How to drive down operational costs with Smartphone Telematics

Business Insights

Hardware Telematics often promises the world but proves expensive, hard to roll out, unpopular with drivers and inconclusive in its return on investment. Smartphone Telematics, however, allows you to reduce costs without the headaches of upfront investment, fixed-term contracts, deployment logistics, or driver pushback.

Daniel Keenan, HR Director at engineering firm Mitton Group, sums it up when he says:

“It’s amazing how little effort was required to roll out Smartphone Telematics to my drivers.”

Like many in his position, he’s seen the expense and hassle that come with hardware-based telematics, which involves installing a black box or on-board diagnostics (OBD) device into vehicles to monitor company drivers.

First there’s the cost, which is typically in excess of £100 per device upfront and a further £15-20 per month. Companies are often tied into two- or even three- year contracts with no way out if the return on investment promised by the sales rep does not materialise.

Then there’s the logistics. It is often-overlooked how long it will take to operationalise hardware telematic devices across a company’s vehicles. Even an OBD solution requires ordering, distribution, tracking and then the registering and the maintenance of the device. You only need to look at the manuals that come with the devices to see that they’re far removed from ‘plug and play’.

Registration requires capturing each OBD device’s serial number and manually associating it with a vehicle or user. The failure rate of devices is also high at 5%+ over a multiyear contract. Another potential hassle comes with the fact that many fleets are leased, which means having to continually instal or move hardware around fleets when the vehicles are replaced.

Third, despite the cost and logistical challenges, the biggest barrier for hardware is often the ‘Big Brother’ aspect – driver location is tracked constantly and performance criticised – and drivers don’t like this one bit. It’s the stick without the carrot.

The rise of Smartphone Telematics

How does Smartphone Telematics compare? It should come as no surprise that, given it addresses all of the issues outlined above, Smartphone Telematics are becoming more and more popular among business owners.

In terms of the cost of implementation. Smartphone Telematics is 80% to 90% cheaper than the hardware alternatives, so a return on investment is achieved much more easily. The only cost is around £5 per month per driver (with no upfront or hidden fees). Providers like Brightmile offer a flexible month-by-month contract that organisations can cancel at any time with a month’s notice.

The logistics could not be simpler. Drivers download the app to their smartphone or tablet, create an account, and they are up and running. Managers get a simple dashboard outlining usage so they can ensure 100% utilisation, add new joiners, and remove leavers – all fully remotely. When leased vehicles are replaced, or if you have pooled vehicles or even grey fleet, this has no impact as the app will continue to work in any vehicle the drivers uses.

Finally, Smartphone Telematics have been designed to be far more driver-friendly. Users never report locations and engage their drivers by providing the carrot to accompany the stick. The company offers ongoing rewards for safe driving with vouchers awarded to drivers every month via a raffle and competitions between colleagues. One way to look at software telematics is like the ‘Fitbit for safe driving’ – it’s by engaging drivers that we see sustained improvements in their driving behaviour.

Driving down operational costs

So, what does all of this mean? You won’t find ‘safe driving’ as a line item on your balance sheet, but the financial implications stack up across insurance, fuel, vehicle wear and tear, and uninsured collision losses. For example, if a driver has a collision, your insurance premium will go up next year. But that’s not the only cost. You won’t be able to claim back the excess deductible and there’s the employee downtime as they miss work because they’re sorting out the collision, or worse, they’re injured. Safer driving also usually means smoother driving with a direct impact on fuel bills.

The application of Smartphone Telematics typically leads to a 10% reduction in fuel consumption coupled with a 35% reduction in collision frequency – Mitton Group saw a staggering 71% fall in at-fault incidents.

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