Like many parents, I spend a fair amount of effort trying to help my kids avoid the painful mistakes I made in my life, and I usually fail utterly. This is because most of life’s important lessons are learned “hands-on”, and no matter how much you trust others, there are simply some things you must learn on your own. New technology efforts are like kids in this respect, and standards groups are the parents trying so hard to help them “grow-up” without all the pain – but it doesn’t work for kids, and it didn’t work for RFID…
The late Jon Fontanella – a stellar analyst whose insight the entire IT industry sadly lost in late 2008 – put it more elegantly:
“Technologies are broadly adopted because they deliver value, not because their use is mandated. Finding this value is by definition a long and sometimes painful endeavor, resulting in countless failures before effective and scalable solutions are developed. The scope and aggressiveness of the Wal-Mart mandate blinded the industry to this reality. But in the end, the laws of technology adoption won out, as they always do.”
(AMR: RFID Reached its Tipping Point and No One Noticed, March 2008)
So what are the laws of technology adoption? Some of them are startlingly familiar from the non-technical world
· You have to walk before you can run. Standards based RFID supply chains were going to transform all supply chains before they had even transformed one. The problem with a global, multi-industry rollout as “step 1” is that no one knows what to do, because we haven’t done it before. Don’t get me wrong, I love exploration and discovery, but it is best applied to smaller projects with a group of “early adopter” volunteers. The hardware side of the RFID work proceeded very successfully precisely because of the extensive experience and field learning the engineers had, which the other parts of the work lacked.
· The science that ultimately gates technology adoption is not electrical engineering or computer science, it is economics. People have to believe they are going to make or save more money than they are spending (this doesn’t need to be true – witness the dot-com boom – but they must believe it). When you have a lot of very specific costs in pursuit of very vague benefits, people are going to hesitate. From a supplier’s point of view, unless their customer is sharing a lot more information as a result of the tag, it is just a really expensive barcode that is incompatible with every piece of gear they own.
· Enthusiasm has to infect the people who need to take action (i.e. spend money). A major lingering hurdle for RFID adoption is that most of the promoters (with notable exceptions like P&G) early on were vendors of RFID technology and retailers pushing mandates
So what does this have with parents sheltering their kids? In my opinion, the RFID standards process kicked off too early. RFID was thrust into middle school without having spent a few years in elementary school, where nurturing early adopters would’ve helped discover strengths and weaknesses (like teachers) and less nurturing peer technologies (like that bully the barcode, or that geeky kid EDI) would’ve competed and tussled with it. Most technologies begin life in more limited pilot projects (usually as proprietary technology), and demonstrate value over time for “early adopters”. At some point, broader adoption requires standardization and interoperability, but that is now much more likely because of all the experience gained early on. This is, by the way, precisely what was seen on the hardware standards, since the industry had years of experience with RFID based security systems (and other kinds).
Contrast this situation with recent efforts by standards organizations such as OAGi (the Open Applications Group) around Logistics, or the IETF efforts around EDI over the Internet (EDIINT, the infamous AS standards). When OAGi sits down to discuss logistics, there is a rich history from the ANSI X12, UN/CEFACT and RosettaNet world to draw on. All the people present have working logistics programs and are now focused on capturing the benefits of high performing standards. Likewise, the teams that built the AS standards had all kinds of projects that had attempted to send EDI over the internet via various protocols to consider. The problem wasn’t generating solutions or proving value, the problem was getting at that value in a way that worked everywhere, interoperability.
Standardization is really good at improving efficiency through scale and interoperability – but people are only interested in that when they have already decided to adopt that technology. Standards give you a better how, but rarely address the why…
So was the RFID hype overblown, and is it all just going to pass away? Not on your life…
The problems cited in the original drive for RFID/EPC efforts are all still with us, and everyone is a lot smarter about how to apply RFID. It has been widely reported that Walmart is not driving as hard on RFID as originally expected, but not as well reported that they are enjoying major benefits in distribution centers (often applying the tags themselves to inbound pallets), and have a major focus going on with Sam’s Clubs. Likewise, the US government continues to indicate its enthusiasm with the results by expanding RFID programs in many areas. Military organizations alone used 55 million RFID tags last year, and the overall RFID industry (public and private sectors) is projected to reach $5.56B this year (up from $1.9B in 2005 according to IDTechEx), and that is in a serious economic downturn.
About 10% of the 2B RFID tags sold in 2008 were for the retail industry, but a handful of – you guessed it – early adopters are behind most of these purchases, led by Wal-Mart and American Apparel.
As word leaks of the benefits of these programs, and people working on them “migrate” to other companies, adoption will increase. And at some point, people working on successful projects will gather and try to tease out the best of their various approaches into a set of standards are best practices. And our confident kid will start to make their mark on the world in a big way, probably drawing envious glances from that barcode guy…
