Business cases aren't easy to achieve, Woods says in a report published on Wednesday. The research firm remains positive about RFID for the long term, but says businesses' fundamental strategic approach to the technology will take years to mature. It took 20 years for companies to begin using bar codes effectively in operational management and supply chains, Woods notes. It shouldn't take as long for RFID, he says, but companies need to keep strategies in check, and realize RFID won't become a mainstream technology overnight.
Early adoption of RFID requires a risk profile that many businesses don't have. For now, RFID is for the lucky and the wealthy, Woods says, suggesting that by 2007 at least 50% of RFID projects under way in 2004 will fail. Early adopters will become the trailblazers because no best practices or process templates exist. Woods says that in an interview with Linda Dillman, CIO of Wal-Mart Stores Inc., she noted that to stay on the leading edge of logistics and technology, the retailer needs to try technologies that might fail.
A limited number of early adopters will explore strategic business cases for RFID through 2007. There will be some expensive and visible failures, but some companies will figure out effective business cases. Woods believes the enthusiasm for RFID came from a fundamental misunderstanding of state-of-the-art data-collection technologies. And as RFID projects continue and companies realize the cost involved, many will turn back to traditional technologies for relief.