Companies Seeking Direction on Strategic Advantage of RFID
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Most information technology (IT) executives are in the discovery and information gathering phase of adopting Radio Frequency Identification (RFID) technology, according to a new study by BearingPoint, the Software & Information Industry Association and IDG’s CIO magazine. Driving the adoption of RFID are mandates from industry leaders. However, most companies indicate they are going above and beyond compliance in pursuit of strategic advantage.
Confusion Persists
While almost half of the respondents describe RFID as "a revolutionary technology that will have widespread impact," only 22 percent claim a "high" understanding of the technology, and less than half have even a "moderate" level of understanding. RFID is an automatic identification technology embedded in various products that, through the use of radio frequency identification tags and readers, provides information about the product's movement in the supply chain and hence, helps to reduce logistical challenges and costs. For example, RFID can be used to track a product from inception (manufacturing) to purchase.
"Organizations need to recognize the adoption of RFID follows the same process as other emerging technologies," says Nick Evans, global lead with 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."
Specific study findings include
- Fifty-four percent state they are going "above and beyond" compliance to realize strategic advantage;
- Fifty-eight percent will be in the trial/test phase of their evaluation inside of one year;
- Fifty-one percent expect to deploy projects in two years; and
- Mandates from government and major retailers are spurring activity among 46 percent of respondents.
Companies Maintain Short and Long-Term Goals
In the near term, respondents plan to use the technology for real-time location systems (56 percent), supply chain pallet and case and asset management (55 percent each) in 12 months. Two years out, they say they will use RFID for smart shelving pharmaceutical (67 percent), smart-shelving retail (61 percent), and mobile-commerce (55 percent).
"RFID is an important development in the IT universe," says Fred Hoch, SIIA Vice President, Software Programs. "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."
Other Key Findings
- CIOs view the top three business benefits of using RFID today as reduction of labor costs, more efficient business processes, and tighter connection with business partners/suppliers;
- Thirty-eight percent are waiting for industry or government guidance to help them address customer privacy issues and are delaying customer-facing activities;
- In 2005-2007, spending on RFID integration is estimated to overtake spending on RFID software products and application development; and
- The top three business risks of using RFID today are standards still being finalized, no clear business benefits or return on investment, and lack of industry-wide adoption.
"Clearly, survey findings indicate RFID technology will play a key role in organizations’ business strategies in the next 12 to 24 months, says Lorraine Cosgrove, Research Editor, CIO magazine, "Companies are looking to RFID to provide competitive edge."
About the RFID Adoption: Current and Future Plans Survey
The survey was conducted by BearingPoint, Inc., the Software & Information Industry Association (SIIA), and CIO magazine. The survey was developed to uncover the current state of adoption of RFID technologies within industry and 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/wholesale, manufacturing, transportation, technology, financial services and communications. The online survey was conducted from April 5-22, 2004. Results are based on 351 completed surveys. At a 95 percent confidence level, the margin of error is +/- 5 percent.Published: 08/2004
Author: Software & Information Industry Association
The Software & Information Industry Association (SIIA) is the principal trade association for the software and digital content industry.
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