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IT Does Matter
RFID will lead to a whole new wave of change in information technology systems, which will provide a competitive edge for those who exploit it.
Aug 30, 2003—By Mark Roberti
Sept. 1, 2003 - This summer, Nicholas G. Carr, Harvard Business Review's editor at large, started a raging debate in IT circles with an article entitled "IT Doesn't Matter." He compared information technology to electricity, railroads and the internal combustion engine. "From a strategic
The problem with Carr's analogy is that electricity, railroads and combustion engines reached maturity and stopped evolving in significant ways. That may seem like the case for IT today, but it's not. Yes, we have reached a lull after the Internet boom. All large companies have, to a greater or lesser degree, invested in the three major IT systems: enterprise resource planning software, supply chain management software and customer relationship management software. We've had these lulls before, most notably after the first wave of corporate investment in mainframes and after the PC boom of the 1980s.
But we're probably closer to the beginning of IT's evolution than to the end. And RFID heralds the next stage. For the first time, it gives computers the ability to identify objects in the real world in a meaningful way. Companies that use RFID technology to improve their supply chain operations will reap huge benefits.
Once computers are able to distinguish objects, software can be designed to handle many routine tasks. Systems can be optimized to a much greater degree as computers track the movement of pallets, cases reusable containers, tools and many other assets. The companies that install these systems first and use them effectively will have an advantage until everyone else catches up.
Sensors are playing an ever-more-important role in managing operations. Many gas stations, for instance, use sensors to monitor how much gas is in each tank and communicate it to computers so gas can be ordered automatically. Some trucking companies now use sensor and GPS systems to remotely measure the speed of their trucks, the route they take, the temperature of the refrigerated compartment and the amount of gas in the tank. There are vending machines equipped with cellular technology that automatically alert the company that owns the machine when the machine is out of order or out of a certain item. The U.S. Department of Defense wants to replace human sentries outside bases with a robot known as the Mobile Detection Assessment Response System (MDARS).
Today, most sensors are too expensive to be deployed in the supply chain. But as prices fall, sensors will be combined with RFID tags to communicate information on the condition of products. Sensors can already indicate whether a product might have been damaged because the box was dropped or jolted, or if meat was exposed to unacceptably high temperatures. Within 10 years, RFID microchips will be combined with organic compounds that react with target agents. These devices could detect anything from e. coli to anthrax.
Companies that deploy these new technologies first will have an edge. In a recent survey by CIO Insight, 71 percent of executives surveyed said adopting emerging technologies continues to be critical for reaching strategic goals. And 51 percent said their companies had missed at least one important business opportunity in the past three years because they didn't invest in new information technology.
If you look out 100 or perhaps 200 years, IT may reach maturity and stop evolving. At that point, every company will have perfect information about its operations. What happens then? Glover Ferguson, chief scientist at Accenture, has an interesting answer. The business advantage becomes insight and relationships. Those who analyze and use the information most effectively—and those who have developed strong bonds with their customers and business partners—will be the winners.
IT doesn't provide a sustainable competitive advantage. You have to keep innovating. Harvard Business Review's Carr sees little opportunity for innovation in the years ahead. Frankly, I find that view incredible. My guess is that in 20 years we'll look back at our supply chain systems—which are essentially deaf, dumb and blind—and they will look like Pong compared to today's 3-D computer games.
Mark Roberti is the Editor of RFID Journal. If you would like to comment on this article, send e-mail to email@example.com.
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