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RFID as an Innovation Catalyst

Contributing analyst Joe Barkai argues in this article that RFID will one day become an innovation catalyst, disrupting existing business models and processes. For that to happen, however, issues like standardization, privacy, and security must first be worked through.
Oct 28, 2005This article was originally published by RFID Update.

October 28, 2005—The flurry of RFID-related conferences and press announcements, combined with the technology heavyweights that jump on the bandwagon and assert their commitment to RFID technology, does not seem to subside. New uses for the technology mushroom and seem limitless, and RFID is proposed to track everything from trash bins to emergency room physicians.

As is often the case with hot technologies, the progress of RFID technology appears to be slowed down by the usual battle over standards and the rush to develop the "next generation" before the current one has been fully exploited. Still, some of the greatest applications and unique solutions based on RFID technology have yet to come to market. The adoption rate will accelerate gradually and RFID technology will eventually become ubiquitous enough to lower the barrier to entry to the point that it could become a new-market disruptor technology.

Like other disruptive innovation seeking to uncover weaknesses in current processes in underserved markets and capture opportunities for business model innovation, RFID and, more importantly, RF-enabled sensors and global sensor networks will become great innovation catalysts.

The most interesting innovation will come not from a better and easier-to-use barcode nor from the increased capacity to track objects. It will come from using these capabilities to solve business process problems and to create new business processes. RF-enabled sensor networks will create a dynamic link between people, objects and processes by collecting, integrating, aggregating and enriching data and increasing its value to enable and sustain velocity, agility and innovation.

The potential for business transformation enabled by RFID and RF-enabled sensor networks is promising, but it is currently limited by equally potent barriers. First, lack of universally adopted standards and rapid technology evolution prevent widespread adoption and the formation of a stable framework that lowers the barrier to make it an innovation catalyst. Similar to the adoption curve of the Internet that had been imperceptible for a long time before it exploded, the transformation of RFID will intensify when the operational model of RF networks and the Object Naming System (ONS) reach maturity and adoption levels similar to the Internet's IP protocol and open Domain Name Services (DNS).

Perhaps more critical are the ongoing concerns about privacy and data security. These will continue to hamper the opportunities for disruptive innovation. Security mechanisms will be developed, but breakthroughs will not take place until the benefits of RFID technology are significant enough to attract the early adopters for whom technology benefits and the "cool factor" outweighs privacy concerns.
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