RFID Integration Services Set for Rise

As initial projects expand to encompass more systems, services revenues will surpass product revenues by 2007 — ABI

As initial projects expand to encompass more systems, services revenues will surpass product revenues by 2007 — ABI

Oyster Bay, NY — February 4, 2004 — The market for integration services relating to radio frequency identification (RFID) projects will rise as RFID projects grow in scope and complexity, and integration services revenue will surpass RFID product revenues by 2007, according to a new report from technology research firm ABI.

As supply-chain-based RFID tags, readers, software and electronic product code (EPC) guidelines rapidly adapt to meet various compliance mandates, tying together the increasingly complex solutions will become a larger challenge, ABI asserts in its report "RFID Integration Service Markets: Meeting Demand for Reader, Software, and System Integration Solutions."

Larger hardware and software spends will require heavy reader, software and system integration service investment. To date, integration has been a secondary concern in RFID project planning, but this is rapidly changing, and consumer packaged goods (CPG) and retailer RFID integrator staffing demands will skyrocket over the next five years, according to the research firm.

Full-scale RFID rollouts will likely be an extension of the early-stage compliance level solutions put in place for the 2005 Wal-Mart, Metro AG and Department of Defense (DoD) deadlines. As these systems are extended further into event and workflow management, RFID solutions will need to adapt to legacy technology and logistics settings.

Warehouse management software (WMS) and supply chain execution (SCE) companies such as Catalyst International, Manhattan Associates, Provia and RedPrairie are all actively extending their logistics solutions to incorporate RFID, ABI reports. Moreover, according to the research firm, enterprise software and systems giants IBM, Oracle, SAP and Sun are also working on building RFID into existing suite offerings.

Incorporating RFID into existing IT and logistics infrastructure affects multiple business processes and areas. "Larger RFID solutions aim not just to track outbound Wal-Mart or Tesco inventory," explained Erik Michielsen, ABI senior analyst, "but also to create real-time visibility tracking, from customer through the warehouse domain and into the enterprise IT systems."

Any changes to existing enterprise systems require architectural mapping, systems programming and testing, and company-wide change management implementations. Companies with deep experience in this space, including Accenture, BearingPoint, Cap Gemini Ernst & Young, IBM and Unisys, are increasing their focus on RFID, "but have a long way to go to meet staffing needs that will support an RFID supply chain integration market that will surpass $1 billion by 2006," adds Michielsen.

ABI writes that, to date, CPG suppliers have been shopping quite a bit, trying to better understand RFID hardware and software so that they may better integrate RFID into their IT and logistics strategies. Moving forward over the longer-term, CPG suppliers will push RFID solutions beyond compliance and internalize the benefits across all supply chain and logistics processes, a viable strategic pursuit for logistics, marketing and information technology personnel alike.

The new ABI report examines the integration service challenges facing CPGs and retailers as they pursue networked enterprise-wide RFID solutions. The report also looks at how companies are developing RFID products and services to address these issues.
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