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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.
In September 2003, six months after it formed its RFID business, IBM introduced an RFID service specifically for its retailer and consumer packaged goods customers (see IBM Introduces New RFID Services). The offerings comprise consulting and implementation services, as well as specialized software in a three-phase approach. Phase one includes consulting and development of the business case for RFID deployment, with IBM charging an average of $200,000 for the service. Phase two involves deploying a 12-week pilot, with IBM charging around $500,000. The final phase is the full rollout of the RFID system. Pricing at this stage depends on the size and scale of the deployment.
A year later, the company rolled out a swathe of similar offerings developed by a number of its individual industry-sector organizations to address deployments in their respective industries. These include automotive, electronics, chemical and petroleum, forest and paper and aerospace and defense (see IBM Expands RFID Services). “As retail and CPG mandates approach, more and more pilots are moving into full production, so industry sectors like electronics are looking not just at compliance but at using RFID as an optimization or business-transformation play,” Mantas says.
The company will also target midsize businesses with a specific offering, believing there is obvious potential in that market. “Eighty-five percent of the companies that have to comply with mandates from Wal-Mart and the DOD are in the mid-market,” says Holland.
Those offerings have grown directly from the organization of IBM Global Services, which comprises seven industry vertical businesses, including retail and consumer products, automotive and pharmaceutical. In each of these divisions, IBM executives take the lead for RFID product and project development, but anyone working on RFID technology or interested in its potential can join the company’s RFID initiatives overseen by Faye Holland. For example, there is a weekly teleconference held to discuss ongoing RFID projects as well as business partner news and potential opportunities. IBM employees working with RFID also have access to an RFID-related database to find answers to issues that may have already been tackled elsewhere in the company.
Because IBM’s involvement with custom and specific closed-loop RFID implementations reaches back more than 10 years, Holland sometimes finds herself surprised at the depth of RFID experience within the company. “Communication works really well [within IBM’s RFID corporate community], but we still find people popping up in Brazil who have been working on RFID for the past two years or someone else who has been working on an RFID project in Europe for more than 10 years,” says Holland.
For vendors such as IBM, the sharing of RFID knowledge within a company will become increasingly essential as RFID deployments start to move from the current early pilot stage through to wide-scale deployment, say analysts. “Knowledge management is set to be very important in the RFID marketplace. There are going to be so many applications and potential projects that consultants will have to allocate resources effectively, and capturing learned experience means being better able to select the most suitable contracts and deliver better results,” Michielsen says.
According to IBM, the vast majority of the RFID market still remains at the business-case and planning stages, but customers are now increasingly looking past mandates to how they can deploy RFID deeper into their operations. “This year the two categories of business case and pilots converged. The majority are assessment and pilot only, but in the past six months, companies have started to take a dual approach. They want a solution for any mandates they might have to meet, but also what want a business case for using RFID in their own operations,” says Holland.
No different from many of its clients, IBM is now preparing a few internal RFID supply chain trials of its own during the next six months. “We looked at this just as we would for a client,” says Holland “We found a number of potential areas where RFID could improve performance, and these were cut down to the one or two that will provide the best return.”
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