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Is Fleet Management Software Worth a Spin?

Q: I recently suffered a huge loss on a big job when one of my employees decided to take a company vehicle containing key materials on a joyride. I lost ground on another job when two of our trucks broke down on the highway. I’ve read about computer systems that can help contractors like me better manage our vehicles. Are they worth a spin?

Indeed, they can be. The solution you're referring to is commonly known as fleet management software. It allows you to track, in great detail, not only how much you and your employees are using your vehicles, but also what maintenance and repairs are being done and how much you're paying for them. Make no mistake, you'll likely incur some substantial upfront costs for one of these systems. But they often pay for themselves over time.

Choosing a solution

Generally, fleet management applications come in two standard forms: stand-alone and integrated.

Stand-alone solutions. Much like any other computer program you buy and install on your computer, stand-alone fleet management applications tend to be relatively inexpensive and take (again, relatively) less time to implement than integrated systems. On the downside, they usually require manual data entry (increasing the likelihood of errors) and are typically incapable of sharing data with other company systems.

Integrated systems. As the name indicates, integrated systems are capable of assimilating fleet management data into your accounting and billing systems. In doing so, they all but eliminate data entry errors while giving you a much more detailed perspective on how vehicle costs are affecting your cash flow and overall profitability.

The chief disadvantage of an integrated system is that it will likely be much more expensive to buy and implement than a stand-alone solution. In addition, you'll probably spend more time and effort training employees to use it than you would with a stand-alone solution.

Pinpointing your ROI

To get the most out of any solution, you should pinpoint exactly what kind of return on investment (ROI) you're looking for.

For instance, to curtail costly vehicle breakdowns, target a system that gives you up-to-the-minute data regarding your vehicles' preventive maintenance needs. If you're looking to cut down on ownership costs, focus on a solution that tracks the life cycles of your vehicles, including the actual costs of each one, to enable you to better plan capital expenditures.

To prevent "runaway employees" like the one you mentioned, you might look for fleet management software with global positioning system (GPS) technology. GPS capabilities are becoming a fairly common feature of many, if not most, fleet management systems.

Tracking your vehicles with GPS technology is definitely worth considering. Doing so can help curtail employee vehicle abuse, improve transportation efficiency (through better dispatching and lower fuel consumption) and, ultimately, enhance the ROI of your fleet management system.

Putting your foot down

It may very well be time to put your foot down and consider fleet management software. Just be prepared to take the time needed to find an affordable solution that suits your construction company's specific needs and that's a good fit for you and your staff's aptitude for new technology.

Questions about fleet management software? 
Contact Matt Dopp at 312-980-2958.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.