Off-Road Telematics: Why the Disconnect?
The technology is more than a decade old. Fleet managers who use it report spectacular gains. So why aren’t more contractors stepping up to the plate?
| August 03, 2012
Research indicates that only 10 to 15 percent of heavy equipment contractors use telematics to help monitor and manage their fleets. Yet most heavy equipment today comes with telematics capabilities or prewired to accept aftermarket systems. And many of the big OEMs not only give you telematics hardware on their machines gratis, but provide access to the data free for a year or more.
The over-the-road trucking industry is way ahead of construction when it comes to telematics. According to Clem Driscoll, C.J. Driscoll & Associates, fleet tracking penetration of the truckload sectors is 40 to 45 percent. And national fleets like Walmart use telematics on almost every rig on the road.
So why aren’t construction contractors buying it?
The amount of information that can be gleaned from an off-road telematics system is almost endless – and that may be part of the problem. Here’s a common refrain heard among fleet managers:
“I’m getting more information than I know what to do with.”
And here is what the OEMs are saying:
“We’re giving them all this information, but most of them never look at it.”
What this seems to indicate is that one of the biggest hurdles is mental.
“The scope of telematics is unlimited, says Ron Ludchak, director of global sales, Topcon Tierra. “We can pretty much do whatever somebody wants us to do, but you have to look at the information available and what your expectations are. Then you need to understand how to use telematics data to meet those expectations and determine what changes are needed in your business procedures to get there.”
Business managers can sometimes be overwhelmed with the variety and quantity of data available, says Steve AuBuchon, marketing and product line manager for SkyBitz. What they really need is actionable data that is easily integrated into their systems or business processes, he says.
Define your needs
What then, is actionable data? The answer is something you define based on your business needs.
“A critical mistake is putting telematics on a handful of units and expecting the money will start rolling in,” says Nick Redd, industry support manager within Caterpillar’s Connected Worksite group. “Typically, there is not a lot of time spent up front thinking about how to change processes to improve the bottom line by using the information.”
Most fleet managers recognize there is inherent value in the information, Redd says. Where they struggle is in execution. The big question, he says, is “How do you take this information and integrate it into your processes without completely disrupting the process?”
For contractors and fleet managers new to the technology, the most reasonable course of execution may be to ignore the higher level functions and just concentrate on a few simple types of data. These would include:
• Hours (run time)
• Idle time
• Fuel burn
Much of the ROI (return on investment) you will get from any telematics system is going to come from these four data points. Asset utilization can be derived from the hours and idle times, says Sean McCormick at Telogis. Theft recovery and deterrence is enabled with the location data. Location data can also allow you to put up “geofences” to prevent unauthorized use. And the hours recording can also be programmed to set up maintenance alerts and schedules, McCormick says.
“The customer wants to know which machines are not being operated and could be used elsewhere, which machines are not where they should be and which ones are in need of maintenance or have maintenance upcoming,” says Steve McGough of software provider HCSS. “He also doesn’t want to fish for this data, he wants it in the form of alerts. Then he can then make informed decisions about equipment allocation.”
Ludchak notes that telematics doesn’t have to be complex. “Hours are a key component for the contractor,” he says. “Hours run their business, from payroll to job costing to equipment maintenance and depreciation. You can implement telematics at that basic level and still get a return and grow it as your abilities get greater. Start with the basics: hours and location. Get the maximum benefit from that, and then move forward.”
Chris Richardson, software solutions segment manager for heavy civil construction at Trimble, recommends you approach your potential telematics providers with four things in mind.
• First: what do you want to track? Do you want to know fuel burn rates, idle time? What do you need to know to be more productive?
• Second: What is your connectivity at the project? Can you cover it with cell phones, Wi-Fi?
• Third: How much is it going to cost?
• Fourth: what’s your projected ROI?
OEM or aftermarket
Another stumbling block for contractors new to the telematics arena is that there are proprietary systems provided by equipment OEMs and also third-party telematics providers.
OEMs tailor their proprietary telematics to provide an enormous amount of data beyond the four basics mentioned above. When you buy a new machine from these manufacturers you often get the telematics information free for anywhere from one to three years.
But if you have a mixed fleet and want telematics functionality on several brands of equipment you have to keep tabs of the machines on several different websites. Third-party telematics providers can bring the data from all of your machines (and trucks for that matter) into one website, but may not always be able to tap into the higher level data that’s dependent on OEM-specific machine sensors and diagnostic codes.
The AEMP standard
One solution to this quandary is the telematics standard developed by the Association of Equipment Management Professionals. The AEMP worked with the major OEMs and aftermarket telematics providers to come up with a software code that allows you to get any of the four basic telematics data types (location, hours, fuel burn and idle time) formatted in such as way as to be exported in standardized form to your equipment management programs.
For more information on the standard and how you can use it in your fleet management programs go to www.aemp.org/resource/telematics/, and see our article in the January issue of Equipment World: www.equipmentworld.com/innovations-2011/
Integration with ERPs
Perhaps the most challenging aspect of getting telematics to work for contractors and fleet managers is the disconnect between the telematics information pouring out of their machines and the contractors’ ERP (enterprise resource planning software) or EMS (enterprise management software) often called “back office software.”
If you can’t integrate your telematics with your ERP/EMS then you don’t get all the business-side benefits of telematics reporting. You wind up with two reporting systems and telematics data that has to be manually entered into the ERP – which is a labor cost and introduces the possibility of human error.
“There is a lot of work to do in that space, connecting telematics to ERP solutions and accounting solutions,” says Richardson. “You can have a huge dump of information, but what does it mean in terms of billing and actual operating costs? That’s what people are looking for, and that’s where the industry is headed.”
The larger fleets are beginning to request this kind of integration help from their telematics providers, says Redd. How much time and effort this takes depends on a number of factors.
“If its a home-grown ERP system, it’s often the contractor’s IT staff doing the integration,” Redd says. “If it’s an off-the-shelf system, it’s often a collaboration between the contractor’s IT department and the vendor of the ERP system. In either case it requires a partnership with their telematics provider and that could be one or many OEMs or third parties.”
“Depending on how the integration is set up it may require little work on behalf of the provider, or the provider could be shoulder deep in the customer’s business providing lots of data points,” Redd says.
“Some systems can be very sophisticated, delivering large volumes of data and can take up to a year to integrate,” AuBuchon says. “There are also solutions available that deliver a more focused set of data which can be easily integrated within 30 days.”
The sources we spoke to agreed that the integration between telematics and ERP/EMS systems is not nearly as well developed as other aspects of the telematics industry. If you want that complete integration, then you’ll need to go through the process and involve both the OEM and/or telematics provider and your office software vendor.
The disconnect between OEMs and telematics providers and ERP/EMS providers is getting better, but will take time, says McGough. “As standards become more of the norm, these back-end systems will be able to pull the data in from various OEM providers without the need for OEMs to get deeply involved in the process.”
ROI from the basics
Nonetheless, you can still benefit from telematics without complete ERP/EMS integration.
“If I can get an alert from a piece of yellow iron saying there’s a fault condition, I can use that data to troubleshoot the equipment before I even send out a mechanic,” McGough says. “I don’t need to have a work order started automatically as long as the mechanic can get the information he needs to fix the problem.”
Still, integration should be a goal. Doing so will maximize your ROI on any telematics system. “We’re seeing a lot of companies changing back office software providers now,” Ludchak says. “And if you are changing software, that’s the ideal time to ensure your new provider will give you that integration.”
Even greater benefits can be had by integrating your telematics and back office software so that the combined systems help you manage the worksite in real time – moving dirt or the actual work performed – in addition to machine monitoring, Richardson says.
Go big or go home
Redd urges contractors not to take a gradualist approach to telematics. “You can’t turn the data into dollars until you reach a certain adoption rate. If you have 100 machines but you only have the technology on 10 of them, it’s difficult to drive change,” he says. “But with 60 or 70 machines you have the critical mass to change the mindset, the behavior and the processes.”
Given the expense of installing a fleet-wide telematics system, that’s a daunting challenge for many contractors in today’s environment. Ludchak feels that this may be one of the key reasons contractors aren’t moving into telematics in great numbers yet. “Since ConExpo last year we’ve seen a greater awareness and interest in telematics.” he says, “but one of the greatest obstacles is the uncertainty with the economy,” he says.
The people who are using telematics today are the early adopters, Ludchak says. “Now we’re in the next phase and those people need a little more guidance; they’re not risk takers like the early adopters.”
The early adopters are enjoying a huge competitive advantage that contributes directly to their bottom line, Redd says. “When there are enough guys out there using this technology to better their business, winning bids and turning a profit because of it, the guys who don’t have it are going to see that and it will start changing their mindset, too.”
For more information from the companies represented in this article you can go to the following websites: