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What Is Telematics and What Are Its Potential Applications?

Telematics is becoming an increasingly popular subject and has been widely discussed on technology-related websites. Although the term itself appears to be generally known, in fact there are not many comprehensive explanations of this issue. Therefore, we should properly organize the knowledge about this field and dispel certain myths.

What telematics actually is?
What are its potential uses?
Which sectors of the economy can gain the most from it?

This article aims to provide an answer to these questions.

Telematics is a term that contains two different words – telecommunications and informatics. Broadly defined, it means an integrated use of telecommunications and information technologies to store, receive and transmit information with the use of telecommunications equipment to remote objects through a network.

It must be noted that this is a vast discipline that may encompass such areas as telecommunications, wireless connectivity, electrical engineering, IT, and road transport.

With the use of communication equipment, telematics enables us to store, send and receive information to control distant objects, in particular vehicles in motion, owing to the integration of GPS technologies with the capabilities of mobile devices.

Given the broad spectrum of applications of telematics in the automotive industry, the term is often narrowed down specifically to this sector only. However, we must remember that this term can also be used in relation to all kinds of network-enabled devices.


From the commercial perspective, telematics is generally used as a synonym of vehicle telematics. This is because of the broad applications of telematics solutions in the automotive industry. The most popular applications of telematics include car concierge systems, onboard connectivity services, insurance based on driving behavior or fleet management services. The last term refers to the use of new technologies in order to efficiently manage and monitor the operations and location of various types of utility vehicles and identifying their status.

Telematics systems designed for fleets enable the exchange of information between a central location and the individual fleet vehicles such as trucks, ambulances, municipal vehicles or school buses.

Ostensibly, telematics is a field dedicated only to specialist industries and specific target groups. In fact, almost each and every one of us can benefit from telematics. Sounds incredible?

Imagine that a smart computer in your car is capable of analyzing everything that is happening all around you. From speed and fuel efficiency to tire pressure – everything can be tested and reported via specific systems connected with your vehicle.

Having this data and enhancing it with such information as weather, road or traffic conditions, we are able to create systems that not only save time and money but also can save the lives of many people.

Now that we know how useful telematics can be for our everyday lives, we can ask ourselves:

How does it actually work?

At the early stages of development of this field, telematics data was collected only by telematics equipment and onboard computers (OBDI and OBDII). However, with the growing popularity of mobile phones – especially smartphones – data such as vehicle malfunctions, engine details and fuel efficiency were combined with information obtained from our phones, including primarily GPS location, driving behavior (braking, accelerating, exceeding speed limits) and mileage.

Afterward, all this information collected by various sensors in your phone and in your vehicle are transmitted to the specially designed platforms where it is processed. Additionally, as the technology progressed, telematics systems ceased being closed platforms, which enabled their integration with other software and mobile applications. This integration made it viable to combine the data from your phone/vehicle with such information as weather alerts or information from various types of cameras or tachographs. This enabled even deeper and more accurate insight into business operations and driver behavior.

In the case of Sparkbit’s software, the collected data is kept in the cloud and transmitted to the telematics system that can be accessed from a desktop computer or a mobile device, such as a smartphone or tablet.

The users can browse and export data and generate business-critical information (such as the 10 top-scoring drivers or the number of dangerous incidents related to a driver’s inappropriate driving behavior) using a dedicated application. With Sparkbit’s systems, insurance providers can offer lower premiums to those customers who are able to prove using telematics applications that they care about road safety. Certain insurers cut their annual premiums by as much as 30% for those drivers who decide to provide their telematics data. That is because those insurance companies can easily determine whose insureds pose the highest risk, and identify the drivers who are likely to cause or will be involved in an accident by monitoring the time of use, speeding and other parameters of driver behavior.

If you want to learn more about our telematics systems used by insurance companies, click here.

Apart from insurance and the broadly defined sharing economy, the area that is able to benefit from telematics to the highest extent is fleet management.

With modern technologies, real-time vehicle tracking and route reporting, logistics companies can improve their customer service and the general efficiency of processes.

Furthermore, the growth of productivity is accompanied by improved safety owing to personalized driver training, reporting of risk and driver behavior, and accident alerts based on telematics data. When combined with optimization of vehicle maintenance with accurate predictions of repairs and remote diagnostics, it becomes clear how valuable telematics technologies can be for the automotive sector.

The latest research carried out by Arval (UK) showed that the main reason why companies with fleet management requirements implement telematics systems is primarily “real-time vehicle location” (95%). Other reasons are “improved driver safety” (87%), “better driver behavior” (87,5%), “lower fleet costs” (75%) and “trip optimization” (70%) (source: Arval’s Corporate Vehicle Observatory Barometer, 2018, the study included 3,700 fleets)

Without any doubt, the telematics market is just entering the phase of intense growth (see graph below) and the potential of telematics technologies will continue to grow. It is undeniable that the early adopters of telematics systems will gain a measurable competitive advantage, while investments in technological development will become a key component of revenue growth.



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