Beware RFID Hype, Analysts Warn

Organizations scrambling for radio frequency identification solutions without understanding limitations, says META Group

Stamford, CT  February 13, 2004  Driven by mandates from retail market leaders like Wal-Mart and public-sector models such as the U.S. Department of Defense, many IT organizations are scrambling for budget and guidance to attain working radio frequency identification (RFID) solutions without understanding the technology's actual capabilities and limitations, technology consultancy META Group warned this week.

META believes that RFID will enable an organization to improve its sensing capabilities, but the consultancy said that decision makers should not be enticed by the "low-cost tag" hype, since RFID is not a one-size-fits-all approach with unlimited technical abilities.

Even though the technology has proven effective in livestock tracking, toll collection and premium product manufacturing, META is encouraging organizations to keep initial RFID projects at the case/pallet level, acting as barcode replacements, before moving to more complicated supply chain implementations.

"Many IT organizations do not immediately realize that even smaller RFID projects can significantly affect an entire IT infrastructure and application portfolio, so a readiness assessment must be performed early on," said Gene Alvarez, vice president with META Group's Technology Research Services. "Starting with small projects will assist enterprises in climbing the 'RFID learning curve' and establishing standards that support efficient future product movement."

META is further encouraging IT organizations to create a task force responsible for gaining an understanding of RFID's capabilities and limitations. This group would interweave RFID technology with existing IT infrastructure and application portfolios as part of an overall adaptive organization strategy.

For more information on trends relating to RFID, see the following SDCExec.com articles:

• Manufacturing and Banking Industries to Lead U.S. IT Spending in 2004 (February 12, 2004)


• RFID Integration Services Set for Rise (February 4, 2004)


• Retail Spending on RFID Seen Rising in "Fits and Spurts" (January 8, 2004)


• Retailers to See More RFID Benefits Than Manufacturers  Study (November 12, 2003)


• Global RFID Market to be $3 Billion by 2007 (October 1, 2003)


• RFID: Beyond Barcodes (September 3, 2003)


• Who's Buying RFID? (August 22, 2003)


• RFID Picks Up Momentum (July 9, 2003)


• Broader RFID Adoption Seen by 2005 (June 16, 2003)


• Benetton: No RFID Tags in Garments...Yet (April 9, 2003)


• Auto-ID Could Save Billions (February 6, 2003)

For more information on the use of RFID solutions in the supply chain, see "Needle in a Supply Chain Haystack," the Net Best Thing column in the January 2002 issue of iSource Business (now Supply & Demand Chain Executive) magazine.