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Ways telematic fleet tracking solutions pays for itself

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    Telematics & technology adoption

    Before talking about the ways in which telematics pays for itself we wanted to talk about technology adoption, in this case, telematics technology adoption.

    Most innovations, whether it be a cell phone or television or a DVR or something else goes through an innovation phase, that looks much like the grey line you see on this graph. You see that it is a bit of an S curve where it slowly escalates in terms of popularity until it reaches a hundred per cent penetration.

    Once everyone has that innovation. And in fact, the buyers at the bottom go through stages as well, from innovators all the way late majority and laggards. The telematics industry after about 14 years is about 25% penetrated. That means of the hundred per cent of fleets that could have telematics, about 25% do already have telematics. This is pretty typical of any new innovation, and we think we believe we're at the bottom of that really fast growth curve where the early and late majority buyers get into the market.

    And we end up in the five to seven-year timeframe with about 90 or 95% penetration.

    So most of you on the phone today, either only have partially bought into telematics for part of your fleet so far or haven't at all yet, and are thinking about it obviously. We really think you're part of this early or late majority. And we're looking forward to working with you over the next five or seven years. We think that most people who are thinking about telematics really are thinking about it for two main reasons. The first and most obvious reason is what we call location management. Our industry also goes by the term GPS, which is really all about location management, where are our vehicles, there were vehicles, where are our workers, where were our workers? And so this has been long the standard for telematics as part of telematics. Location management, a really good reason to get telematics.

    We want to know where our vehicles are and were

    Also over the last three or four years, becoming more popular is the idea of driver management, managing driver behaviour, whether it be idling, speeding, or unauthorized use of vehicles, or just how hard do they drive those vehicles. Very popular. And we think most people when they think about telematics are really thinking about one of these categories or both of these categories, as you should. I'd like to posit that there's a third category equally important to location and driver management, that we're going to call vehicle management. How healthy is the vehicle? Are there any trouble codes on the vehicle? What are the meter readings real-time and directly from that vehicle? How well does that vehicle do in terms of KM per liter? What's the total utilization? Does that vehicle need roadside assistance and things like that? Integration with your fleet management software for example.

    We believe that this third pillar, this vehicle management pillar is what makes telematics excessively valuable to you as if location management and driver management weren't enough. And they are.

    To add that vehicle management piece makes telematics that much more valuable.

    Before we dive into what the top five are, I'd like to talk about effective telematics implementation. we sense that many organizations are reticent to pull the trigger on telematics because of employee reaction. Employees are nervous about big brother and therefore employers are nervous about big brother. But there are some best practices that we've gleaned for introducing and messaging. And they're really around being transparent and goal-oriented with that messaging. First, we always advise our customers to be open and honest about the fact that the organization has decided to implement telematics. Secondly, explain the expected results.

    Employees want to make the organization better just like you do. Explaining the results to them will help them buy-in. And third, if you have a vehicle use policy tie telematics into that policy, We've got more information on this on our next slide. we think this is an important part of the process. And finally over-communicate about the telematics implementation. we were talking to a fleet manager a couple of weeks ago, who had been using telematics for about three years and was asking him specifically about how he implemented it. And he said, they held a series of employee meetings and they were not timed meetings. So they weren't supposed to last an hour or two hours. They just answered questions for these employees about telematics until there were no more questions. So they over-communicated what they were trying to do, answered every question and put to bed any question that anybody had. It's not unreasonable for you to want to improve accountability through telematics.

    That's a pretty normal goal. Just be open and honest about that. And what will it mean for the employees in the organization? we think you may be pleasantly surprised by the results and maybe don't need to be quite as nervous as you might be about implementation and how your employees will react.

    telematics asset gps tracking

    It's really a good idea to tie the capabilities of telematics into your existing vehicle use policy.

    For example, if you have take-home vehicles, then you probably have some something in your vehicle use policy governing the use of vehicles from a take-home standpoint. You can build telematics language into that policy to cover the kinds of things that telematics will measure in terms of that take-home vehicle policy. The big one, the obvious one is around the driver behaviour.

    If you have speeding or idle time policies, you can build in that telematics is going to be measuring speeding and idle time to make sure that the policy is being upheld. Also, you almost certainly have something around vehicle misuse or unauthorized use of vehicles. That's something else that telematics helps with and something you can build into the policy, as well as tampering with GPS devices. You almost certainly have some sort of policy in there about tampering with vehicles. The GPS device just becomes part of the vehicle. You can build that into your vehicle use policy, you see some other ideas, some other touchpoints that we think are a good idea to build in as part of your vehicle use policy. If you decide to go with telematics, then these are just some ideas.

    As a, as a point of reference. If you Google Alameda County vehicle use policy. You will find a publicly available vehicle use policy from Alameda County who uses telematics. And there'll be some great information on there about how to integrate the GPS stuff into that vehicle use policy. So with it let's talk about the areas that you can get a return on investment from telematics, from these top five ways that we referenced before.

    And some of them we think are more obvious than others. For example, you've probably thought about fuel savings. The obvious advantage of driving less and driving better is that you burn less fuel. And that's certainly true. It's one of the biggest areas of savings that we see from telematics. And it's one that you should definitely think about. By itself, it can pay for telematics investment. In fact, people reducing their fuel usage simply by reducing the amount of idle time that they have has paid for telematics. So it should be one of the most obvious it should be one of the fastest ones you can get. And it certainly should be one that you're thinking about. Safety and liability is another big one that people think about upfront. If you drive better, you certainly are going to see safety and liability benefits down the road.

    You're going to have fewer accidents.

    You're going to have fewer claims against you with that accountability. You're certainly going to see the benefits, financially and otherwise from telematics in safety and liability. And also inefficiency, we think efficiency is often the largest category of improvement. You ought to be able to drive fewer KM, which has a significant effect on obviously the maintenance of your fleet. But it also that less time behind the windshield means you can do more work or you can get people off the clock sooner. So we've got a lot of cases where we see folks have their overtime go down at the same time the number of work orders completed goes up. That's not unusual from our standpoint. Now the two we have in green here are in green, separate from the blue ones, because we think they're categories that you're probably, or maybe you didn't think about it.

    We showed on the other slide, that vehicle management is a big piece may be that people don't think about and that vehicle management piece leads to some additional categories. We're going to call them utilization and maintenance in this case. I'll give you a couple of stories to illustrate. Some of the things people see from a utilization and maintenance standpoint. we were at one of our regional user's conferences a couple of weeks ago. And one of the fleet managers was talking to the crowd and he said, they've got about 250 vehicles in their public works department. And they have been using telematics for about two and a half years. And he got up and said, "By understanding the utilization patterns of our fleet, we've been able to reduce our fleet size by 10 vehicles." That's 4% of their 250. So that's not, that's not bad.

    It's not a huge number, but 4% by itself is fairly significant. He pegged a dollar value to that because these are heavy vehicles, expensive to maintain and so on. He pegged a value of $330,000 a year savings on that. And this is when he said, what we think was the most compelling statement. He said, "That's $330,000, that will never be in the county's budget again. And we think that's sort of the goal, at least in the public sector, but really in the commercial organization as well is really to take those pieces out of the budget or to do something better with those dollars. So we find that a lot of telematics customers do see a huge benefit from reducing their fleet size or utilizing that fleet in a better way.

    On the maintenance side, we think it's pretty obvious if you idle less or speed less, or use your brakes in a better way or all those things, you're going to see some maintenance benefits crystallized by this other comment a separate fleet manager at that same event we referenced said that they don't really replace catalytic converters at that county anymore. And he was talking about the fact that catalytic converters these days are sensitive to clogging. And that if you have a trouble code in the vehicle, what you often get is those catalytic converters clogging because there's some other problem with the vehicle. He said he uses his telematics system to immediately notify him when he's got a vehicle trouble code.

    He immediately fixes that problem or identifies it as a problem that doesn't need to be fixed, but usually immediately fixes it. And he said, "The downstream effect of that is that their catalytic converters don't have a chance to get clogged by that problem. And therefore they just don't have to replace them anymore."

    We think that's the kind of benefit we see as a result of all the other things that telematics does for customers, for users, and that they see all these sorts of benefits. So I'm going to say, think about, if you haven't already, about utilization and maintenance savings. In addition to all the other categories that we're talking about.

    Now, we'd like to talk about some actual results that some fleet customers have seen that utilize telematics. This first one, we think, is pretty obvious. What we've got is two lines depicting the number of speed instances per week. So in the case of the red line, 100 plus KM an hour speed events on a week to week basis, and then the blue line, 100 KM an hour plus speed events. And you can see in the case of this fleet, when they started utilizing telematics, they were just under 200 100km an hour speeding events a week and just over 200 KM an hour speeding events. And you see what happens in the first four or five weeks as they begin to see what their speed portrait looks like, and then begin to manage to that speed. They reduced the number of speed instances significantly.

    Most significantly their 75s, they go from about 110 a week to a 10 or less a week. They're over 70s, they go from about 190 a week to about 80 a week. We think there's some, some additional work that they can do on those over the seventies, but regardless it's a huge savings for them or a huge change for them in how they operate their fleet, leading to reduce fuel usage, better-maintained vehicles, fewer accidents, safety, and liability. All the things we talked about before. This chart actually depicts the average time that vehicles were starting their day. This is actually a public utility in California and the fleet manager when he was talking to us before he implemented telematics, he told us he really wanted to get all of his vehicles out of the yard 9:30 every day.

    And in fact he'd been telling them that for some time, but they had four or five fleet yards. He obviously wasn't able to take care of that himself. So he actually implemented telematics on about 600 vehicles. And you can see for the first four or five weeks, he's got an average time vehicles leaving the yard of 10 o'clock, 10:10, 9:45, 9:50. And we think anybody can see that if we want to leave at 9:30, but I'm leaving at 9:50 that's 20 minutes per day per vehicle on average between what we want and what I'm getting. And the amount of work that can be done is obviously significant in that time period. Especially if you take it over the accumulation of a week. Not coincidentally. He had a big backlog of work orders at the same time. You can see after those five weeks, he lays the hammer down, shows everybody these results, and you can see he got the results he wanted after he proved what was happening.

    He really got what he wanted. That 9:30 time happened and not coincidentally the number of work orders he got done went down that backlog, was reduced. And this is not their chart, but it's really similar. So you can see, illustrate what can be done. This is a department at a county, and you can see. There were four months sampled between April and August of last year. And you can see that they started out doing about 25 jobs per week per vehicle. So that's an average in that department. And by the end of the sample period, they were doing about 35 jobs per week per vehicle. That's an increase of about 40%. And really it's eliminating goofing off, making people more efficient with what they're doing and therefore getting to do more work than you couldn't do before. So there's that kind of wasted time or wasted KM in the fleet that you really get to squeeze out. And this is the kind of benefit that you can see.

    We want to talk briefly about telematics integration.

    So there's a lot of great data that comes out of telematics, but there's also great data that comes out of other systems you have in place as well. So this was a fleet that actually took their HR system that people clocked into, compared it to their GPS system, their telematics system that told them when people were leaving to do work. And they compared the times between when people clocked in and when they left and they compared it by the group and you can see here that ideally, you want people clocking in and leaving and going to work as fast as possible, like in the case of group three, and you don't want what happens in group four, where people clock in and there's a long time between when they actually leave and go to work.

    And the main reason for this, if you talk to them, is really about efficiency. They had the crews the night before not stocking up the vehicles as needed for the next day. And so group four would come in and have to do a lot of work before they actually got to leave, leading to inefficiency. So that's the kind of thing they were trying to drive out of it. And our main point here is to tell you, there are lots of things you can integrate your telematics data with to give you more valuable information that your telematics system alone might not be able to tell you.

    And certainly, if you drive better and drive less, you're going to reduce the number of accidents you have. You can see in the case of this fleet before they implemented telematics, they were averaging about 30 accidents a year on about 300 vehicles, which is about right, 10%, some of these small accidents, some of these larger, and you can see about three or four of those every year were speed-related at-fault accidents. So they wanted to reduce that. And you can see when you reduce your speeding and you reduce your hard braking events and you drive better. You end up with results like these, where now they're down to seven or eight accidents a year and no speed-related at-fault accidents. So we talked about safety and liability as one way to pay for telematics. This is the corresponding reduction in liability for that same fleet.

    The blue is the liability claims and the yellow are the claims paid. And you see they paid more than $400,000 in claims in 2008. And they're down under 50,000 every year since. So there's your return on investment right there. we want to summarize by saying that you shouldn't shy away from accountability. Accountability is important. It's important to make people accountable and to, and to understand what's going on in your vehicles. Don't shy away from big brother. We talked about some strategies to make people feel more comfortable, but don't shy away from it. Be clear about what you want. And the short term benefits, we think, are obvious. You're really going to get a short term benefit of less fuel used and more efficient use of the fleet and workforce immediately. And the longterm benefits we think are less obvious, but just as important things like lower maintenance costs, the smallest fleet so better utilization and safety and liability.

    And with that, I'd like to take any questions that we have. we see that we have a couple of questions that came in on the chat line. So the first one is asking whether or not there is integration between Verizon Network Fleet and AssetWorks Fleet Focus, the answer is yes, there is integration. The integration point generally consists of vehicle trouble codes and meter values like odometer and engine hours. We'd love to tell you more about that. You could certainly call your AssetWorks representative. You can call your Network Fleet representative, or if any of you were going to be at the AssetWorks users conference in a few weeks, we'll be happy to talk to you more there about what that integration contains.

    All right. Another question here. Asking about how fast do our customers generally see results from telematics?

    The answer is it really varies. You'll see some fleets that say, "Hey, look, we got a return on investment in three months." It paid for our telematics in three months. Some people say six months. Some people say nine months. The reality is how much do you want to use it? Do you want to use it right away for safety and liability plus efficiency plus fuel usage? You're going to see a pretty broad and quick return on investment very quickly. Here's what I'll say. I'll say you're going to see a return on investment very quickly. How many categories you want to see it on is really up to you and how you decide to implement and roll out.

    So very quickly, but really time-dependent. With that I'm going to say, thank you very much for your time. Appreciate having you on here. As we mentioned before, we'd love to talk to you more about telematics, so you can approach your AssetWorks or your Verizon Network Fleet rep, or we'll see you at the asset works user's conference. Thank you very much.

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