What we’re seeing that we think is a sign and also is different is with clients is that it’s no longer about compliance … and no longer just about retail, said Ann Breidenbach, director of sensor and actuator strategy at IBM’s software group, in a recent interview.
Initial traction of RFID was in the supply chain, chiefly from customers in the consumer products and retail industries, as well as manufacturing, that were either building, delivering or selling products, Breidenbach said.
Now, IBM is seeing higher-order business processes for RFID and clients across its various customer industries, rather than the top six or so. Breidenbach said the shift took IBM somewhat by surprise. We expected it to happen, but not quite as soon, she said.
And rather than just get product through the supply chain, customers now are using RFID to track assets, have greater visibility into what’s being sold and where, and how product promotions are being handled, Breidenbach said.
Also, RFID data is being integrated with more business applications and systems, she added.
For example, manufacturers now want to track tools and components during the manufacturing process, rather than just when the goods leave their premises as finished. Military and defense outfits in the US and elsewhere are using RFID for asset tracking, monitoring and visibility, she said.
It just proves the point that getting visibility to the data of the edge of your network is really where this technology has value. Not just about tagging a pallet [with RFID] and reading it and knowing it got there, Breidenbach said.
The catalyst for the shift was an improvement in the technology itself, she said. This was largely owed to global, high-volume RFID hardware standard, known as Generation 2. Companies wanted to see that the standard would indeed happen and would be implemented and deliver some of the value they expected, Breidenbach said.
RFID reader technology also has improved and more vendors are offering active RFID tags.
The tags also have become more durable and can now be successful applied to metal and liquid goods for item-level – and not just case-and-pallet – tagging.
And more companies are beginning to move beyond first-of-kind projects to see what else RFID can do for them, Breidenbach said.
Pharmaceutical companies, for instance, initially used RFID for e-pedigree tagging as mandated by numerous US state and national regulations. But drug makers also face problems of their goods being diverted en route to pharmacies, stolen and being sold as something they’re not. RFID became a way for them to more accurately track their shipments, Breidenbach noted. I think it’s a combination of not just legislation, but what the benefits are despite the legislation, she said.
And the expansion of the use of the technology has been worldwide, Breidenbach said. It’s not just a US kind of technology or a European one, she said. These two regions do represent the largest areas for RFID opportunity for IBM, however. Asia Pacific also presents a large opportunity for the company, but is not growing as rapidly, Breidenbach said
IBM may be seeing better-than-expected traction with its various RFID products and services, yet Breidenbach is quick to point out the technology is not yet mature. But it’s definitely heading up the curve, she said.
Most of its customers are still in pilots and proof-of-concept projects. Many have deployment the technology in one product or manufacturing line, and are still evaluating how that’s worked and planning what to do next, she added.
The length of RFID pilot projects vary wildly depending on the customer, but an average is roughly 6 months or so.
IBM does not track RFID revenue separately and Breidenbach declined to give any financial metrics for its RFID business.
Looking to 2007, IBM is bracing for increased demand in integration multiple RFID installations, often with hardware from different vendors, as well as with various business applications, Breidenbach said. Increasingly, this means the need for services oriented applications, she added.
It’s not just can we get the data, but also can we read the data, can we integrate the data to all these back-end applications and do something with it. That’s what we’re seeing many of the projects about and what we will see in 2007. It’s good news for us, she said.
Still, Breidenbach said she doesn’t expect the competitive pressure from both specialist RFID products and services firms and larger integration vendors to change next year. We’ve seen competition from the beginning and will continue to see it.
