Four Things that will change Fleet Management Forever
And why that might be good news for FMOs.
Within 5 years, the Fleet Management industry as we know it will be gone, replaced by something unrecognisable to those in the industry today. Automated cars will play a part, but the cause of death will be much more fundamental than that.
Four big, fundamental factors will change the fleet industry (and many other industries) in ways that we can’t even imagine today and it will happen in a space of perhaps 5 years.
Those four things are;
(Big) Cloud data
The last three of these are the technology trends that IBM ‘bet the farm on’ at the IBM Interconnect conference earlier this year. The first is a trend that we’ve already seen in the tech industry that will soon make itself known in the auto industry.
Strap in and I’ll explain each one, but first I want to explain why automated cars aren’t on my list. For me, automated cars aren’t a big, fundamental factor, they’re an outcome of other factors. I’ll explain that too.
You’ll be reading this on a computer or maybe a phone or a tablet. Take a look and tell me who is the manufacturer of your device.
If your answer is Apple, Microsoft, Hewlett Packard or Dell you're wrong. All of those are made by Hon Hai Precision Industry Co., Ltd, mainly in China. If you answered Samsung, you're sort of right because Samsung still ‘sort of’ owns its own manufacturing facilities.
Most clothing brands are not in the business of making clothes, most footwear brands are not in the business of making footwear and most consumer electronics brands are not in the business of making consumer electronics.
In each case, the business model is to build a brand around products that are designed in-house but manufactured elsewhere. It’s been Apple’s model from the very beginning.
When you see that Apple, Uber, Google and even Bosch are working on driverless cars, I can assure you that their plans for manufacturing these cars are all but zero. In each case (and especially so for Apple and Google) what they have is a brand and a large collection of very smart people. They want to design the car with incredibly detailed specifications and then get someone else to make it.
Earlier this year a Dutch start-up, Amber, announced that it had permission to begin testing self-driving cars on road in the Netherlands from mid 2018. That’s a big deal because one of the tricky things for self-driving cars is recognising bicycles and if you've spent any time in the Netherlands, you’ll know that being able to recognise a bicycle is kind of fundamental. They’re everywhere.
The reason I mention Amber is not because they’re an especially big player, they’re not and that’s exactly the reason why it’s so exciting. As design comes to be the most important factor, companies like Amber will be more common. The massive infrastructure of Toyota or Volkwagen will no longer be necessary.
For the fleet manager, this changes everything. All your old relationships and preferences will be gone the way of the buggy-whip.
Big Cloud Data
The first computer that I ever used was a Tandy TRS-80. It had 4Kb of RAM (that’s 4000 bytes) and stored data on a cassette tape. The computer I am using to type this article has 8Gb of RAM (that’s 8,000,000,000 bytes) and stores up to 256 Gb of data on a solid state hard drive.
When I first started to use computers for work, the cost of an extra gigabyte of storage ran to about $300 - $500. Today Google offers storage from $0.007 per month per gigabyte. Yes, that is seven-tenths of one cent.
Current estimates of the total data storage in the world is about 100 zettabytes. That’s 100,000,000,000,000,000,000,000 bytes. It’s a lot.
The point in all this is that storage is getting cheaper and bigger at a rapid rate. It’s also being aggregated. And there doesn’t seem to be much indication that it’s about to stop. Current research into DNA storage at Harvard suggests that up to 250 petabytes of data can be stored in a single gram of DNA. That means that one million of my laptop’s hard drives could be stored in a single gram of DNA. For perspective, it would take 5 shipping containers to hold the one million laptops and the one gram of DNA could sit comfortably on the head of a nail.
The reason why this is important is that it gives us a chance to store data that we wouldn’t have even considered before. We can keep it all and hold it secure and retrieve it on demand and with the right smarts, we can do magic.
Which brings us to the next factor: AI.
In July this year, the good folks at Facebook were conducting an experiment with AI chatbots. Chatbots are those awful things that pop up on a website and pretend to be humans. Perhaps that best examples are Siri (Apple) and Cortana (Microsoft) but there are plenty of others. Dominos Pizza has one of the more awful examples.
Chatbots are at the forefront of AI research with the very simple goal of appearing to be human to those chatting. The Turing Test, developed by Alan Turing in the 1950s is often considered the holy grail for AI. The test simply demands that a bot and a human chat with a third person and that person needs to be unable to determine which of the two is a bot.
So in July this year, Facebook was conducting a little experiment on getting chatbots to negotiate. They would give each chatbot a set of notional ‘goods’ and tell the chatbot to negotiate with the other chatbots to reach a determined outcome.
For example, there might be goods that include basketballs, books and umbrellas. They’re not real, so it doesn’t matter. Chatbot A might be given six basketballs, three books and nine umbrellas and then told that by the end of the negotiation it had to have at least nine basketballs.
The bots would initially work to reach their objective and then stop all negotiation, so our experimenters had the chatbots place a premium of reaching the best possible outcome. Chatbot A would still need to obtain nine basketballs, but would now consider 3 umbrellas to be a better outcome than 2.
This is when it all got weird because the chatbots stopped talking English. Like traders the world over, they started to develop a specialised language for their trades. If you’ve ever attended a livestock auction, you’ll know that for an outsider, understanding what is being said is all but impossible. In this case, the Facebook developers were outsiders.
The incident was widely reported at the time, with some of the tabloids suggesting that Facebook had been ‘forced’ to shut down their experiment before it ‘went live’ (visions of Terminator’s Skynet). The truth was more prosaic, they couldn’t understand what was being said, so the experiment lost its value.
What does this have to do with Fleet? Everything. For the autonomous car to be accepted by humans, it needs to be able to communicate with them and it needs to do that in a natural way. Natural to humans that is.
The work that is happening now around AI and chatbots will start to appear more and more regularly. For cars and for fleet, it will be the technology that allows the car to understand when you climb in and say ‘take me to the Springfield Office’.
More than this, the combination of the Big Data available and the human-like qualities of the chatbot will mean that the car will know that you are due to go to the Springfield office and that you’ll leave at around 8am and will stop at a coffee shop along the way.
Of the four factors I’ve listed, Blockchain is probably the most fundamental and the most difficult to understand. It’s probably the most fundamental change to technology in the last 30 years. In terms of industry impact it’s as fundamental as HTML was 30 years ago.
When you think back to the first half of the 1990s, you’re thinking back to a time when the internet was just beginning to make a mark on the world. Those few of us who did access the internet did so using Netscape Navigator and we searched the internet with Alta Vista. We heard about a bookstore in Seattle called ‘Amazon’ that was actually selling books on the internet and some of us wondered whether we could make money out of the internet too.
Within 5 years the internet was a global phenomenon that impacted every business in the world in ways that we couldn’t even imagine. Over that period, from the mid nineties to 2000, companies like Yahoo!, Google and eBay were founded and the internet was part of everyday life for most of the western world.
It was a remarkable change in a remarkably short period of time. All the more remarkable when you consider that in 1990, the internet was already 30 years old. So what changed?
The main thing that changed the internet and made it available to the world (instead of just being a cool thing for nerds) was something called HyperText Transfer Protocol or HTTP. It was invented by Time Berners-Lee in 1989 and allowed a user to click on a link that would automatically take them to another place on the internet. It sounds so obvious now that it’s hard to credit that someone needed to invent it. Kind of like saying that someone invented a way that you could cook your food without making a fire.
Blockchain is that fundamental.
Essentially, blockchain allows transactions to be anonymous and peer-to-peer. It was developed to be a cryptographically secure, distributed ledger and a recent development from a 23 year old nerd called Vitalik Buterin has allowed the blockchain to distribute instructions rather than ledgers. Ponder for a moment what that means for ‘Smart Contracts’.
In the next 3-5 years blockchain will have a disruptive affect on pretty much everything we do.
What does it all mean
In ten years, maybe less, privately owned cars will be a minority. In twenty years a rarity and in thirty years you will need a special permit to drive a car on a public road. It will be considered too dangerous.
No doubt there will be car enthusiasts that continue to go drive their car on the weekend in much the same way as people go ride a horse on the weekend, but nobody will be driving their car to work.
In much the same way, providing a car as a benefit will make about as much sense as providing a horse and carriage. Lovely to look at, but not very practical in day to day use. Instead, employers who wish to provide a benefit will provide mobility, not a car.
Mobility has become a catchphrase in the fleet industry that everyone talks about but nobody understands. In the early 1990s, the Australian Prime Minister Paul Keating said that you could walk into any pet shop in Australia and hear a parrot squawking about micro-economic reform. Mobility is a little like that. Everyone says the word and everyone knows it has to be achieved, but nobody really knows how to go about it.
The trends I have outlined here are high-level and broad sweeping. They will cause fundamental changes to the fleet industry, but they will also affect most other industries too. The early adopters will face risks, but the rewards will be enormous.
Next week, I’ll talk a little about how you can take advantage. Stay tuned.
Shane Curran is the founder of Stonecutter Consulting and is a Connector Pioneer with over 25 years experience in finance, fleet management and asset management. He has a strong leaning toward technology and has been involved in major systems implementations for fleet management on both the client and vendor side. He lives in Sydney with two laptops, a tablet, a kindle and a smartphone.