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Thursday, June 27, 2013

GPS Fleet tracking in the age of the Sequester

Fleet tracking systems can be a boon for companies or government entities that are trying to save money for their organization.  These types of systems provide the efficiency as well as the oversight that can allow an organization to tighten their fleet related spending - which can be used to lower their overall budget, or to help to prevent severe cost reductions in other critical areas of the organization.

One major issue is how to come up with funding to invest in a cost savings system like vehicle tracking when income is actively being reduced.  Here are some ideas:
  • Incremental system roll-out.  Purchasing the entire system at once will help to lower costs quickly, but if you can't do that with your current budget, install units on an incremental basis - using savings from the prior installs to help fund further installs until you have the system in place on your entire fleet.
  • Leasing.  Leasing a vehicle tracking system can usually defray some of the major up-front costs for a few months - enough to get the savings needed and the return on investment moving forward so that overall cash-flow is only impacted for a short period of time - a couple of months as opposed to years of protracted budgetary shortfalls.
  • Use a hosted solution.  While enterprise systems can be more cost effective over the long run for large fleets, the initial outlay may not be feasible in times when budgets are being tightened.   Even for fairly large systems, the savings of a hosted vehicle tracking system can help to pay for itself, and to create head-room on cash-flow within a few months.  Once the savings of a hosted system is in place an enterprise system can be easier to justify, putting in place the self-hosted system that will create even higher long-term savings.
  • Pilot systems.  Keep in mind that fallow times provide good timing for system pilots, demos, analyzing actual return on investment (ROI), defining specific requirements, etc.  Even if you can't afford a system right now, these efforts can help make for a stronger financial case later when competition for funding isn't as high.
The return on investment of a fleet tracking system for an organization varies based on the fleet size, the type of fleet vehicle, the average monthly mileage of the vehicle, and other factors such as if employees have access to the vehicles after hours, gas prices, etc.  Even so, the return on investment can generally approach $60USD a month per vehicle - after the costs for the equipment and services have been deducted.  For a fleet of 500 vehicles, this can create an additional monthly cost savings of $30,000USD, or a yearly savings of $360,000USD.  In some cases, the additional productivity that a vehicle tracking system provides can actually provide a significant boost to income not including the monthly cost savings; depending on the organization's business model.