From The Editor | February 21, 2008

RFID: The Hype Effect

While RFID (radio frequency identification) adoption may not be living up to the initial hype, the technology is still poised to make a significant business impact in the near future.

Integrated Solutions, March 2008

Hype has a funny way of leading to severe disappointment. For instance, like millions of other moviegoers, I was excited when George Lucas announced he was going to release three Star Wars prequels beginning in 1999. I was a big fan of the original trilogy, and the hype surrounding the first prequel installment, Star Wars Episode I: The Phantom Menace, only heightened my anticipation of the film. However, like millions of other moviegoers, I was extremely let down when the movie didn't live up to its lofty expectations.

Similar to The Phantom Menace, I feel the initial hype surrounding RFID has been the primary contributor to the perceived disappointment that exists regarding the current rate of RFID adoption. RFID mandates imposed by retail giants like Wal-Mart in 2003, and later the DoD, had industry vendors and the business community envisioning a world where 30% to 50% of manufactured capital goods would be RFID-enabled by 2008. Looking back, these expectations were overly optimistic, if not unrealistic. Wal-Mart has since modified its RFID mandate and slowed its RFID adoption, which has contributed to what many perceive as a 'slump' in RFID implementations. However, for those of you ready to write off RFID as a technology bust — think again.

Unlike The Phantom Menace, RFID is still a work in progress, and hype often blinds us to the fact that technology typically takes time to mature and catch on. Case in point — since 2001, vendors in the ECM (enterprise content management) industry hyped software developments that enabled unstructured paper content (e.g. legal contracts, human resources files, accounts payable/receivable documents) to be automatically captured and processed. However, it was only last year that adoption of these technologies began to take hold in the business community for invoice and mortgage processing applications. Many factors contribute to the rate at which technology is adopted. For RFID, the technology maturity level, price, and a lack of 'packaged' solutions have all hindered the rate at which the technology has been deployed. However, these are all areas vendors in the industry are addressing and continue to perfect. These efforts will continue to propel growth of the technology forward.

Furthermore, the perceived slump in RFID adoption really only makes sense when Compared with the initial hype surrounding the technology. In fact, a recent study by ABI Research shows that more companies are beginning to adopt RFID technologies across various industries — even beyond supply chain management. In particular, adoption of RFID for closed-loop applications, such as asset tracking and security access control in the manufacturing and healthcare industries, has contributed to the overall increase in RFID solution deployments.

However, I don't need a study to convince me of the current and long-term business implications of RFID technology — we cover successful end user implementations of RFID technology every month in Integrated Solutions. For example, this month's feature story highlights how HP has placed RFID tags on its printer chassis to facilitate end-to-end information gathering. This RFID initiative has allowed HP to shorten its manufacturing process time while enhancing the company's visibility into its entire supply chain. The benefits of RFID are real and documented. The key to ensuring RFID adoption catches up with initial expectations lies in continually educating the business community on the potential benefits of RFID and convincing the market to give the technology a chance for a wide range of emerging applications.