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Key RFID Findings from Frost & Sullivan

Research firm Frost & Sullivan performed a study on the state of RFID adoption and related workforce issues in North America. In this article we highlight key findings.
Aug 26, 2005This article was originally published by RFID Update.

August 26, 2005—Research firm Frost & Sullivan was commissioned by the Computing Technology Industry Association (CompTIA) to perform a study on the state of RFID adoption and related workforce issues in North America. The study is entitled "Analysis of RFID Adoption and Workforce Issues in North America", and this week Frost & Sullivan analyst and author of the report Karthik Nagarajan gave a webinar discussing his findings, the highlights of which are outlined below:
  • The research was conducted from two perspectives, that of the end-user and that of the RFID vendor. 510 end-user companies were interviewed, whose annual revenues ranged from $10 million to $2 billion. On the supply side, 45 leading RFID vendor and channel partners were interviewed, including some from Europe.
  • Mandate compliance continues to be a leading driver of RFID adoption. Most of this compliance adoption is expected to happen within one year.
  • Despite the important role of compliance, however, it was not cited by survey respondents as having the strongest influence on their decision to deploy RFID. "Improved process efficiency" was number one, which is an encouraging indication that end-users are beginning to perceive the technology's long-term value.
  • For end-users piloting RFID, the three biggest challenges were bad read rates, working with cross-functional teams, and keeping track of the rapid changes in RFID technology and products. (The cross-functional team problem is one that Manufacturing Insights analyst Mike Witty cited in a recent conversation with RFID Update, noting that there is often the lack of an appointed leader with the authority to spread RFID enterprise-wide, causing deployments to wallow as isolated side-projects. Read the article.)
  • As would be expected, the end-users most likely to follow a slap-and-ship approach to RFID are those in verticals such as CPG and textiles and apparel that are under tight mandate deadlines. By contrast, end-users in the banking/finance and IT verticals have embraced a more deliberate, long-term approach to the technology. "Banking and IT, who have the luxury of time, have opted for more integration into the business process," said Nagarajan.
  • End-users also generally cited the achievement of ROI and integration with legacy systems as key RFID challenges.
  • End-users described themselves as still largely uneducated about RFID. Only 26.3% said they had an intermediate level of RFID understanding, and a paltry 2.1% considered themselves "expert." End-users from the automotive, banking/finance, and textiles/apparel vertical industries are the most knowledgeable about RFID.
  • This lacking awareness was disconcerting in light of the consensus among vendors that a trained workforce is key to a successful RFID implementation. That is, the less educated an end-user company's employees are, the more work (read: cost) that is required by both the end-user company and the vendor.
  • Much of the RFID training available in the market today is offered by vendors, which can result in the education having a certain bias or narrow product focus. "Most vendor training was based largely on their product," said Nagarajan. To get the broadest exposure to products, "end-users should opt for third-party training," he advised.
  • Online is the most popular source of RFID information for end-users. This was cited as a concern by vendors, who worry that online information can occasionally misinform.
  • Not surprisingly, the vendors saw the inevitable fall of tag prices spurring adoption and general market growth.
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