled DocumentWhite Paper: Telematics: The 21st century solution to cutting and controlling fleet costs Produced on behalf of Genesis Communications November 2008 However, technology providers must put huge efforts into training fleet managers to use the data. Fleet chiefs will have unprecedented access to data but they must be taught how to use it to best effect. Telematics the drivers friend Communication is key in selling the benefits of telematics to drivers. While the corporate benefits are many and varied, the spin-offs for staff are equally significant. They include reduced driver stress and fatigue as up-to-date satellite navigation/mapping means drivers will reach their destination first time, every time. Meanwhile, continual two-way communication enables drivers and their office to be in constant contact. Employees that are doing their job have nothing to fear from telematics and the data recorded can even help them reduce their tax bills. Current light commercial benefit-in-kind taxation rules mean detailed mileage records are instrumental in van drivers being able to prove that they did not use their company-provided vehicle for private journeys To prove exemption from tax - based on a 3,000 scale charge with an additional 500 charge for employer-provided fuel used privately - employees should keep mileage records, sign an agreement about van use with their employer or have use of the van written into their contract of employment, says HM Revenue & Customs. With the burden of proof that drivers do not have to pay tax resting with them, journey information recorded by a telematics device can provide the required evidence for benefit-in-kind tax exemption. By helping employees reduce their tax bills through having robust systems in place and not leaving them to the mercy of the taxman, companies can further boost staff relations. As systems become increasingly sophisticated, drivers will be able to log mileage as business or private at the press of a button when they start each journey and the log will be used to submit business mileage expense claims. Telematics devices also empower companies and drivers with indisputable proof that the employee was, for example, at a customer s premises at a specific time. In the event of allegations of missed appointments , late deliveries or indeed suggestions that a driving or parking offence had been committed, the data recorded will provide the answer. The key to winning driver support for telematics is to explain to employees the mutual benefits of the technology. Ultimately, an employee that vehemently opposes such systems may have something to hide. Vehicle telematics the future Estimates by the vehicle telematics and tracking industry suggest that more than one in four UK fleets is already using such technology within their vehicle operations. Commercial vehicle fleets have led demand for the technology and penetration has been greatest among companies operating more than 100 vehicles. Business sectors leading the race for the sophisticated devices are the utilities, logistics/road transport and service management sectors. Industry surveys also suggest that there remains widespread ignorance amongst companies over the multi-faceted business benefits that telematics can bring. But, as fleet chiefs grapple with their key concerns of overall cost control, fuel prices duty of care, vehicle environmental impact and congestion, telematics providers points to companies that have used their technology to get to grips with all those issues. Untitled DocumentWhite Paper: Telematics: The 21st century solution to cutting and controlling fleet costs Produced on behalf of Genesis Communications November 2008 As a result, the explosion in demand for telematics devices has already started to navigate across to company cars, particularly in relation to duty of care issues. Increasingly, according to Professor Colin Tourick, a management consultant specialising in leasing and fleet management and author of Managing Your Company Cars , as cars become more technologically sophisticated and use software to manage key processes, manufacturers will send software updates directly to the engine using telematics rather than drivers calling into a dealership. This will occur without driver knowledge or involvement. Telematics systems will also enable vehicle manufacturers and dealers to send message reminders to drivers informing them that a service is due. Drivers will then be able to book the service from their vehicle directly with the dealer, without human intervention. Equally, if an electrical fault occurs, the system will talk the driver through the procedure to isolate and repair the problem. Alternatively, if the fault requires attention by a technician, the system will liase with the local dealership to book the vehicle in, ensure parts are available and calculate the price of the work. Systems will also be sophisticated enough to provide advanced waning of imminent component failure. In due course, Professor Tourick believes that telematics systems will become entertainment centres selecting music to be streamed into a vehicle s audio system or television pictures to the in-vehicle TV screens to be keep children amused on a long journey. Equally, the systems will be able to locate the nearest restaurant, hotel or fuel station, for example, and direct the driver via the vehicle s satellite navigation system. In addition, with congestion charging continuing to be on the radar of both the Government and some local authorities, some form of black box tracking technology linked to mileage payments is likely to become widespread. Expert comment Professor Colin Tourick, a management consultant specialising in leasing and fleet management and author of Managing Your Company Cars , said: Currently, the main telematics features are delivered via a special box fitted to a vehicle, but soon they will all arrive via a mobile phone, personal digital assistant (PDA) or laptop PC with information available through voice activation. Researchers are also developing heads-up displays that will enable drivers to see information without taking their eyes off the road ahead as it will be directed on to the vehicle windscreen. Marketplace consolidation Whether such technology remains the preserve of the aftermarket or the introduction of a national road pricing scheme, perhaps in 2015, becomes the catalyst for vehicle manufacturers to decide that so-called black boxes should be original equipment remains to be seen. But, with around 33 million vehicles on Britain s roads aftermarket demand for the technology will remain huge. Presently, there are a plethora of telematics companies all offering a wide range of devices. The disparate nature of the market means that at some point industry consolidation will occur - just as it has happened in other new market segments. Consolidation will be the result of companies running out of cash to keep pace with the rate of marketplace developments and a failure to have the resources available to support technology users. But, until that point is reached, the telematics marketplace is increasingly crowded with a range of providers all offering an array of solutions with a menu of services. So, choosing the optimum device for a specific fleet may not be straightforward but the benefits will be enormous if the information gathered is used intelligently Untitled DocumentWhite Paper: Telematics: The 21st century solution to cutting and controlling fleet costs Produced on behalf of Genesis Communications November 2008 Stewart Whyte, managing director of long-established fleet consultancy Fleet Audits, said: Telematics hardware is already in place and changes will not be revolutionary. However, the pace of software development is rapid. The differentiation between telematics providers is in the capability of their software. Much of the software was initially developed for HGV telematics systems and that does not necessarily translate well into van or car situations. Suppliers that have failed to update systems should be left alone by fleet operators. Telematics providers that offer standout products will survive, while imitators and those who fail to update and adapt their systems to the growing market will perish. Fleet decision-makers should look to the pedigree of potential suppliers and try to anticipate their would-be partners being in the marketplace for years to come. It s a view shared by Professor Peter Cooke, KPMG professor automotive management and head of the Centre for Automotive Management at The University of Buckingham, who said: The successful telematics suppliers will be those that link the use of telematics into a business model in such a way that systems are not seen as being a threat to individual employees. One of the challenges to overcome is the way unscrupulous management could use information gleaned from telematics systems. Telematics must not become a tool of man management. Conclusion Thousands of companies throughout the UK already agree that tracking technology is an essential business tool Telematics is a major assistance to both corporates and drivers so long as implementation is managed properly and the reasons for adoption of the technology are explained to employees. Data and information gleaned from telematics devices should inform corporate as well as driver decision-making. Ultimately, the information gathered and analysed and used properly will provide the lifeblood that keeps your business ahead of the competition. Untitled DocumentWhite Paper: Telematics: The 21st century solution to cutting and controlling fleet costs Produced on behalf of Genesis Communications November 2008 About Genesis Communications Genesis Communications is one of the leading UK IT and telecoms business solutions providers. Acquired from DSGi through an MBO in 2007, Genesis purchased SaaS provider Servelogic in the same year to expand its product offering from mobile voice and data packages to fully converged IT and telecoms solutions. 2007 also saw the company awarded Microsoft Gold Partner status. The company is an expert in tracking solutions, with its xTrack ECO solution providing a complete communications package to customers in both the logistics and field sales industries at a very competitive rate. For more information, please go to www.genesis.co.uk/xtrack
