Choosing a Fleet Management Solution
According to Donlen’s survey involving fleet managers and telematics, 21% of companies belonging to the industry are now using some sort of telematics solution, while 34% are planning to get a telematics solution. Looking only at companies with fleets that have at least 300 vehicles, close to half are seriously considering getting a telematics solution. While close to one in every three companies with a fleet size of around 100 to 299 vehicles are considering the same.
Photo courtesy of Donlen.
Whatever the reason, it is very apparent that there are a lot of fleet managers out there who are looking to get into fleet telematics within the near future. And the most critical part of the process is choosing the right fleet management solution and vendor.
When you select a service provider and telematics equipment, you should be confident that the system you have is reliable. You should also strive for compatibility. In this regard, you might want to consider working with a company that manufactures its own hardware and writes its own software code. This way, the devices and the software would have been made for each other.
Furthermore, consider having a dual resilience back up system so that you will not have too many downtimes. Your equipment will be linking directly to a data carrier instead of going through dial-up links.
Lastly, make sure that you know the overall costs of implementing a telematics system instead of just calculating the upfront costs of the devices and the software. You should also know when you would be able to get a return on investment from your telematics system.
Hidden costs
As with any deal, hidden costs in telematics could easily bloat the charges that you have to pay in the course of your contract.
Hidden fees take several forms. For instance, there are providers that levy roaming charges for your vehicles that go beyond the country’s borders. There are also companies that would charge you extra when you change vehicles. Be sure what your termination fees are, as some companies would charge you for removing their equipment when your contract ends.
The best course to take is to ask the service provider to put the price you pay in the contract that you sign and make sure that you do not pay more than the stated amount, no matter what you do.
Hidden costs can ruin your budget and you would find it difficult to forecast your return on investment. Because of hidden costs, chances are, the financial benefits that you think you have gained from deploying telematics and using the data it gets are far smaller than what you have originally computed.
Types of contracts
When it comes to fleet telematics, there are two different ways you can pay a service provider for the associated software you need:
- perpetual license and
- subscription-based.
With a perpetual license, you buy the software and the devices, and you get to use it forever. A perpetual license is a very traditional model and has been used for most on-premise applications that you have now.
With a subscription, on the other hand, you pay every month to use the software and the system for a certain amount of time. Most companies require you to buy the devices and then pay a monthly fee for the use of their software.
As you can guess, perpetual licensing involves very high initial costs that you have to pay upfront, but you do not have to worry about high recurring costs anymore. You would, however, still pay for support and maintenance, but these recurring costs would be kept at a minimum.
A subscription might initially save you from having to pay a lot of money upfront, but you will be paying the subscription every month or every quarter or whatever the terms of your subscription package might be.
It may sound like getting a subscription is the way to go, but if you are planning to get into fleet telematics for the long haul, you might want to consider that over time, the total cost of ownership would be the same for both methods.
Some companies “play” with the cost of the telematics device and the subscription fees. They allow you to pay more for your telematics devices and get a lower monthly subscription fees. Or you could get it the other way around, where the devices and installation are cheaper, but you pay a higher subscription fee every month.
Extra costs and support
No matter what type of contract you choose, there are other costs that you need to consider as well. The initial investment you make would not only include the license fee, but also costs for the setup and installation, customization and integration with your current systems.
You have to consider that any integration or customization might be very expensive, sometimes proving to be more expensive than your telematics device and license fees. You would also have to figure out if you need technical and other types of support for your software, and how much you are paying for it.
Pricing example
To give you an idea of how these plans are priced, here are some pricing schemes currently being used by several companies.
There are several price ranges depending on what is offered and what you need.
Solutions providers in the telematics space have five major service regions: United States, Canada, United Kingdom, Ireland and the European Union.
Prices range depending on the solution and the provider you work with. For instance, UK’s Tracker has a base rate of £244 (around US$381) for its Tracker Fleet offering, with monthly subscription of £11.95 ($18.69) for a one-year subscription. Their Tracker Vision Sprint sets you back £460 with a monthly subscription of £9.95.
Omnitracs has several plans that you can get with an MCP50 device. The Core Plan goes for $19.95 per month. This allows you to get a basic analytics manager software, access to their services portal, as well as other basic features. The company also has the Compliance Plan that costs $27.95 per month, and includes vehicle inspection reports and hours of service into the mix. The Performance plan goes for the same monthly subscription, and focuses on performance monitoring, critical event tracking and reporting, and other basic features of the Core Plan. Lastly, the company offers two premium plans starting at around $40 per month.
Canada’s Titan Tracking and Messaging sell airtime plans together with the hardware. Several flavors exist, but to give you an idea, monthly subscriptions for TrueSat Theft goes for C$49.95 (US$42.85), Theft Pro goes for C$59.95 (US$51.38), TrueSat Fleet Replay C$69.95 (US$59.96) and Fleet Replay Pro C$89.95 (US$77.10)
The company also has data plans on top of the regular airtime plans, wherein you get free KBs every month typically bundled into the airtime plan. Any KB over the allocated is charged C$2.80 (US$2.40) per KB.
Things to watch out for
Here are some important details that you should watch out for when dealing with fleet tracking solutions.
- Never sign a long-term contract. The thing with tracking and telematics technology is that something better and more affordable is always coming out all the time. There are a lot of companies out there that will try to lock you down with a two-year contract or far longer than that. This would mean that you would be stuck with mostly obsolete equipment and that you would not be able to take advantage of the latest features and functionalities that newer technologies can provide. Another contract related caveat: beware of automatically renewable contracts that some providers are giving you.
- Scalable and customizable. Be sure that the platform that you choose is able to accommodate any future needs that you might have. Or they should be able to customize their products and offerings according to what you need.
- Check the equipment. We are not just talking about the tracking devices that you are going to use, but also the SIM. Be sure that your service provider is not using SIM cards that are locked to a mobile network. Instead, make sure that the SIM works with a variety of networks. If you have a locked SIM, your vehicle’s tracking device will stop working once it gets to an area that does not have mobile coverage for that network. Having a multi network SIM ensures that your tracking device works with the widest possible coverage.
- Ask your service provider, “Do you provide the training and software?” Remember that your employees might not be familiar with the new tracking devices, so you might want to orient them with that. Also, you might as well consider that your fleet telematics will be recording different kinds of data. Does your provider have the software for you to fully take advantage of this data? Also, if you have your own ideas of what data should be available to you, will the company be able to give you the customizations you need?
