Return on Investment of Telematics – What to Expect (And How Soon)

Telematics – the integrated use of telecommunications and information technologies to collect data and translate them into valuable business insights – has a tremendous impact on fleet management approaches and methods.

Telematics solutions are powerful tools to successfully manage your fleet and improve fleet efficiency. The benefits are countless for forward-thinking companies that are prepared to innovate in an increasingly autonomous, connected, and shared future.

The primary role of telematics is to provide pinpointed details into your fleet’s performance. The list of competitive advantages is endless. The more data you have, the more equipped you are to optimize every element of your operation from driver safety to fuel economy to preventive maintenance – all while keeping an eye on the bottom-line.

Telematics brings radically new solutions that will urge fleets to adopt a strategic approach to maintain their positions in a fast-changing environment. This will undoubtedly upend traditional decision-making processes: instead of guesswork and instincts, businesses need to reshape their business models so that they leverage data-driven decisions. 

To put it simply, the future of efficient fleet management will be defined by connected car telematics. By providing unprecedented transparency, big data and advanced analytics offer game-changing opportunities for fleet operators in terms of cost savings, efficiency and customer satisfaction. Used strategically, this wealth of data will work to maximize your ROI on your telematics investment. The question is how.

Not all data are created equal

The management consultant Peter Drucker, also known as the Father of Modern Management Theory, once said: “If you can’t measure it, you can’t improve it”.

Some of the business insights that telematics provide – i.e. fuel efficiency gains and maintenance costs – are easily monitored and compared, these are easily translated to profit. Some others don’t. 

Take driver behavior, for instance. Behavior impacts fuel efficiency, insurance incentives, and overall performance increase, to mention but a few of key fleet performance indicators.

Monitoring behavior and taking action on the data will allow you to 

  • increase fuel savings. Aggressive driving – speeding incidents, rapid acceleration and hard brakes – waste fuel. Encouraging driver behavior change can lead up to 40% fuel savings.
  • increase in efficiency. Optimized routes and reduced idling time will result in less paid work hours and better (i.e. timely) service.
  • reduce maintenance costs. Driver behavior affects repair schedules as well. Through vehicle diagnostics, predictive maintenance will help prevent unscheduled downtime and associated losses.
  • lower insurance premiums. Onboard telematics devices can significantly improve driver behavior from driving more cautiously (15% versus 9% in 2014), to paying more attention to fuel consumption (12%), a global study by LeasePlan in 2015 suggests. 

Throw in reduced unauthorized vehicle use and regulatory pressures to reduce carbon dioxide emissions – and now take a look at the bottom-line.

Telematics and Automotive Technology

How to maximize your ROI

In order to implement a successful telematics strategy and make the most of your telematics investment, you will need a systematic approach.

Step 1: Set your company’s targets.

One major setback to a successful implementation is the lack of clear strategy. It is vital that you define what you expect to achieve. What key metrics do you plan to quantify and for what goal? Fuel efficiency? Route optimization? Driver behavior? Maintenance scheduling? – if needed use a consultant to help define your objectives.

Step 2: Choose your tools accordingly.

Focus your resources on the scope. Select the most appropriate telematics solution. It takes time and effort to find a solution that fits your company goals, but it is well worth it. Easy implementation is a good start, but functionality, reliability, and in the long run scalability are crucial factors that need to be considered as well.

Step 3: Collect and analyze data.

The more data you collect, the more information you have on concerned areas and can take the necessary steps to improve performance. Then again, you can leverage the data only if you know why you collected the data in the first place. 

Step 4: Identify opportunities to improve fleet operations.

Telematics provide accurate and real-time information on fleet operations and associated costs allowing fleet operators to detect and eliminate avoidable recurring expenses. The real asset, however, is the opportunity to address potential issues in advance and take action to optimize the flow.

Step 5: Do the math.

This may sound flippant, but when all is said and done, it all comes down to net profit. And while the benefits of telematics systems will undoubtedly outweigh the initial costs implementation, the monetization of telematics data and methods for evaluating ROI are quite complex due to the nature of gains.

Direct and indirect financial benefits of telematics

Direct gains such as fuel efficiency and lower insurance premiums are easily quantifiable. Some benefits, however, are less obvious. Indirect monetization of telematics data - i.e. costs that did not incur (accidents, unscheduled downtime, vehicle breakdowns, etc.) and lost savings (i.e. money spent due to lack of information) need to be taken into consideration as well for an accurate calculation of ROI.

Insurers, for example, have been exploring the potential of insurance telematics solutions to forecast usage-based insurance (UBI) trends. By accessing more precise driver profiles, they are in a better position to offer customized policies for fleets. Needless to say, usage-based insurance offerings that optimize premiums will yield long-term results by impacting fleet risk management.


To sum it up, installing telematics will yield the best results when the reports they produce are exploited to underpin business decisions in as many ways as possible. In short, the more data you have, the better decisions you can make. Big data reporting allows detailed insights into existing trends in fleet performance, but the true value of advanced analytics lies in the projections gained to implement change and thus improve future performance. Early adopters of telematics systems are at a competitive advantage to adjust their strategies to meet customer expectations and increase profitability through improved pricing accuracy and lower expenses. 

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