Deployment and utilization rates of telematics in the construction industry are “surprisingly and shockingly low, respectively,” according to results of an AEMP telematics initiative with AEM (Association of Equipment Manufacturers).
The intensive, in-depth survey, funded by AT&T and implemented by INEX Advisors, is the first ever conducted in the industry. Information was gathered through lengthy telephone interviews and online surveys with protections in place for the individuals who participated.
“We created a secure environment backed up contractually that says no names, no titles, no specific companies,” says Christopher Rezendes, founder and president of INEX. “Nothing would be shared except by two individuals on the INEX Advisors research team and the Technology Futures Group at AEMP. Even today, AT&T does not know the names, titles or specific companies that participated.”
About 50 to 60 fleets—including mega fleets, large, medium and small fleets—were involved in the undertaking, and more than 80 individuals were interviewed, some as frequently as two or three times, Rezendes says.
AEMP launched the survey in response to concerns voiced by members that, although existing telematics standards are good at producing data needed to maintain fleets, the current standards do not provide asset managers with enough centralized data to better manage their fleets.
“There are numerous data points and fault codes that come off the machine,” says Stan Orr, CAE, president and chief strategy officer for AEMP, “and we asked responders to rank them. In preliminary meetings, the OEMs expressed a desire to provide all of them, but they have to try and figure out how.”
Yet the data points are only a smaller part of a bigger challenge, Orr says.
“The overarching sticking points are a) how do we standardize the data and b) how do we manage and protect the data so it is not aggregated. Aggregating is a major concern of manufacturers and fleet owners—and rightfully so.”
There typically isn’t a problem if XYZ Construction aggregates the data coming from its fleet of 500 machines, Orr says. But aggregating data coming from 50 different companies, each with 500 pieces of equipment, “is a concern that cuts both ways,” he says.
“For instance, there could be concern that ‘secure’ aggregated data might be compromised and used by an end user to see how a competitor is doing business, while manufacturers are concerned that compromised data would invite unfair competitive comparisons. And initially there was some concern that access to data might allow some end users to manipulate and alter the way a machine runs, creating all kinds of warranty issues, liability issues and safety issues.”
Orr says survey results were presented to AEM to demonstrate why this is a genuine problem, why telematics is not being used and “here is what we need to do about it.”
“AEM has been nothing short of outstanding to work with,” he says. “They have acted in such a way that is very encouraging. At a Chicago meeting of top level executives, AEM said, ‘We are going to help solve this (problem).’”
In short, Orr says, the survey “got all of us off the dime.”
One example of what kind of data would help asset managers better manage their fleets came from one major fleet executive at the Chicago meeting, Orr says.
“He said if he has two bulldozers on a work site, and he was able to figure out that they are both running at about 40 percent idle time, then it stands to reason that he could make a decision on whether to run one machine instead of two. That may be an oversimplification, but it makes the point. Access to the ‘holy grail’ of telematics—idle time—helps fleet managers run machines more efficiently.”
Don Gengelbach, CEM, fleet manager at Mulzer Crushed Stone, typifies the general view of asset managers reflected in the survey. He says the type of additional information he would like to see from telematics includes average fuel burn, utilization and load percentage.
“Utilization with load factor is very important,” he says. “For instance, you might have a machine operating at a utilization rate of 80 percent but averaging a 20-percent load factor.”
Gengelbach also says he has “the right to all that data if I own that piece of equipment.”
“But at the same time, although it is my data, it is also my responsibility to have confidentiality of that data per machine per OEM,” he says. “I can’t broadcast it to everybody; OEMs can’t put that out on a cloud for everybody to grab it up.”
Survey results also clearly showed low integration of telematics use in the industry. Manufacturers have invested heavily in the technology since it produces data that enables them to build better, safer and longer-lasting equipment, Orr says. From the end user’s perspective, using telematics is more difficult, primarily because of the way the technology has evolved.
“Manufacturers all have a different way of doing it, and on top of that you have third-party involvement,” Orr says. “They have good systems and solutions as well, but nothing is perfect. We have to find a way of getting all this data into a central data feed so end users don’t have to go to a dozen different screens to find their data.”
Easier access to utilization data is important to Kendall Delp, global service and maintenance manager for Ameco, which has about 10,000 major assets operating in Mozambique, Chile, Peru, Panama, Mexico, Australia, Jamaica, the United States and Canada.
“Each manufacturer measures utilization a little differently,” Delp says. “Productivity information is also data that would help us better manage our fleets. If there was a way for us to go in, for example, and measure productivity of a wheel loader with a certain size bucket, in addition to a load-weighing system, now we’re getting into productivity. The fact that we have to go to each manufacturer’s website to gather some of those details is what makes telematics cumbersome to use in helping us do our business. [We would like to see] seamless integration into the customer’s back office system so customers like ourselves can utilize the data either as given to us by the manufacturer, or the raw data so we can, in turn, generate our own metrics of how we do business.
“Give us the idle time, and we will make the determination on utilization and productivity,” he says. “The work involved in drawing the data from each manufacturer makes it kind of prohibitive.”
Costly integration fees software companies may charge to bring data into in-house systems also scares off would-be telematics users, Orr says.
“If you are a big fleet with 20 different brands, you’re talking pretty serious dollars that represent a huge investment,” he says. “Even if you are a small fleet, it is a significant investment. It’s all relative.”
The variety of telematics systems, each claiming to be the best, has muddied the market, says Orr.
“Guys are desperate to do something, but they have reached the point where they go into vapor lock,” he says. “They don’t know which system is best. All the systems have something, but they all are a little different and that is what’s causing the paralysis that is out there.”
Mulzer’s Gengelbach—who manages a fleet of 400 to 450 off-road units, plus 200 to 225 on-highway vehicles—says third-party monthly fees could run $30 or more per piece of equipment.
“It depends on how much data you want, whether you want satellite or cellular,” he says. “Everything is negotiable, but for a company our size those fees are pretty scary.”
Making the business case—that is, getting approval to spend that kind of money from upper management—also influences the integration of telematics use. It can be a hard sell to upper management, says Gengelbach, “when you say you’re going to have a monthly fee of $10,000 for a limited number of pieces of equipment just to bring in the information.”
Ameco put cost benefits onto items and calculated return on investment, Delp says.
“There are some assumptions that are not yet totally proven, but if we say we are able to save one or two repairs on the machine based on our average cost to repair that machine, [we can show] payback.”
By eliminating or alleviating a repair, or catching it before a failure, says Delp, “we can make the repair at a much smaller financial level than if we were not aware of it and allowed it to go to failure.”
Mobeen Khan, executive director, mobility marketing, AT&T Business Solutions, says they became interested in the AEMP project because AT&T is “interested in connecting fleets of machines to the cloud, so operators can optimize their usage and maintenance of equipment and generate additional revenues and margins. That interest is specifically true for heavy-equipment companies that want to improve the usage of their assets.”
This will give another layer of improvement to the enterprise, Khan says, and start to show up in:
- Process improvement. By collecting data—whether it is alarms, diagnostics, location, security or temperature—it is possible for operators to improve customer service or machine uptime.
- Better designs. Companies are looking to design improved products, especially in AEMP’s case when OEMs themselves are involved. “They can improve their products by collecting data around how machines are being used, where they are being used and the environmental conditions surrounding the use,” Khan says. “They can feed that into better designs and newer products.”
- Improved revenue streams. “Think about having different types of usage-based warranty or proactive maintenance contracts, which will generate new revenue for customers who don’t have them now,” he says.
“Our view of the world from a machine-to-machine perspective is to welcome the era of next-generation productivity in the private sector,” Khan says. “That’s why, with AEMP addressing an important part of the economy, we became involved with them.”
INEX conducted its research specifically to generate deep insights on telematics, Rezendes says.
“When most people talk about research they almost always talk about the process to collect data,” he says. “It’s not just about how the data is collected. We have a dig-deeper concept. It is about how the data will be processed and how do you exploit it to determine whether to disseminate or share it—and with whom, and under what conditions.”
The PED approach (processing, exploitation and dissemination) used by INEX “is riveted in our experience and our knowledge that mission-critical, line-of-business and applications are not easily understood,” Rezendes says. “They are not homogenous. They are highly fragmented and can be very nuanced and complicated.”
The key to a deep dive into the construction market, he says, is logic: the logic of operators, of the people doing the work.
“To do that, we had to create a structure wherein those deep domain experts in the heavy-equipment industry would have deep conversations with us,” he says. “We had to make sure they understood exactly what the process was, exactly what we needed to collect and exactly what we were going to do with it.”
Rezendes also says INEX had to be clear about not going over the same old ground. “We needed to reach back to the great research AEMP has done, but we really had to explore new places,” he says. “It was a classic—if highly specific and controlled—partial confirmation and partial exploration study.”
Ameco’s Delp sums up today’s situation this way: “OEMs have generated systems that benefit them and that they believe benefit the customer as well. I don’t think OEMs have taken enough customer surveys or heeded the voice of the customer enough to say what the customer’s needs are in certain areas. I think they are missing the mark there.
“Our industry is so diverse that end users have different needs, different desires and different frequency in what they are going to do with the data,” he says. “But if that data is presented in an easier format, the manufacturers will see an increase in the acceptance of telematics going forward.”