One bright note: the survey finds that users no longer see cost as the single most important factor. That's significant because it's the first time in the years that Aberdeen has conducted this study where interviewees did not choose cost as the most important issue when making RFID decisions.
Report author John Fontanella, Aberdeen's Senior VP and service director for supply chain and retail research, said one of the most troubling findings in the survey of RFID users was that most companies were doing the absolute minimum to comply with mandates. In other words, they weren't leveraging what they are required to do for a major customer and using it to improve their own operations.
"Most are giving no thought beyond just satisfying the immediate need of collecting the data. The slow adopter is trying to meet whatever mandate they've been given. Some 99 percent are only adopting because they have to, because someone is telling them to, whether it's DOD, Wal-Mart, whoever," Fontanella said. "Now that the information is collected and paid for, it's time to start turning that RFID data into something much more positive, to get a much better return on their investment."
Not all companies, though, are passing up the opportunity, he said. After Wal-Mart started forcing various suppliers to deliver, some suppliers decided to "do what I have to do to meet the mandate" and "they were forced to automate the tagging process. But they then that as the opportunity to not only build ASNs but to do also automate centralized customer service," Fontanella said. "Some companies now are starting to use it as a notice to their carriers, that on this date, we're going to be shipping this amount of product and it has to be delivered on this date."
For some companies, though, making these investments strategic and delivering a stronger ROI has to take a backseat to simply keeping up with the day-to-day RFID demands of their business partners. One huge obstacle?which is likely to get worse before it gets better?is finding enough experienced RFID talent.
"Over half of companies relying to the survey say that they are still suffering from a critical shortage of internal RFID expertise," the report said.
Fontanella stressed that this is a continuation of a very unfriendly trend. "This is the second time in six months where we're asked" about difficulties finding RFID experienced talent. Both times, we get a resounding 'Yes, we have a shortage.' It's bad enough to delay the growth, slow the growth of RFID," he said.
Part of the problem is that it's not a shortage of experience with RFID itself?which is far from new?but with the particular flavors of RFID deployment that companies are dealing with today.
"RFID has been around for 60 years. It's certainly been used in the industry for 20 or 25 years. Granted, that may be proprietary applications of RFID," he said. "But the key is that it's likely not passive RFID as we know it today, with active tags. What's new is EPC and the passive UHF tag and the standard that goes along with it, Gen2. That's where people are lacking experience, with Gen2 and the readers that support it. And, quite likely, with UHF in general."
But isn't Gen2 far too new for anyone to have much experience? Not necessarily, Fontanella said, pointing to the extensive advance work many system integrators have been involved with. "If you look at the integrators of any size, the smart ones have been way ahead of the curve on Gen2," he said. "In fact, they've been part of the standards construction of Gen2 so they could anticipate what Gen2 would be like well before it was accepted by EPC."
Ultimately, Fontanella predicts, this problem will go away, probably in the next two to three years. This is mostly because universities are starting to focus on RFID education. "There are four or five universities in Europe alone that are focusing on RFID," he said, adding that some U.S. schools?including MIT, Georgia Tech and the University of Texas--are also beginning to train students in RFID tactics.
Even for those companies who are faring well today, Fontanella projects some difficulties when they make the next logical RFID move. Not all of the lessons learned in the initial deployment phases will prove helpful when RFID scales up, he said.
?While a quarter of respondents say that they will continue to manage readers at the site level, a significant minority are already planning strategies to centralize control, eliminating the expense of having to have skilled on-site personnel at every RFID-deployed location. This strategy assumes that the complex issues around the physics of a large deployment can be solved as the RFID network scales," the report said. "The industry has seen this year that the trial and error method used to set up one or two points within a site is untenable when planning for 15, 50 or 500 readers that will be in close proximity. The physics issue becomes an order of magnitude larger within such a dense reader environment.?
Much of the explanation for that is a weakness is RFID middleware, which vendors have only recently started to address, Fontanella said. "It's only been over the last year that usable technology has been introduced to be able to manage multiple sites, multiple deployments of readers," he said.
As the industry moves into the next phase of deployment, Aberdeen is recommending that companies focus not so much on the software or the networks?and certainly not the tags or chips themselves?but on readers. To the extent that readers become a lot more sophisticated will sharply impact the ease of RFID scalability itself.
"In many cases, they are going to want to look at much smarter readers, so that the readers themselves have the intelligence to make decisions. In a simple case, if I'm tagging boxes on a production line, my reader looks down the line and sees a case and can't read the tag," he said. "It has to make an instantaneous decision whether to kick that case off the line or let it pass through. Then it's got to communicate that decision to the PLC so the PLC can take action."
The next step is to look using network appliances to help those vast networks of readers. Procter & Gamble, for example, recently described its huge network of readers.
"When you're using network appliances to help manage readers, we're not talking necessarily about software sitting on a server. We're talking about managing over the network," Fontanella said. "One of the most likely scenarios is that there will be individual network appliances with the logic to be able to clean data and to be able to provide a level of integrity to the data as it's passed up through the enterprise. It also provides the ability to manage the readers and the reader configurations. They can identify the status of a reader and whether there are conflicts with simultaneous reads, which is a big problem with UHF. One reader can block out the other if they're both reading something at the same time."
On the cost side, the Aberdeen found a significant change in attitude, with users reliability easily overtaking cost concerns. Among aggressive adopters, reliability was now reported as the top concern for 73 percent of the users surveyed, compared with 45 percent who cited price. Similar?although slightly less dramatic--results came from average adopters who preferred reliability over price to the tune of 63 percent to 44 percent. Slow adopters, which often have tighter budget issues, rated them equally at 56 percent, which is still significant because pricing had been a strong preference in that group.
?For the first time since Aberdeen has been tracking end user buying preferences, cost is not top of mind for most companies involved in implementing RFID. This is in recognition of the fact that RFID technology is now being integrated into processes and systems that operate at very high levels of performance, both in throughput and maintaining quality standards," the report said. "Many of these environments are built around Six Sigma standards of quality. The allowed three and one half defects per million opportunities does not leave much room for failure. Combining the top two criteria of price and performance together, the survey tells us that companies now are more interested in receiving value from their technology vendors rather than just lowest cost.?
Fontanella was struck not merely by the change in priorities but how much it had changed and how quickly. Price "was second by a longshot. It was staggering," he said, adding that concerns about pricing have actually remained pretty much the same, but that it's soaring reliability concerns that have eclipsed them.