Market Trends

Mobility Management to be Catalyst for Fleet and Corporate Travel Convergence

September 4, 2016

by Mike Antich - Also by this author

A growing number of European fleet professionals believe traditional fleet management will evolve into “mobility management,” which will radically transform the fleet industry as we know it today. The expectation is that the fleet managers of today will evolve into “mobility managers” in the future. Instead of managing a fleet of vehicles to meet employees’ mobility needs, the new mobility managers will move beyond asset management to manage a broader array of mobility and travel services, creating new multi-modal mobility options for employees.

Paradigm Shift in Fleet Management

The concept of mobility management will represent a paradigm shift in fleet management, allowing employees to receive a mobility budget instead of a car allowance. A mobility budget is a financial incentive that stimulates employees to travel in a more sustainable way. It is a fixed monthly budget that an employee can use to pay for all travel costs, regardless of the travel mode used.

If, by the end of the month, the mobility budget is not completely spent, the employee is allowed to either keep the money or use the remaining amount for other employee benefits. Employees decide how to spend their mobility budget. The more environmentally sustainable way an employee travels, such as using public transport, or even by participating in a teleconference or videoconference rather than traveling to a meeting, the more monies will be left over for the employee’s use. The proponents of mobility management say this financial incentive motivates employees to use sustainable transportation. The trend to create a corporate mobility budget has spread to some companies in the Netherlands, France, Belgium, the UK, and Sweden.

Convergence of Fleet & Corporate Travel

Mobility management at multinational companies provides the business case to realign fleet and travel expense management into a single corporate function. As corporations adopt a mobility business model, the prediction is the pressure to converge these functions will accelerate. However, this discussion is not new. For decades, management has recognized that there are many similarities between fleet management and travel management. For instance, over the past decade-and-a-half, a growing number of fleet managers have assumed dual responsibility of managing both the fleet department and travel department. In a mobility management model, fleet and travel management are simply different manifestations of mobility, which offers the opportunity to reduce corporate spend, while providing greater options to employees, by merging these two corporate functions onto the same IT platform.

This position was reinforced by a recent Frost & Sullivan study entitled, “The Future of Corporate Mobility – Will Fleet and Travel Management Functions Converge?” In the study, Frost & Sullivan said a growing number of organizations are looking at fleet and travel convergence to control spend, improve operational efficiency, reduce CO2 emissions, and increase employee satisfaction. The Frost & Sullivan quantitative study results were based on an Internet survey of 465 fleet, travel, and mobility decision-makers in five European countries – Germany, France, the UK, the Netherlands, and Belgium. The second phase of the study included qualitative phone interviews with an additional 116 companies in both the private and public sector. Half of those surveyed (51%) already employ, or have piloted, mobility solutions. The research revealed 22% of these companies see a high opportunity for travel and fleet management convergence and expressed an interest in an IT platform to facilitate this convergence.

Where Do We Go from Here?

As the concept of mobility management matures and becomes more widespread, companies will transition to operating their fleets on the basis of a total cost of mobility (TCM), rather than the traditional, asset-based, total cost of ownership (TCO).

In the future, the boundaries between fleet and travel management will increasingly converge at many corporations as the travel functionality and fleet functionality as simply different mobility options. Dedicated corporate mobility services will be integrated into corporate travel options. In this new mobility environment, assessments will be made of the most cost-efficient, time-efficient, environmentally-efficient, and labor-efficient ways of making essential business travel. Corporations will adopt new mobility business models that include integrated mobility solutions, such as carsharing, ridesharing, and ehailing, such as the proliferation of Uber, Lyft, and similar type of services. Proponents predict that mobility management will produce structural changes as corporations adopt new integrated technology functionality to realign their fleet and travel processes into a single mobility solution.

Let me know what you think.

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Mike Antich

Editor and Associate Publisher

Mike has covered fleet management and remarketing for more than 20 years and entered the Fleet Hall of Fame in 2010.

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