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Survey Finds Major Shifts in RFID Adoption Trends

Customer compliance requirements will not be the leading driver for RFID projects in 2009, according to a new survey by ABI Research that also found end users are planning to up their RFID spending an average of 28 percent. ABI found adoption support for a broad range of applications.
Sep 22, 2008This article was originally published by RFID Update.

September 22, 2008—Compliance programs are no longer the leading driver behind RFID implementations, and cost is no longer the leading criteria in tag selection, according to a new survey from ABI Research. The survey of 186 RFID end users worldwide will form the basis of the Oyster Bay, New York firm's latest series of RFID industry research reports. Besides the changes in RFID implementation and purchase decisions, the survey also found users are planning to significantly raise their RFID spending, and will support a diversity of applications.

"Compliance is not the leading driver this time around. That's a first for the past several years," ABI Research director Mike Liard told RFID Update. Users are planning RFID projects in many industries and applications, Liard said in ABI's announcement. "RFID opportunities are broad in today's market. Virtually every economic sector and industry where data needs to be collected or objects need to be tracked holds the potential for RFID applications."

Survey respondents plan to spend about 28 percent more on RFID projects in 2009 as they did in 2008. "RFID expenditures are increasing, and it's happening for all types of users and applications," Liard said. Based on data from previous research, earlier this year ABI predicted 15 percent compound annual growth for RFID through 2013 (see ABI Research Finds Widespread RFID Market Growth). The two studies had different respondents, which accounts for the differences in projections. Liard said respondents to the most recent study skewed more heavily to passive UHF RFID technology users, and the earlier one included a broader base, with more users in smaller, slower-growing markets.

Support for multiple applications in the broad RFID market, which is no longer dominated by customer-dictated shipment tagging requirements, shows that users are recognizing RFID's potential to improve their operations, according to Liard. "Business process improvement was the number one adoption driver, not customer compliance," he said. "After that, users are motivated by scalability and extensibility -- they want systems that can grow beyond pilots -- followed by ease of integration. When we asked about business benefits, we learned most people are using RFID for business process improvements and efficiency gains, improving asset visibility, security, and regulatory compliance, such as Sarbanes-Oxley and e-pedigree. When we spoke with banks and financial firms, it wasn't long before Sarbanes-Oxley came up in the conversation."

ABI has been conducting an RFID end user survey for several years, and produces multiple reports on various technology trends. Besides identifying a changing application mix, this year's survey also identified changes in what motivates users to purchase specific tags. Previously, price was the leading factor in the tag purchase decision, but it fell to third in this year's study, behind read accuracy rate and range.

"For the first time, cost wasn't number one on the list," Liard said. "Performance is outweighing price [across applications and industries]."

The survey also found RFID buyers want to purchase their RFID systems as part of a total solution and prefer not to deal with multiple vendors for hardware, software and integration. This is consistent with a report ABI issued earlier in the year, which analyzed implications for firms in the RFID distribution channel (see ABI Warns RFID Integrators to Adapt to Tech Maturation).
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