Logistics technology: A cloudy future for RFID is a good thing

Cloud computing. Software-as-a-Service. Managed services. These have been among the hottest topics in information technology over the last year. All three terms refer to the same concept – turning over the day-to-day management of an application to a third party.

Most of the buzz has been around supply chain software, but could managed services also be a new business model for RFID? That’s one of the questions being asked by the industry, according to VDC Research Group, the Massachusetts based technology research firm.

“Managed services is a relatively new offering for the RFID industry, but it is emerging,” says Drew Nathanson, director of research operations for the Massachusetts based technology research firm.

The reason is that using a managed service mitigates risk. “One of the biggest barriers to the adoption of RFID is the risk in the up front investment,” says Nathanson. “Managed services mitigate that risk.” In a managed services model the solution provider owns and maintains the hardware and software; that reduces the upfront investment cost and means that the user always has the latest technology because the supplier stays up to date.

Two solution providers offering or experimenting with a managed services model include Savi Technology and ODIN Technologies.

Several models are being discussed within the industry, including a Software-as-a-Service model, where the end user owns the hardware but a middleware company hosts and maintains the application software; a hardware leasing model, where a solution provider leases and maintains the RFID readers and other hardware associated with the solution; and a hybrid package that encompasses both hardware and software. Billing could be a subscription model, based on the level of service required, or could be based on how many labels are applied or read.

One advantage that Nathanson sees from a managed services approach is the ability for the service provider to provide analytics associate with the data being collected by the system. “Through its work with the Department of Defense, Savi Technologies has an end-to-end infrastructure,” says Nathanson. “As an end user, you could conceivably slap a tag on a box in China and then watch in real time as it travels to the United States, all provided via the Internet as it’s read in the supply chain.”

What all of this adds up to, says Nathanson, “is that RFID is becoming real. We had been seeing signs of this before hand but there’s been a broadening and maturing of the market.”