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Managed RFID Services

A promising new business model for supply-chain deployments is emerging in Europe.
By Jonathan Collins
Feb 01, 2009—There has been a lot of discussion recently focused on the impact the global recession will have on RFID adoption. There are two clear strands of thought: Some believe the greater efficiency and potential savings RFID can bring could prove vital to enabling companies to rein in costs. Others speculate that with cash in short supply and growth uncertain, many organizations will lack the confidence to invest in a new technology and overhaul their operations.

These antagonistic positions become more pronounced when we consider supply-chain deployments, which require a shared determination among multiple players. But in the midst of this economic crisis, a new approach to RFID deployments—managed services—is an attractive option that could sidestep restricted budgets and some other issues that have held back RFID supply-chain implementations.

In this scenario, a managed-services firm takes on the cost and responsibility of deploying an RFID infrastructure at its customer's site. That could include hardware installation, software, training and maintenance, depending on the company's requirements. The system is integrated with the customer's back-end applications, and the services firm manages the RFID network remotely. The managed-services firm rents the use of the RFID operation to the company, which moves the spending from a capital investment to an operating cost that can be offset with the savings from improved efficiencies.

Companies that rent RFID services will still need to change their operations and learn how to employ RFID data, but they can take this step with less financial investment or risk. In addition to providing a financial incentive to adopt RFID, managed services offers another potential benefit to supply-chain partners: standardization across multiple sites with many customers. That simplifies a lot of the issues that have stalled deployments, including which data is shared and managed among partners, and how this is accomplished.

This concept is not entirely new. Telecommunications service providers and large systems integrators in Europe with substantial expertise and infrastructure for remote management have announced initiatives in RFID managed services, but uptake has been limited. Now, specialist RFID systems integrators are getting in the act, preparing to launch RFID managed services with initial European trials in food processing and retail operations set for early 2009.

In many ways, RFID has proved its mettle. Real-world full-scale implementations are occurring in numerous industries. Managed services could spread the reach of those deployments and new ones by enabling adoption in a much wider range of organizations.

Of course, the companies looking to roll out RFID managed services aren't immune to the effects of the global recession. They have to find the investment and the customers to get their services off the ground. But many organizations that are accustomed to outsourcing or paying for other IT services may just welcome this new business model. And with RFID efficiencies already proven, the timing for managed services could be just right.

Jonathan Collins, former RFID Journal European editor, is now a principal analyst with ABI Research. Based in London, his focus is on RFID and contactless commerce.
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