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Business Intelligence Applications Enhance Telematics Systems

Abstract

During times of a strong economy, government and industry contracts abound, which typically leads to more opportunities available than there are companies able to complete the work. In this type of environment, organizations may operate without much regard for the inefficiencies that increase operating costs. A high demand combined with a low supply can result in companies expecting a greater return for their effort. During these times, addressing inefficiencies are not normally a high priority, particularly with staff focusing on active projects. The high profit potentials of project work mean that return on investment to reduce inefficiency is comparatively much lower.

On the other hand, when the economy is lean, such as our current global climate, there are fewer opportunities and therefore the competition is much greater. Industries, in order to remain competitive while maintaining profitability, must find ways to reduce costs and one of these ways is to address the inefficiencies, be it in the employees, methods, or assets. One method is through the use of Business Intelligence systems, which can provide the tools companies need to discover areas for improvement. These tools can help identify potential profit centers in the business processes, or methods that can maximize the return on investment.

Companies that rely upon a motorized fleet of equipment for example, such as trucking companies or heavy construction contractors, have been using equipment monitoring devices, known as Telematics, to provide information that has helped these industries improve. A Telematics system, when applied properly, should enable any fleet dependent organization to clearly identify how their assets are used and the level of performance. Then applying this information they are able to improve the business processes and increase their margin.

 

Content

Introduction

One of the primary tenets of a capitalistic economy is the law of supply and demand. When there is a limited supply of a product or service in demand, the result can be that this same item has greater value and will therefore fetch a higher return. Consider the price of gas, when the supply is low as testimony to this fact. The higher demand price will mean greater profit margins for producers. However, higher potential returns will reduce the barriers of entry, resulting in more producers entering the market. As supply increases, demand decreases until the point of equilibrium is achieved. This capitalistic balancing act is clearly demonstrated in transportation, trucking, and shipping industries, which rely upon mobile equipment to generate revenue. These organizations must maintain, or increase, their profit margin while continuing to maintain customer loyalty. Therefore, they must find ways to reduce costs and maximize the profit created from the current infrastructure.

This paper will provide a big picture view of how, through the use of Telematics and Business Intelligence together, companies can reduce inefficiencies, increase control of assets, improve profitability, and create new business opportunities.

What is Telematics

A Telematic systems is “…the integration of wireless communications, vehicle monitoring systems, and location devices.” This technology will allow the monitoring service provide to capture a given set of characteristics (location, operating conditions, local sensor conditions, etc…) from a remote piece of equipment. This information can be viewed in real time, for the owner to use, or written to a data base for analysis, or used by a Business Intelligence application to aid an organization to better manage the assets and users of that equipment.

Most people are not aware of the term Telematics directly, but they are quite likely to be familiar with its application. The technology has been used in commercial vehicles through provider names such as the Onstar® systems found in GMC vehicles. (Copyright [2010] OnStar, LLC.) This system consists of a GPS device, a cellular transmitter/receiver, and an on board monitor computer. The GPS provides position information, and the cellular will enable the link between the equipment and monitoring station. The on board monitor computer can be configured to talk with any other compatible devices found on the equipment. For example, many vehicles and engines include an electronic engine control module (ECM). This ECM will interact with the many sensors on the engine as well as peripheral components such as the fuel level sensor, air bags, transmission and oil sensors, etc… The Telematics system can be configured to communicate with the ECU and retrieve the sensor data and forward this information using cellular networks. The information can be communicated based on a condition, such as an airbag being deployed, or it can be polled based on the owners’ criteria, such as twice daily.

Applications

Telematics has been gaining momentum for applications as a tool. “[W]ith more attention being given to a company's bottom line every day, more and more fleet operators are monitoring their equipment with care.” For the Mar/Apr 2011 article, Telematics are Here To Stay, in Purchasing B2B Kara Kuryllowicz interviewed a number of large trucking firms across Canada. The consensus amongst the interviewees was that the Telematics system has helped them improve their margin through understanding the basics of their expenses. For example, the ability to monitor their driver’s poor habits (such as speeding or excessive idling) has reduced their annual fuel costs substantially. The same article noted that these same organizations are able to support (through telematics) their drivers by providing trip planners and forwarding shipping documents, which reduces time spent at border check point and weight stations. Telematics is also used by the company for time cards, and maintenance scheduling, again saving money and reducing downtime through the inclusion of a scheduled maintenance plan.

The Real Power of Telematics

Although the previous mentioned benefits are valuable to an organization, they are only the beginning of its true potential. With the inclusion a Business Intelligence applications combined with the Telematics information delivery system, the agricultural industry is developing the “…capability [to] complete the circle from planting to harvest … transfer of guidance lines, variable-rate prescription maps, planned and completed jobs, application maps, soil sampling and scouting maps, yields and more”. The combined systems can include data collection and interpolation for not only the tractor itself, but can also be mounted to tractor accessories, thus enabling a more complete picture of the operation and a method to maximize the profit potential of the farming industry.

The benefit of Telematics, combined with BI applications, is also realized by the service industry. Guy Gessner (et.al.) wrote of how BI applications are being used by organizations to maximize the sales potential of their staff by enabling customer targeting. Their paper observed that the customer service departments of most organization “…are not normally expected to generate revenue or direct profits for the company.” The customers, once they have completed a purchase, are sometimes ignored by the sales team who are often looking for new opportunities. The article goes on to point out the error of this approach, since many of those customers may have additional need of products that the original company can supply. Through the careful monitoring of the customer services interaction with the clients, new opportunities for business can be found. Telematics and business intelligence can be used to discover “…unique insight into the performance and use of the vehicle and field personnel behavior.” These insights include learning which customers are using the customer service department, which indicates a bond and trust between the businesses that can potentially lead to more sales and greater growth.

Moving Forward

As discussed above, Telematics, when used with Business Intelligence (BI) applications, can increase the control and profit generating potential for organizations that exploit mobile equipment in their operations, but there is still work to be done. Mike Vorster observed in Three Keys to Making Telematics Work that:

Innovative and creative software developers need to develop Telematics data managers that call for the defined, well-understood and standardized data available at each OEM specific processing site; combine it into a single company database; and provide it to the enterprise accounting, estimating costing and reporting systems.

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The individual company that are looking for a more effective means of fleet management are not interested, for the most part, in tracking issues such as the average operating temperature of the transmission oil of a vehicle. The Original Equipment Manufacturers (OEM) on the other hand can richly benefit from this information.

Many manufactures, particularly of the automotive industry, include a quality control program as part of their business model. The problem with ensuring quality has been, the evaluation process is completed on the fresh off the line equipment or it relies upon feedback from authorized service depots. Telematics and BI applications can provide untapped resources for the OEM quality control effort. Through the use of Data Warehousing and Data Marts, which are a normal part of a BI application architecture, the captured information can be used for both quality and reliability measures as well as provide the OEM a rich source of empirical data necessary to fully appreciate both their customers’ needs as well as the environment conditions and circumstances the OEM’s products must deal with.

The OEM can also take responsibility to capture the information for the customer. They (the OEM) can then provide the operational information (such as fuel consumption, usage, and location) to the client for a fee. They can also use the captured information to provide aftermarket service for the client, including notifications of approaching maintenance and recommending preventative maintenance repairs. Because the OEM is providing aftermarket service through an online process, they can also supply a list of recommended parts necessary to complete repairs, opening a long term profit center not realized prior to the implementation of Telematics.

Conclusion

“Telematics are here to stay in the transportation industry. With an ever widening array of standard features to increase efficiencies and reduce operating costs…” Telematics technology on its own can provide many benefits, as well as a rapid ROI when utilized. The real potential for both improvement and growth can be realized once the companies using the current technology realize how it can be greatly enhanced with the addition of a business intelligence application.

References

• Colin, L. (2008, 02). Does Telematics Provide a Good ROI? Retrieved 01 13, 2012, from Automotive Fleet: http://www.worktruckonline.com/article/story/2008/02/Does-Telematics-Provide-a-Good-ROI-.aspx

• Fernanadez, R. (2009, Mar). Tracking Assets with Telematics. Light & Medium Truck , 22 (2), pp. 22-24.

• Guy, G., & Scott, R. A. (2009, Spring). Using Business Intelligence Tools to Help Manage Costs and Effectiveness of Business to Business Inside-Sales Programs. Information Systems Management , 26 (2), pp. 199-208.

• Hest, D. (2011, Nov 7). A look at new telematics offering for 2012. Farm Industry News .

• Koroluk, K. (2010). Telematics promise big fleet savings. Journal of Commerce (31), n/a.

• Kuryllowicz, K. (2011). Telematics are here to stay. Purchasing 2B , 53 (2), 27-28.

• Vorster, M. (2009, Jan). Three Keys to Making Telematics Work. Construction Equipment , 112 (1), p. n/a.