February 2005 | Commentary | Viewpoint

Keeping an Eye on RFID Challenges

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In The Prince, savvy politician Machiavelli asserts, "there is nothing more perilous to conduct, or more uncertain in its success, than taking the lead in the introduction of a new order of things." That 16th-century admonition should serve as warning to those who espouse the advancement of RFID.

The swirling hype, promises of opportunity, and mandates for change have created a maelstrom of uncertainty surrounding RFID.

For many industries, RFID promises to fundamentally transform the cost structure associated with tracking items. The technology has considerable potential, but reaping its benefits requires recognizing three key challenges—all of which require careful attention.

1. Business process changes. First and foremost is the need to change business processes that RFID deployments will prompt. McCarran International Airport in Las Vegas, for example, has begun a $125-million project to RFID-enable its baggage-tracking system with the goal of reducing baggage mishandling by 15 percent to 30 percent. Considering the $100 price tag of re-routing a mis-routed bag, the potential savings on the 70,000 bags handled daily at McCarran is significant.

Though the benefits are obvious, the route to achieving them—given the airport's existing infrastructure and its manual business processes—remains unclear. What kind of new applications are required to run RFID-enabled, "human-free" bag routing? How many employees are required for error detection? Who will install, maintain, and operate the RFID systems? What kind of networking infrastructure is required?

Asking these questions about RFID's changes to physical assets, people, and processes is critical. After all, these things can be tough—and expensive—to change.

2. Data volume. Data is precious, but be careful what you wish for. With in-store deployment, Wal-Mart predicts it will generate more than seven terabytes of operational RFID data per day. Traditional technology architectures are not prepared to handle this volume.

Indeed, the value of RFID technology depends on having valid, real-time data visibility. Re-thinking software architectures is required to deal with the influx of data RFID brings. The operational databases needed to handle this data differ from traditional back-end databases, and are far less understood. They will become more commonplace, however, for collecting, correlating, filtering, and cleansing RFID data.

3. Changing standards. RFID standards have yet to mature, and rapid changes are expected. Early adopters must choose the elements of RFID standards that have practical value to their deployments. Rather than leap ahead of emerging standards, companies are better served by planning for the certain changes in business process and data volume that RFID deployment generates.

The hype surrounding RFID is based on the belief that real-time, automated asset tracking is the only way for companies to dramatically improve operational efficiency. Changes in business process, technology, and standardization are, to use Machiavelli's words, "perilous and uncertain." But they also have the most dramatic pay-off.

RFID is bringing about a sea change in the way companies purchase, distribute, track, and secure assets. Proceeding with RFID makes sense, but doing so with an eye to its challenges better ensures a successful journey.

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