July 08, 2004

Justifying RFID

Strategic advantage of RFID still sought, says study.

Monday July 5, 2004


Seven out of ten companies are in the discovery and information gathering phase of adopting RFID technology, according to a new joint study by BearingPoint, the Software & Information Industry Association (SIIA), and IDG's CIO magazine.

Above and beyond the supplier mandates that are currently driving the adoption of RFID technology, the study found that many companies are going still further in pursuit of strategic advantage. But some confusion still exists: while almost half of the survey's respondents described RFID as "a revolutionary technology that will have widespread impact", only 22% claimed a high understanding of the technology, and less than half claimed even a moderate level of understanding. This article is copyright 2004 UsingRFID.com.

Overcoming barriers
"Organisations must recognise that the adoption of RFID follows the same process as other emerging technologies," said Nick Evans, global lead for BearingPoint's Emerging Technology practice. "Over time, the market will address the barriers to adoption such as standards, security and privacy issues, and infrastructure costs. Early adopters who look beyond mere compliance will see increasing business value over time as initial hurdles are overcome."

The study's key findings include:

54% are going above and beyond compliance to realise strategic advantage;

58% will be in the test phase of their evaluation within one year;

51% expect to deploy projects within two years;

Mandates from government and major retailers are spurring activity among 46% of respondents.

38% are waiting for industry or government guidance to help them address customer privacy issues, and are delaying customer-facing activities;

CIOs view the top three business benefits of using RFID in the short term as being: reduction of labour costs; more efficient business processes; tighter connection with business partners and suppliers;

The top three business risks of using RFID in the short term are seen as being: standards are not yet finalised; there are no clear business benefits or return on investment; a lack of industry-wide adoption.

In 2005-2007, spending on RFID integration is estimated to overtake spending on RFID software products and application development.

Business goals
In the near term, respondents plan to use the technology for real-time location systems (56%), supply chain pallet/case management (55%) and asset management (55%) within 12 months. In two years time, many expect to be using RFID for smart shelving for pharmaceuticals (67%), smart-shelving for retail products (61%), and for mobile-commerce applications (55%).

"RFID is an important development in the IT universe," commented Fred Hoch, SIIA's vice president of software programmes. "Our members are keenly interested in RFID and how it can best be implemented. RFID is on its way to pushing into the enterprise IT mainstream."

Conclusion
"The survey findings indicate that RFID technology will play a key role in organisations' business strategies in the next 12 to 24 months," concluded Lorraine Cosgrove, research editor for CIO magazine. "Companies are looking to RFID to provide a competitive edge."

The survey, 'RFID Adoption: Current and Future Plans', was conducted by BearingPoint Inc., the Software & Information Industry Association (SIIA), and CIO magazine, to examine the state of RFID adoption and to determine current market demand, future application areas, business and technology risks and rewards, and requirements for solution providers. More than 350 IT executives participated in the survey, representing various sectors such as government, retail and wholesale, manufacturing, transportation, technology, financial services, and communications.

For additional information:
Visit BearingPoint at http://www.bearingpoint.com
Visit CIO Magazine at http://www.cio.com
Visit SIIA at http://www.siia.net

Sources: BearingPoint Inc.; SIIA; CIO Magazine

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Posted by Craig at July 8, 2004 02:50 PM