As the vehicle telematics space continues to evolve, many companies have adopted an API-first approach, positioning themselves as platform providers. While this strategy may seem attractive on the surface, it fails to address a fundamental truth: most customers—from car dealerships to Distributed Energy Resource Management Systems (DERMs)—don’t want to build their own solutions. They want ready-to-use, managed services that integrate seamlessly into their operations. This blog explores why the API-first motion is misaligned with customer needs, highlights the importance of hardware in scaling telematics solutions, and argues for a services-based approach over a platform-centric one.

The Problem with API-First Go-to-Market Strategies

APIs are often pitched as the cornerstone of scalable, flexible solutions. However, in vehicle telematics, this approach introduces significant barriers for end users who lack the technical expertise or resources to build and maintain custom applications.

1. Customers Want Solutions, Not Building Blocks: Car dealerships, DERMs, and other telematics customers prioritize their core operations. They don’t have the time or capacity to assemble software tools into a cohesive solution. For instance, a dealership wants a plug-and-play system that tracks vehicle health and provides actionable insights—not a set of APIs they need to integrate into a custom dashboard.
2. Complexity Limits Adoption: The API-first model often assumes customers have engineering teams to implement and maintain integrations. In reality, many potential users lack this capability, creating a significant barrier to entry. This is especially true in industries like fleet management or energy, where technology adoption has traditionally lagged.
3. Time-to-Value is Crucial: APIs require customers to invest time and resources upfront before realizing value. Fully managed solutions, on the other hand, deliver immediate results, reducing churn and accelerating adoption.

Why Software Alone Isn’t Enough

A software-only approach overlooks the importance of hardware in the telematics ecosystem. Vehicle data collection and analysis require reliable hardware components, such as OBD2 devices, to interface with the vehicle’s onboard systems.

1. The Role of OBD2 Devices: These plug-and-play devices are essential for accessing vehicle data, from engine diagnostics to fuel efficiency metrics. Without a hardware solution, customers are left to source and manage devices independently, adding complexity and friction.
2. Integration Challenges: Hardware and software must work seamlessly together to provide accurate, actionable insights. Companies that only offer software place the burden of hardware integration on the customer, leading to inconsistent performance and user dissatisfaction.
3. Scalability Depends on Hardware: A scalable telematics solution requires robust, pre-integrated hardware to ensure consistent data quality across different vehicle makes and models. Companies that offer a complete solution—hardware and software—are better positioned to scale their offerings.

The Case for Services Over Platforms

Instead of positioning themselves as platform businesses, telematics providers should focus on delivering managed services. This approach aligns more closely with customer expectations and addresses the limitations of API-first and software-only strategies.

1. Turnkey Solutions Drive Adoption: Managed services provide customers with a complete, ready-to-use solution that minimizes implementation effort. For example, a telematics provider can offer dealerships a package that includes hardware installation, software setup, and ongoing support.
2. Recurring Revenue Opportunities: Managed services create predictable, recurring revenue streams. By bundling hardware, software, and support into a subscription model, companies can build stronger customer relationships and reduce churn.
3. Differentiation Through Expertise: Offering services allows telematics providers to position themselves as domain experts, providing not just technology but also insights and recommendations that help customers optimize their operations.
4. Case Studies in Success: Companies like Geotab and Samsara have successfully adopted a services-based model, offering integrated hardware and software solutions tailored to specific customer needs. This approach has driven higher adoption rates and long-term customer loyalty.