From The Editor | July 24, 2007

RFID's Next Stage

The hype around RFID (radio frequency identification) has been replaced with practical realities. That only means the technology will be important to your company's future.

Integrated Solutions, August 2007

The brilliance behind Gartner Group's Hype Cycle for technology is that it's always applicable. Look at the five stages: Technology Trigger (a breakthrough), Peak Of Inflated Expectations (unrealistic projections), Trough Of Disillusionment (the backlash), Slope Of Enlightenment (true understanding), and Plateau Of Productivity (broad or niche deployments).  No matter the technology, you can overlay it and glean a better understanding — both of history and of the future. The Internet? Bar coding? Wi-Fi technology? All of them can be defined by the Hype Cycle.

How about RFID? It's been a long, hard slog, but I think we've finally reached the Slope Of Enlightenment. It's at this stage where focused experimentation and solid hard work by an increasingly diverse range of organizations lead to a true understanding of the technology's applicability, risks, and benefits. Commercial off-the-shelf methodologies and tools become available to ease the development process. Everywhere you look — across vertical markets and applications — you can see that this stage of the Hype Cycle seems well-suited for the current state of RFID.

If you're looking for a 'diverse range' of activity within the RFID space, consider some recent initiatives. Asset-tracking and management applications continue to gain traction. From tracking IT assets (e.g. laptops, servers, hard drives) to tracking mundane physical assets and capital equipment, a host of companies are currently evaluating RFID as the answer to their asset-tracking problems. Some have full deployments (and have been featured in Integrated Solutions). Under the heading of security and anticounterfeiting, pharmaceutical companies continue to experiment with RFID for item-level tracking applications that will curtail black market activity and ensure a safer supply chain. (Just because these deployments aren't detailed in the media doesn't mean RFID is stalled in this space. You could fill volumes of magazines with RFID case studies that are being kept out of the public's eye.)

But, what about applications in the supply chain? It was these initiatives — Wal-Mart, DoD, and others — that really served as the Technology Trigger for RFID. These deployments are not being rolled out as quickly as anticipated. However, all participants in the supply chain are learning from the technology and applying the lessons learned. A few years back, it was predicted that every pallet flowing into Wal-Mart DCs (distribution centers) would contain an RFID label. Looking at RFID costs and supplier margins, that was obviously too ambitious. However, that doesn't mean RFID won't be pervasive in the supply chain. Retailers have already learned that RFID can help reduce out-of-stocks. And, suppliers are working on leveraging the technology to improve promotions management. And, when it comes to perishable goods, all parties can benefit from the RFID and environmental sensing technology that is currently being piloted and further developed.

At this point, we haven't even talked about the 'solid hard work' being done with RFID with respect to cashless payments, animal tracking, port and intermodal security, and work in process. According to the Hype Cycle, the next stage will bring us second- and third-generation products. At that point, we'll be on the cusp of whether RFID will be broadly deployed and pervasive or relegated to a handful of niche applications where it is truly effective. It's clear that the space is not evolving as quickly as technology vendors and industry analysts predicted. But, looking at the range of areas where RFID is being evaluated, I'd be hard-pressed to bet that RFID will be a niche technology.