Fleet News

Risk management: telematics

THE telematics market in fleet has exploded over the last couple of years.

More and more firms are realising the benefits of collecting vehicle data electronically and the technology has been hailed by many as a revolution in fleet management.

But with rapidly developing new markets come those looking to hop on the bandwagon and take advantage of the flurry of interest and there are concerns that unscrupulous providers could leave fleets with a substantial bill and little to show for it.

Tony Neill, vice-president at global navigation specialist Navman, says there are examples of telematics firms being set up and collapsing soon after, leaving fleets with debts to pay and no product.

‘The problem with the rapid growth of any industry sector, or technology, is that it can attract business start-ups looking to make easy money at the expense of unsuspecting customers,’ he says.

‘Businesses are signing up to five-year lease rental agreements for vehicle tracking systems with companies that rapidly go into liquidation or administration.’

Research by Barclays Bank suggests that 18% of all new businesses fail within their first year, and half within three years.

‘Many businesses, small to medium enterprises in particular, wrongly assume that if a vehicle tracking company is no longer able to provide their service, they will stop paying for it,’ Neill says.

‘In reality, because most suppliers use the services of a third party leasing company to provide finance, customers are tied into payment for the full length of their finance agreement.’

John Peniston, proprietor of Superior Windows, Barrow in Furness, can vouch for the pitfalls facing telematics customers.

‘A couple of years ago we invested in a vehicle tracking system that we thought would prove reliable, from a company that presented itself as a trustworthy technology provider. Our faith proved misplaced, however, when the system developed a problem.

‘We were unable to make contact with anyone from the company and subsequently discovered that it had gone bust. We had paid up front for the system and never got our money back.’

Martin Port, managing director of telematics company Masternaut, said: ‘There are quality companies that work with integrity, but there are people that will go for the cheapest option and get their fingers burned.’

Neill believes that while fleet managers are increasingly being forced to comply with an overwhelming array of regulations, no such rules exist in the telematics sector, which leaves customers vulnerable.

Until such regulation is in place, fleets looking into telematics need to do their homework before taking the plunge.

‘Investing in the right system from the right provider can boost efficiency, increase security, ensure legislative compliance and save companies thousands of pounds a year, but it can also mean making a serious financial commitment,’ Neill says. ‘The need for thorough research before signing on the dotted line is essential. Customers should mitigate their risk by ensuring that they’re buying from a company they can trust.’

Port adds: ‘People don’t make the necessary checks and look at the credit-worthiness of the companies they are dealing with. They should make sure that their underlying technology is sound.’

It can be relatively straightforward to set up a tracking system, Neill says, but that does not necessarily mean the system will be reliable.

‘The technology is liable to fall over on a regular basis, but an unprincipled individual would have enough to sit himself in front of customers and offer a telematics solution.

‘And when the system fails, who does the customer turn to? When all the customer wants to do is press a button and see the system working, the person who sold it can absolve responsibility and blame the hardware supplier, the hardware supplier may then blame the hosting company, the hosting company then blames the network provider and so on.’

Andrew Pearce, a director of Wire3 Technologies, says: ‘Problems are created when suppliers do not deliver on customer service and support.

‘We make sure clients are aware of us and our sister companies and encourage our prospective clients to speak to existing users.’

When looking for a provider, ask for testimonials to find out what existing customers think of the service. Look for a supplier that takes responsibility for every aspect of the system’s operation.

Neill says: ‘There is no reason why customers shouldn’t be given first-hand access to a working telematics system to see how the software operates before investing in it.

If a company has any faith in its product, it will have no objections to offering this level of access to potential customers.’

Port continues: ‘If a firm doesn’t have at least 10 or 20 references then they’re not a player.’

Pearce warns against automatically going for the cheapest option: ‘The telematics market is swamped with product and the price has been driven down to a level that can become unsupportable,’ he says.

‘It’s an old adage but you do get what you pay for.’

Neill concludes: ‘Buy from a reputable company and you’ll be purchasing technology that could revolutionise your business.

‘Choose the wrong supplier and you could be counting the cost of your mistake for years to come.’

At a glance

  • What do you need telematics for? Consider whether you want simple vehicle tracking, full vehicle management or something in between.
  • Check the credit-worthiness of potential suppliers – will they still be around over the coming years?
  • Get references from several existing clients.
  • Investigate the support and post-sale service as well as the software.
  • The cheapest product is not necessarily the best value.
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