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Part 9: RFID and the IT Challenge

Companies must find ways to turn RFID data into useful information. This Special Report examines the challenges IT departments face in the short, medium and long term, as companies deploy RFID systems.
By Bob Violino
Mar 30, 2003—March 31, 2003 - When you strip away all the hype, radio frequency identification is nothing more than another way to capture data. RFID has advantages over bar codes (you don't need people to scan items, you can write data to some tags and so on). And it has some disadvantage (higher cost and the inconsistency of reads because of the physics of radio waves). As we've made clear in previous sections of this Special Report, we believe that over time, the advantages will outweigh the disadvantages, and RFID will complement and eventually replace bar codes on many items. That presents some special challenges for information technology departments.

RFID will lead to not just much more data flowing into a company, but the data will be arriving in real time or near-real time. It will be the IT department's job to figure out how to turn all that data into information business managers can use to make better decisions. In the longer term, the systems themselves may have to make routine decisions in order to keep pace with the data. In this installment of our Special Report, Low-Cost RFID: The Way Forward, we look at the short-, medium- and long-term effects RFID will have on IT departments.

The first challenge facing CIOs today is convincing CEOs, in a time of tight budgets, to spend money on a technology that may be a couple of years away from being ready for widespread deployment. But starting early may be the single biggest thing any company can do to ensure it is able to capitalize on the long-term potential of RFID (see Getting IT Right).

Building infrastructure presents some special challenges for companies. Think of a city that decides to build an underground rail system. It has to choose the right type of system for the population's needs, figure out how to phase in different lines, and minimize disruption to city life. It also has to plan for unpredictable growth.

Creating an RFID infrastructure poses similar challenges. One key is deciding on what type of RFID technology to adopt. It's essential to adopt technology that works in your company's environment. Products with a lot of water content -- shampoo, juices, fruit and so on -- are more easily tracked with high-frequency tags. But if you need a longer read range, UHF might be more suitable. You also need to look at the evolution of the system. You don't want to adopt a system that works great for pallets and cases but which you might have to rip out in five years as you move to item-level tracking.

And as you evaluate the technology that is best for your company, you also have to look at what technology is, or is likely to be, adopted by your suppliers and/or customers, and by industry at large. If possible, you want to try to adopt the technology that is likely to get the broadest adoption. That's because the more widely the technology is used, the more economies of scale will drive down unit prices for everyone.
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