The drive toward making fleets run more efficiently is being propelled by a small Ottawa startup.

FleetPulse, which has been developed by Netistix Technologies Corp., uses a piece of onboard hardware that monitors everything from fuel consumption to fluid levels.

The information is transferred wirelessly to a fleet manager's computer where a web application can then suggest a reduction in vehicle idling time or call for preventive maintenance.

"A delivery truck can use four to five litres of gasoline an hour while idling," says John Woronczuk, Netistix's vice-president of marketing and sales. "And if you can pinpoint mechanical problems before they cause roadside breakdowns, there's huge savings potential."

John Woronczuk

The concept, known as telematics, capitalizes on a basic rule of cost recovery - the more efficiently a vehicle runs, the bigger the savings.

Other FleetPulse applications include scheduling efficiency, mileage tracking and back-office automation.

The hardware costs less than $500 per vehicle, while webhosting for the software application runs between $5 and $9 a month, depending on the extent of diagnostic monitoring.

While telematics is not new for long-haul freight trucking, its use in light and medium vehicles has only taken hold in the past two or three years.

Identifying the market was almost a coincidence for Woronczuk and Netistix CEO Gord Echlin, who also have two other partners.

Woronczuk and Echlin had put in two decades of product and business development at Newbridge Networks Inc. and Mitel Corp. before looking for a bigger challenge after the tech market collapse of 2000.

"Basically it was no fun in a huge company where individual ideas got lost. We didn't know each other well, but I think we were both looking for something smaller and more responsive," Woronczuk says.

Each had moved to startups for a year before coming together in 2002. Their first idea was to put the onboard diagnostics into personal vehicles, but the price point was not affordable for individual consumers.

"So we put the idea into a business-to-business environment and found it would work in a fleet scenario. Our research found costs were affordable, with a payback (for customers) in less than 12 months," Woronczuk says.

Seed money came from their own pockets, friends and family, as well as some Ottawa angel investors.

Photo courtesy of Netistix
The Technologies Corp. hardware.

FleetPulse was readied for pilot'-project testing in 2004 on the strength of a $750,000 first-round, venture'-capital investment from Ottawa's Access Capital Corp. A second round of $750,000 was received this year from the Business Development Bank of Canada.

While Woronczuk will not release specific figures, he will say total investment so far is between $2 million and $3 million.

Netistix landed its first pilot project in early 2004 with Ottawa Police Services, which wanted to be able to check odometer readings quickly and easily.

Ottawa RCMP also installed the hardware in 50 vehicles last year in order to track mileage and reduce idling in an effort to take a leadership role in reducing greenhouse gas emissions.

A pilot also is under way with the City of Winnipeg, which outsources its fleet operations. Twenty of the fleet's 750 vehicles are participating.

Upcoming projects may include a provincial government, which will use FleetPulse to monitor emission-control systems in individual vehicles, potentially doing away with mandatory emissions testing.

There is also the possibility of another municipality, a U.S. government body and a U.S. waste-management company. Negotiations are still under way and Woronczuk declined to name the specific customers.

A pilot project also is in progress with Canpar Transport, a parcel-delivery service based in Mississauga. The first stage, which started in 2004, was a 10-vehicle test in Ottawa; the second covered 76 trucks across Canada.

The hardware fits under the vehicle's dashboard and is connected to its onboard diagnostics system. The collected data are transferred when the vehicles return to base.

Canpar's vice-president of operations, Paul MacLeod, says his department is trying FleetPulse for its ability to save fuel throughout the company's 800-vehicle fleet. It does not have results because it has not yet reviewed the data.

Telematics for small- and medium-sized vehicle fleets is gaining traction across North America, says Joerg Dittmer, a senior industry analyst for research consultancy Frost & Sullivan in its Palo Alto, Calif., office.

"The penetration rate is still quite low, partially because early systems didn't perform well and were quite expensive. That's changed today because costs have come way down, but also because it is improving efficiency and with it customer satisfaction," Dittmer said in an interview.

There are barriers, however.

Lack of standardization confuses the market, small fleets do not provide an attractive market because selling costs are high, and telecommunications coverage and bandwidth issues limit the technology's applications, Dittmer says.

In a 2004 study on the North American telematics market, Frost & Sullivan predicted that penetration of hardware and subscriber software would grow about 40 per cent a year between 2003 and 2012 within small fleets.

Bell Canada has also entered the marketplace with Telepod, a high-end package that can analyse a vehicle's entire diagnostics system and transmit data by cellular communications or at a wireless hotspot.

Telepod hardware can cost up to $1,375 per vehicle, while software hosting can cost up to $50 a month.

Netistix has decided to stay in the mid-range to appeal to all sizes of businesses, Woronczuk says.

"We don't know where the market is going, especially with respect to pricing, so our goal is to have a product that satisfies a marquee customer," Woronczuk says. "Fleet operators still need convincing, so providing an affordable, dependable product is part of the education process."

Because it is still trying to find its core market, the company offers a PayGo program, where potential customers can rent the FleetPulse system for three months - at $25 per vehicle per month - to determine whether significant fuel and maintenance savings are possible.

(Mike Levin can be reached at levin@businessedge.ca)