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Lessons Learned From ERP Can Help Drive RFID Adoption

Research studies and the history of enterprise resource planning systems show that RFID solutions vendors need to make their products not only easy to integrate, but also to use.
By Kurt Hozak
Feb 13, 2012RFID Journal's founder and editor, Mark Roberti, recently wrote that the cost, time and risks associated with tying together a system of tags, readers and software from different vendors is a significant impediment to the adoption of radio frequency identification (see End Users Want An iPod). Researchers from University of Aberdeen's Business School used in-depth interviews, as well as secondary sources, to study the factors affecting RFID's adoption in the health-care industry, and reached similar conclusions (see Mapping the Benefits and Costs Associated With Process Innovation: The Case of RFID Adoption). A key finding of their research was that the lack of standardized "best-practice" applications integrated with one another is still a major deterrent preventing hospitals from investing in the technology.

This predicament is reminiscent of the era before enterprise resource planning (ERP) software became prevalent and reduced the need for clumsy, time-consuming and expensive integration between applications sold by different vendors for each functional area. RFID solutions would be much more popular if vendors were to adapt and apply lessons learned regarding the adoption and use of ERP software. As with ERP, customers do not want unproven, piecemeal RFID solutions that limit their flexibility with the remainder of their technology infrastructure. Although the software's difficulty to implement and use was not a large enough hindrance to keep most businesses from investing in ERP technologies, such shortcomings are more of a deterrent for organizations considering RFID.

The University of Aberdeen researchers found that even though RFID's adoption rate has increased in health care, the lack of standardized applications has continued to require collaboration between vendors and their customers in developing the apps. The opportunity to influence application design, and to be the first to implement an innovative application, are often insufficient to overcome the caution of organizations lacking the necessary resources to manage issues associated with co-creating and using version 1.0 products. Some of their hesitation may be driven by memories of well-publicized debacles when ERP vendors first expanded into various vertical markets—even the most successful vendors faced expensive and time-consuming glitches that needed to be overcome by early customers.

To revisit one of Roberti's points in his "End Users Want an iPod" article, a vendor able to establish wide-ranging competence across health-care applications will, by definition, be successful—but the first to do so may be able to catapult its strong market position into overall dominance if the wide base of health-care organizations that have delayed being on the bleeding edge begin to feel safe about taking the plunge to adopt RFID. The first widely proven option could not only become the industry's "gorilla," but also increase the rate of adoption across its market segment.

The Aberdeen researchers quoted an RFID standards organization representative who foresaw potential integration problems for the many hospitals that purchase technology incrementally, and "a real mess" for those that fail to plan their investments strategically. Roberti has also stressed the need for RFID end users to think about the technology as a form of technology infrastructure, in which each successive investment can build on previous ones (see Do You Really Need to Justify Your RFID Investment?).

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