Telematics is Opportunity Knockin' at the Dealer's DoorBy Joanne Costin
Article Date: 04-01-2010
Copyright(C) 2010 Associated Equipment Distributors. All Rights Reserved.
Dealers and manufacturers press on toward solutions that help end users make more of what they’ve got, with a technology that represents: a sale.
Despite the fact that telematics are now standard on many models of construction equipment, many contractors and dealers have yet to fully integrate telematic data into their daily work routines.
The heart of the problem was revealed in a 2008 study of current and future needs for telematic data conducted by the Association of Equipment Management Professionals (AEMP). Only 40.7 percent of respondents were accessing the data from OEM Web sites, and among those that do access the data, 47 percent have to manually retrieve the data and 43 percent look at the data but don’t use it. A mere 6.8 percent of the industry’s most sophisticated user group, had found a way to integrate the information into their enterprise solution software.
While that percentage may have risen since the study was conducted, it nonetheless illustrates the frustration equipment owners have had in fully utilizing machine health data that is available to them.
AEMP Rolls Out a New Standard
As a result of the study, AEMP began to work with OEMs and technology companies on a solution. Less than two years later, AEMP is rolling out a new standard that will dramatically reduce the cost and complexity of importing data into an end user’s database. Developed by volunteers from McFadyen & Associates, Caterpillar, Trimble, John Deere, Volvo Construction Equipment and Komatsu, the standard will simplify telematics implementation in a mixed-fleet environment.
At the same time, manufacturers are working on improving their presentation of data, with the hope of making things easier for their customers. “Our system collects and presents a huge amount of information,” said Ken Calvert, director of machine support systems for Komatsu. “We need to filter all the information and present our dealers’ sales people with the right information.”
While the software is simple and easy to use, Tim Hoeft, tech support and development manager for Ziegler Inc., a Caterpillar and Trimble dealership based in Minneapolis, Minn., believes the skill comes in interpreting the data, and that few equipment managers are as adept at it as a dealership. “Customers will see the value that the dealer can add by having vision into what others are doing and have done with optimization. The relationship should get even stronger,” said Hoeft.
Customer Interest Grows
Despite the lack of standardization, interest in GPS-based systems continues to grow, as customers look to trim costs in a devastated construction market.
“We see increased interest and adoption from progressive customers,” said Terry Rasmussen, marketing supervisor for Caterpillar’s Connected Worksite Products & Services. “The key to a certain return on investment is the commitment to monitor the information and take action on needs identified in remote monitoring. The customers who have adopted these processes into their daily activities are seeing these systems as an important way to manage their business through the economic downturn.”
“We are getting an uptick in calls by people that haven’t gotten into it, who know they need to,” said Joe McNamara, vice president of Spectra Integrated Systems, a Trimble dealer. “As the economy turns, they know they need to be that productive to compete. They are bidding against more people. You need to know your costs and you need to be able to tighten your bids.”
Bill Graber, director of marketing for Trimble, concurs. “The value proposition is starting to become more and more palatable. Customers have saved millions of dollars by reducing their idle times.”
One such customer is Ted Bryant, vice president Tennessee-based Summers Taylor, a highway and heavy contractor. The company installed Trimble hardware on approximately 195 pieces of heavy and highway equipment and 100 other assets such as dump trucks, service trucks and equipment transportation vehicles.
“We are saving approximately 20 percent on fuel costs throughout the year just by paying more attention to idle times. We also saw right away that when our idle times went down, our productivity went up,” said Bryant. “The total cost of the technology was about $300,000, and it has paid for itself many times over in the first year alone.”
Another driver is security. “There has been a lot of machine loss in the last four or five years. So the cost of losing an expensive machine more than outweighs a telematics investment that can improve the visibility of the fleet and alert fleet managers when something is amiss,” added Graber.
It seems the more people use telematics data, the more benefits they find – and that includes construction equipment dealers. One of Trimble’s customers is a dealer whose service trucks use telematics to measure their off-road fuel tax savings. “The savings that they get helps pay for the telematic boxes and the monthly service.”
“I think the message that has resounded best with the customer is reduced idle time,” said Calvert at Komatsu.” We saw idle time be cumulative 40 percent of the machine’s hours. “If you put a pencil to those idling hours, they’re driving added machine depreciation, causing the next maintenance interval to arrive earlier, and burning fuel unnecessarily – customers got that message immediately.”
Looking at trends from the company’s Komtrax data, Calvet says they have seen about 10 percent cumulative reduction in idle time. “We think that is too significant to be an accident,” he said.
Reaching critical mass with telematics is another reason why demand is building.
“If only a few machines out of an entire fleet are outfitted with a remote monitoring solution, it doesn’t seem to compel the customer to really evaluate and incorporate the features and data into his core business process,” explained Caterpillar’s Rasmussen. But the story is different once a machine failure is avoided, or a machine is recovered. “Once a real and decisive value is identified from remote monitoring, a customer becomes committed.”
While there has been an uptick in sales of technology products, Hoeft at Ziegler believes we are still in the early adopter stage with telematics. He estimates less than 10 percent of the machines in his territory are using the technology.
“I think many potential customers are still learning about the products and services and are trying to determine what is available and how they might match those products to their needs,” added Hoeft.
Interpretation of Data is the Opportunity for Dealers
As a Trimble dealer and a Caterpillar dealer, Ziegler Cat has had a long involvement with technology products. Yet, despite healthy hardware sales, Hoeft admits they have yet to finalize their value proposition as it relates to the interpretation of telematics information – what he sees as the real area of opportunity
“We are trying to decide what differentiators we can add so that we are offering something that other people can’t, so that our customer would buy from us,” explained Hoeft. “Everybody can offer the hardware, everybody can offer the software, and to some extent the data formatting is getting pretty close,” continued Hoeft. “But what people can’t offer is that whole proactive analysis part.”
Ziegler is currently training people to fill what may emerge as a new role at the company.
“What we are looking for as we develop is a combination of technical expertise along with someone who has construction expertise.”
Deere Launches Fleet Care
John Deere has also recognized that customers don’t necessarily know what to do with their data and in response has created a solution called Fleet Care.
“The idea was conceived on a napkin about three years ago,” said David Wilson, program manager, Machine Health for John Deere Worldwide Construction & Forestry Division. What the company created is an in-house system that removes the burden of collecting machine data from multiple Web sites, and automatically delivers proactive machine health solutions after crosschecking fluid analysis data, telematics data, scheduled service activities, and machine inspections.
“Fleet Care empowers our dealers with a new tool to go to customers to say, ‘I’m not just providing a simple oil and filter change. What I am offering is a complete machine health solution.”’
Wilsoncompares the current state of telematics to a person who undergoes a physical and receives many test results. The test results are fine, but until you see the doctor, you really don’t know what you should do about them. Fleet Care automatically interprets machine data from multiple sources and sends proactive machine health solutions to either the dealer and/or end user.
For example, when a machine subscribed to Fleet Care exceeds 33 percent idle time, a proactive machine health solution is delivered to the dealer (or end user) detailing the amount of idle time along with suggestions on what to do today to control the health of the machine. Fleet Care not only provides JDLink operational data on idle time and hours, but crosschecks fluid-analysis results and machine-inspection reports. The combined information is run through a proprietary “rules logic” program to think through every possible explanation for a fluid or condition to be out of spec.
Kris Grimes, customer support advisor in the Kansas City, Mo., branch of Murphy Tractor, a John Deere dealer, tested Fleet Care and is excited about the opportunities. “I think the biggest selling feature of it is that we don’t just get an oil sample report that says copper or iron are high. Now we get something which says the copper is high, and here are some potential root causes to consider while addressing the machine’s condition. We get a more precise diagnosis of what is going on with the machine.
“So far the recommendations have been great,” added Grimes. “It has led us to look at some things, where before we might have just resampled and got similar results.” There are other advantages, as well. There is just one source to go to for all of the needs on that machine, and the results come right into the company’s business system. Fleet Care also saves the dealer time from having to review all the data, but when a PM comes due, it automatically goes to the business system, and populates the labor time, the parts list and the labor activities, so there is no more manual entry. “It’s a huge time savings,” said Grimes.
Grimes is optimistic about how the solution will help his largest customers, even those that do their own maintenance. “If you have a large customer that has his own mechanics, they struggle with when the machine is due for service and what all needs to be done. It doesn’t have to be dealer performed.”
However, Grimes thinks there will be more value for Fleet Care service when customers resume their normal work schedules. “All of our customers say I am trying to do more with less,” said Grimes. “They might have had 12 machines, and now they are trying to do it with eight or nine. Everything we can do for them that will increase their uptime on those eight or nine is going to help them do the work that they were doing with 12. To do more with less, that machine has to have the most uptime that it can have.
“Managing the data, what needs to be done, catching the catastrophic failures before they are catastrophic failures is the only way we are going to do that.”
Wilsonat Deere believes the Fleet Care is the only intelligent machine health solution on the market that is truly proactive, identifying problems even before diagnostic trouble codes appear and saving customers from the high cost of catastrophic failures.
The suggested list price is $300 per machine, but Deere is offering a 10 percent savings on an extended warranty, which would most likely cover the cost of the service. “This is our way of putting our money where our mouth is,” said Wilson. “We are going to pay it forward as a sales tool that dealers can take to our customers.”
Selling Telematic Solutions
So how can dealers effectively sell telematic solutions? Graber has found that putting savings in terms of a particular job helps contractors quickly see the benefits.
“There are certainly savings you can get over time, but they are harder to quantify,” said Graber. “But when you get in a situation where you are working with a contractor on a project where they have a set of numbers that they have to achieve, then the benefits of the telematic solution becomes very clear: fuel savings, maintenance, all across the board.”
Trimble is interested in becoming a full-fleet application for contractors. “OEM solutions are machine centric and our application is more construction centric,” said Graber. “In addition to machine diagnostics we are working on solutions that are helpful to jobsite improvement, jobsite utilization, cycle monitoring, jobsite efficiency, increased productivity and cost estimating.” Trimble formed a joint venture with Caterpillar in 2008, but would like to work with other OEMs as a mixed fleet solution.
Hoeft believes the joint ventures between equipment manufacturers and technology companies are helping to provide more flexible solutions for contractors. The challenge is finding a solution (OEM or aftermarket) that matches the customer need while providing the most flexibility on varied assets. “Not all needs can be met and it is good to outline differences in performance and expectations so that there is no misunderstanding. It is a very dynamic market with new solutions being introduced daily. There is no one, all-encompassing solution for all customers.”
So what makes a dealer successful in adding value to relationships through machine health data? Komatsu’s Calvert finds that one common denominator is a senior manager to champion the effort. “They have somebody pushing it, saying, ‘This is good for us, we need to be doing this. We need to be visionary.’”
“The best salesmen have embraced the technology,” added Calvert. “The real challenge is taking something that inherently complicated and making it simple.”
Building relationships is the driving force behind Komatsu’s decision to provide Komtrax data for five years at no charge. “It’s been a very simple belief that if it improves the ownership experience, it is going to come back to us in business,” said Calvert. It’s a sentiment echoed by other OEMs.
But if the industry is going to experience from the full potential benefit of telematics, it has to figure out a way to turn telematics data into intelligence and actionable items. And while this is unchartered territory for some, a dealer’s knowledge and experience puts them in a great position to fulfill this growing customer need.
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