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IBM Bulks Up Its RFID Initiative

Big Blue has made RFID a top priority, adding the technology to its manufacturing operations, rolling out industry-specific RFID deployment services and rolling out RFID test labs.
By Jonathan Collins
Sep 27, 2004In April 2003, as interest and spending in RFID systems began to swell, IBM formed its RFID emerging-business unit with the goal of coordinating the company’s resources to best tap into the emerging market. Just a year and a half later, the company says its RFID business has grown significantly.

“We have experienced vast growth over the past 18 months—in terms of both revenues and people. In April last year, we had around 400 IBM staff involved, and now I lead a community of over 1,200 people over three geographies,” says Faye Holland, worldwide RFID leader for IBM Global Services, and the person charged with promoting the technology within IBM as well as growing IBM’s RFID business.

The company announced in late September that it had earmarked $250 million to develop RFID products, laboratories and customer projects during the next five years, and had already says it has already begun to disbursing some of that money.

Analysts agree the company has invested in quickly building up its RFID business. “IBM has staffed up its RFID efforts significantly with regional and industry vertical training across multiple groups in business consulting, hardware, software and technology groups,” says Erik Michielsen, director of RFID and ubiquitous technologies at ABI Research, a consulting firm based in Oyster Bay, N.Y.

But despite all the growth and scaling-up of IBM’s RFID activities, head count at IBM’s RFID emerging-business unit has stayed flat at just one employee—Faye Holland. It is a situation that reflects the way the IT giant has tackled the challenge of growing and adapting to the demands of an RFID business that touches many areas of its existing operations.

IBM’s RFID emerging-business unit is a cross-IBM virtual organization within IBM Global Services that taps consulting, building, and testing expertise from IBM Global Services as well as research from IBM research division, industry-related skills from its industry-specific organizations, and software from IBM's software group. For its part, the Global Services division combines IBM’s Business Consulting Services (BCS) and Integrated Technology Services (ITS) units to provide business and technical consulting, as well as deployment, testing and maintenance services.

Rather than set up a specific RFID business, IBM has opted to use the RFID emerging-business unit structure to incubate its RFID operations within its services organization and deliver related support to its separate industry-specific operations within the company. “RFID is applicable to a wide range of industries and uses. The goal of the RFID emerging-business unit is to promote RFID within IBM so that each industry unit builds its own RFID business,” Holland says.

The company is taking a similar approach within its software division. In September, the software division announced the formation of its Sensor and Actuator unit, which has the responsiblility for developing software products that will bring together IBM’s existing software offerings and add RFID-specific capabilities. Like Faye Holland’s RFID unit in IBM Global Services, Sensor and Actuator will draw from IBM staff employed within a range of other IBM organizations.

As the RFID market matures and customers look for more mature services, IBM says, its Global Services RFID emerging-business unit will also mature, and its skills and knowledge will be handed off to those business groups.

The growth in IBM’s RFID business has been the direct result of booming demand. In the past year, IBM says, the number of RFID projects it is working on has grown by as much as 10 times, and growth is set to continue. “Each RFID engagement we are involved in is larger than the one before. Most companies hadn’t even budgeted for RFID in this calendar year, and if they had, it was only a small amount,” says Jesus Mantas, who—as partner for global wireless for IBM’s Business Consulting Services—works with IBM customers on their RFID implementations.

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