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RFID in Uncertain Times

Savvy companies will manage the risk around RFID adoption, not avoid it.
By Kevin Ashton
Oct 01, 2004
Standards, patent royalties, system performance, the business case—almost everything about the RFID market seems unclear right now. For many users, the only certainty is uncertainty and a looming, irrevocable compliance deadline. It’s a potent mix, likely to vex even the most able manager, but it’s not impossible. Uncertainty—better known as risk—is what managers are paid to manage. Great managers, and by extension great companies, don’t run from risk. They thrive on it. Uncertainty presents an opportunity to shine.

The best strategy for managing uncertainty is to organize it. RFID’s uncertainty can be organized into three areas: cost, performance and implementation. Patent questions, for example, are actually possible costs. License fees charged by patent holders will ultimately come from the pockets of users. If patent holders take direct legal action against users, they will be seeking money. Seeing the patent question as a cost question makes possible solutions more obvious: minimize liability in
contract negotiations with vendors, allow for possible patent-related expenses in business case planning and, where appropriate, discourage patent holders from making high royalty claims.

Performance questions are too often dismissed as a result of the “laws of physics.” These laws have not changed since the beginning of time, but technology keeps on getting better. Wherever its physical limits lie, RFID has not reached them—and won’t for a long time. Any technology can always be improved with time and ingenuity. The recent increase in investment in RFID will likely yield rapid performance improvements over the next few years. Other improvements will come from users gaining experience. The keys to managing performance-related risks are to work with innovative vendors and to get experience using the technology internally.

With all the focus on cost and performance, implementation is often overlooked. That’s why it may be the biggest risk of all. Implementing RFID is complicated and takes time. It’s not obvious how to deploy the technology across an enterprise, or even who should do it. There are integration questions, legacy questions and training questions. Users need to evaluate vendors, choose products and set budgets. Workflows and processes must be changed. These questions cannot wait until costs are clearer and performance is better. Costs will always be falling. Performance will always be improving. The only way to manage these risk areas is to manage them in tandem—and not wait for certainty before acting on the internal questions.

In many ways RFID, for all its rawness and newness, is like every other area of business. There will always be some uncertainty. The risks can’t be eliminated entirely. Even the greatest managers can only organize them, minimize them and then take action. Things may still go wrong, and further adjustments may be needed. But there is no other way: Wait for certainty and you wait forever.

Kevin Ashton was cofounder and executive director of the Auto-ID Center. He recently finished writing a book about RFID.
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