Understanding value is the first step to monetizing vehicle data

Matt O'Brien Profile picture for user Matt O'Brien February 27, 2023
Understanding the value of monetizing vehicle data - Matt O'Brien from Samsara points to examples of the digital transformation process opportunities being realized by the transport, logistics and industrial sectors.

Modern highway aerial view and various charts. Transportation and technology concept. ITS (Intelligent Transport Systems). Mobility as a service. © metamorworks - Shutterstock
(© metamorworks - Shutterstock)

Vehicle telematics used by commercial fleets has been around for decades. And up until fairly recently, it's been largely used to solve specific problems.

GPS routing, for example, helps drivers plan journeys and find their way around ever-busier roads. Dashcams are handy for recording what happens in front of you — an invaluable impartial witness in the event of an incident. While engine monitoring can help prevent expensive vehicle breakdowns by highlighting maintenance issues before they get serious.

Today, this siloed approach to using technology to solve fleet-specific problems is being replaced by single cloud-based connected integrated solutions. Not only do these address specific business and operational issues, they also provide a bird's eye view of entire businesses as execs look to drive down costs, improve efficiency, increase productivity and make physical operations safer for all involved.

It's all part of a digital transformation process that's happening within one of the largest business sectors on the planet.

And yet, despite the shift to connected operations and the adoption of enterprise-scale Internet of Things (IoT) solutions, too many people within the transport, logistics and industrial sectors are unaware of the potential of connected digital systems and the data they produce.

One industry insider said recently during a roundtable discussion:

I would say that the value of the data is not recognized by 90% of commercial fleets today,. I don’t think they even realize that telematics is ‘data’, and that data might be valuable across the rest of their business, let alone to other stakeholders within that.

It’s as if some people view data as a by-product of telematics rather than something valuable. And that’s a major hurdle for anyone with an eye on monetizing data from fleets.

Monetizing vehicle data is an open road of opportunity

In 2016, McKinsey published an in-depth report that explored the opportunities of monetizing data from cars in terms of “how they are used, where they are, and who is behind the wheel.”

The billion-dollar question for those far-sighted analysts who wrote ‘Monetizing car data: New service business opportunities to create new customer benefits’ still resonates today. They said: 

With [the] greater proliferation of shared mobility, progress in powertrain electrification, car autonomy, and vehicle connectivity, the amount of data from vehicles will grow exponentially, raising a key question: How might industry players in the evolving automotive ecosystem turn car-generated data into valuable products and services?

What’s more, the question is just as relevant for commercial fleets and other workhorses of trade and industry.

One simple answer could be that those fleets that have already invested in enterprise-scale telematics systems are already monetizing their data indirectly. How? By saving money.

The cost savings around more efficient operations, digitizing processes, improved safety and efficiency gains can be substantial. US-based Summit Materials, for example, saves around $1 million a year by using connected telematics to monitor fuel usage and reduce engine idling across its fleet.

Artera — another US firm which provides integrated infrastructure services to the natural gas and electric industries — used data to identify equipment that was simply not paying its way.

As a result, it sold $10 million of underutilized equipment, freeing up cash flow to invest in areas that matter.

Data monetization includes money saved and money earned

What’s clear is that analyzing data can make a sizeable difference to the bottom line. But it’s just the start.

One area that highlights the value of data is usage-based insurance (UBI) or pay-as-you-drive (PAYD) motoring cover. This data-first approach to vehicle insurance means that by allowing insurers to access their data, fleets can negotiate bigger discounts on their premiums.

It’s an approach championed by UK-based Flock, a new breed of data-focused company that’s challenging traditional approaches to insurance. Its real-time, data-driven business model means it prices connected vehicle insurance on a per-second basis, while also giving fleet owners the insights they need to improve safety and drive down premiums.

According to founder and Chief Strategy Officer, Antton Peña, real-time telematics data holds the key to enabling and incentivizing safer driving and reducing insurance costs.

The big question for many, though, is whether firms will be in a position not just to monetize their data via savings and cost efficiencies, but whether they will be able to sell it and generate revenue.

Can data monetization generate revenue and not just savings?

In my opinion, yes, but we’re not there yet. After all, for every transaction there needs to be a buyer and seller. Currently, there’s nowhere for fleet operators to ‘sell’ their data in return for cash. Even if they could, it would raise a number of questions not least around data security, privacy and protection.

But there’s no reason why fleet data could not be sold in the future. As the McKinsey report points out, fleet data sold to vehicle manufacturers could be used to market specific vans and lorries. Data sold to advertisers could fuel bespoke B2B campaigns focusing on areas such as vehicle maintenance contracts and insurance.

And if data is ever to become central to a government-led national transport strategy, this nationwide information could be monetized by governments raising money for the public purse. As a comparison, patient data held by the NHS — described as a "national treasure" — is estimated to be worth some £9.6bn a year.

Alternatively, government organizations such as the Driver and Vehicle Standards Agency (DVSA) could purchase data that would be used to inform safety policy and legislation based on real-time data rather than years of research. This same agency — responsible for driving standards and testing — might also be encouraged to purchase data to improve the roadworthiness of the next generation of drivers.

While drivers who have just passed their tests — or those who have accumulated a certain threshold of driving penalty points — could "sell" their data to the DVSA as part of a personal driver safety ranking to augment the established pass/fail testing process.

Putting a value on data is not easy

Whatever the possibilities, invariably, the debate around data monetization returns to the same sticking point: you cannot monetize data until you know its value.

That's the challenge facing fleet operators today. They need to understand that data isn't just a by-product of telematics, but something of real value. By tapping into the data, they can begin to create a 'digital twin' of their organization that identifies areas where considerable savings can be made.

Whether it's saving money on fuel or streamlining back-office processes, this indirect approach to monetizing data is a compelling entry point to help businesses understand the value of data.

What's more, it's incumbent on tech firms like Samsara to ensure that any telematics-based enterprise software solution is fit for purpose. The quality of the data and the way it is presented has to be meaningful providing the necessary insights for firms to cash in on this most valuable asset.

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