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An ROI Checklist: Your Fleet Management Solution

By Kevin AriesDecember 28, 2020

GPS and fleet management systems continue to gain traction across all fleet-dependent industries based on the many benefits the technology can afford organizations and their vehicles. From helping to improve customer service, to increasing driver productivity and enabling better routing, fleet management software can play an integral role in streamlining operations and enhancing connectivity. It can also significantly contribute to measurable ROI, both in terms of the technology investment itself, and in relation to impacting cost savings across a number of critical business areas.

But to recognize true Return on Investment (ROI), it's important to first define what it means in relation to the utilization of a GPS management system, and then identify the key areas to measure within the organization.

What is Return on Investment? 

Return on investment is a ratio between net profit and cost of an investment. A high ROI means the benefits of a solution compares well to its cost. In fleet management, this is usually a calculation of the savings that a fleet tracking solution realize divided by the cost of implementing the solution - software, hardware installation and training costs.

How does a Fleet Management Solution impact ROI?

Our Fleet Technology Trends Report 2021, based surveys conducted by Bobit Business Media the publishers of Automotive Fleet, Work Truck, Government Fleet and Heavy Duty Trucking magazines, revealed that 96% of organizations using a fleet management solution found it beneficial.

Also impressive, the majority of organizations who had implemented the technology achieved a return on investment (ROI) in less than one year. This holds true for organizations across multiple industries:

  • Transportation: 50%
  • Services: 59%
  • Construction: 36%
  • Government: 35%

While these figures underscore the value of investing in fleet management technology, there’s more to the telematics-driven ROI story. This year, perhaps more than ever, organizations were forced to grapple with unprecedented challenges and upheaval.  Survey respondents clearly indicated that GPS tracking can have a positive impact on business operations and cost centers.

The data showed that the majority of survey respondents saw increased improvement in critical areas such as customer service (54%), productivity (54%) and routing (38%). Respondents also reported decreases in fuel, accident and labor costs.

Fuel Management

By using a fleet tracking system, companies saw an 8% average decrease in fuel costs. This was slightly higher or lower when broken out by industry: Transportation – 10%, Government – 6%, Construction – 8%, Services – 9%.

Accidents

With telematics, organizations reported an 11% average decrease in accident costs. By industry, the decreases achieved were as follows: Transportation – 14%, Government – 7%, Construction – 14%, Services – 8%.

Labor

Post-GPS technology implementation, companies reported experiencing an average decrease of 10% related to labor costs. Similar percentages were seen when broken down by industry: Transportation – 9%, Government – 5%, Construction – 10%, Services – 15%.

Assembling a fleet management ROI checklist

Your organization can realize many of the same benefits we’ve outlined, simply by adopting or upgrading the right GPS tracking technology. And while determining the ROI of a new software purchase like a fleet management solution can involve many factors, the formula for calculating ROI itself is fairly straight forward: ROI = (Gain of Investment) – (Cost of Investment) / (Cost of Investment)1

The key is recognizing what factors apply to your company for both gains of investment and cost of investment. Here’s a checklist we’ve created to help you determine what to consider in your ROI calculation.

ROI Checklist

Potential Gain of Investment

While the some of the potential gains from fleet management can be hard to determine, concrete metrics like average mpg, and increased billable hours can be used to calculate total annual savings per vehicle in your fleet. Here are some of the potential gains you can see from a fleet management solution:

  • Improvements to customer service
  • Improved fleet productivity (help achieve an optimum number of vehicles to serve your customers)
  • Enhanced routing
  • Greater ELD compliance/reduction in fines
  • Improved fleet vehicle maintenance/decrease in maintenance costs
  • Improved fuel savings
  • Help cut in labor costs
  • Help cut in accident costs
  • Help reduce other fleet operational costs and cost contributors (help check poor driver behavior)
  • Streamlined for fleet managers
  • Decreased instances of lost or stolen vehicles or related assets

Cost of Investment

  • Cost of the fleet management system itself
  • Technology installation, maintenance and support
  • Downtime resulting from staff education and training

In terms of potential savings and gain of investment, we tracked many of these factors in our Fleet Technology Trends Report, and here’s how other fleet-dependent organizations netted out in terms of achieving these benefits post-solution implementation:

  • Improved Customer Service (54%)
  • Improved Productivity (54%)
  • Improved Routing (48%)
  • ELD/Regulatory Compliance (54%)
  • Decrease in Fuel Costs (8%)
  • Decrease in Accidents (11%)
  • Decrease in Labor Costs (10%)

Make this year all about your fleet

Rising customer expectations, increased technical complexity and a competitive landscape can put stress on even the best-run companies. Our data reveals that organizations across multiple industries have found that GPS fleet tracking can help them successfully navigate these challenges.  In the transportation industry, for example, 62% realized improved customer service and 80% of those in the services sector achieved improved productivity in terms of number of jobs and vehicle utilization.

Use these data points and our tips for assembling an ROI checklist and you will be well on your way to building a resilient business that can withstand the today’s complex environment or any future challenges.


Kevin Aries

Kevin Aries leads Global Product Success for Verizon Connect, helping build software solutions that optimize the way people, vehicles and things move through the world.


Tags: Cost control, Revenue & ROI, Customer Service, Dispatching & Scheduling, Fleet utilization, Performance & Coaching, Productivity & Efficiency, Safety, Vehicle Maintenance

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