Written by BSM, a Geotab Company
on February 27, 2019

Many of us are familiar with ROI or, Return on Investment. ROI is used by organizations across every industry to measure just that—the benefit of the money they’ve put in to adopting a tool, hiring someone, or a multitude of different investments.

COI, on the other hand, stands for Cost of Inaction or Ignoring (both are correct). It’s what’s costing your organization by not buying and fully utilizing the products and services available to you. Many companies underuse COI or don’t calculate it at all.

COI vs. ROI

Both tools share the same objective: to maximize profitability. But that’s the only thing they have in common. Where ROI focuses on maximizing revenue by asking “how should we spend our money?”, COI strategically focuses on minimizing operating costs, driven by asking “how much can we save and where can we save it?”

Think yin and yang, not either-or.

We aren’t suggesting that you stop measuring your company’s ROI in favor of finding all the ways you can save money. Both tools serve a valuable purpose, so to illustrate let’s use the example of a company managing their fleet, and deciding whether or not to implement a telematics solution.

COI

Scheduled vehicle maintenance is an essential component to managing your fleet successfully. But what about unplanned repairs due to your crews driving aggressively, or misusing the vehicle? Let’s put a dollar amount to those costs of $80,000. Using the COI, you can determine that not monitoring the vehicle use—the inaction—will continue to cost you $80,000 annually.

Implementing a telematics solution, however, will allow you to monitor your vehicle usage in real-time so you can plan for the unexpected and avoid costly repairs, leading us into the ROI example.

ROI

So you’re spending $80,000 each year on unscheduled repairs due to the inability to monitor the vehicle utilization information, and $140,000 in fuel costs because you have no route optimization capability. But then you implement telematics into your fleet for an initial investment of $40,000, and an annual subscription cost of $10,000. With the data provided by the telematics solution, you’re now able to:

  • Reduce your unscheduled repairs by up to $30,000
  • Reduce fuel costs by $25,000 by optimizing your routes

The result? A year one ROI of $5,000 after implementing telematics, which will only increase in subsequent years.

We know every company has unique needs when it comes to managing their fleet, which is why we’re take building relationships with every customer very seriously. At BSM, a Geotab company, we tailor our services and technologies to suit your organization. The best way to determine which solution is right for you is to reach out!

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