Irrational Exuberance: Analyst or Marketing Department?

I was playing catch-up on recent RFID news and research when I came across an RFID survey. Larsten Business Reports (www.larsten.com) performed a survey of 669 businesses and concluded in three mini-reports that businesses responding had "the expectation that RFID would significantly lower prices and provide more efficient delivery for customers."

(see http://www.larstan.net/RFID.htm and http://www.larstan.net/RFID_results/RFID_Comparative.pdf)

I have some issues with their survey, or at least with the way they have reported their findings:

1. What is the demographical makeup of the companies responding to the survey?

Larger companies or companies with a larger in-house logistical requirement will clearly benefit from checkpoint or near-real-time tracking system that an in-house implementation of RFID would/could provide. Smaller companies are less likely to realize a benefit from RFID much in the same way they did not realize any near-term benefits from implementing EDI as required by their larger customers and trading partners.

The lack of demographical information means that there is no meaningful context within which to view these results.

2. How did they draw that conclusion about RFID causing "lower prices" when data provided in the survey seemingly does not support the conclusion?

The survey results include:

• 64% to 66% disagree or strongly disagree that they have "already implemented an effective advanced infrastructure that can support RFID technology opportunities."
  
  
• 46% to 53% disagree or strongly disagree that their "existing IT infrastructure can accommodate anticipated RFID data volumes."
  
  
• 60% to 63% disagree or strongly disagree that they already have "an RFID infrastructure that features standards and interoperability with other systems" although 72% to 86% feel it is very or at least somewhat important that they have such an infrastructure.
  
  
• 75% to 85% agree or strongly agree that "implementation of an effective RFID plan would require significant re-engineering of our processes."
  

Given all these results, I fail to see how anyone who knows anything about IT infrastructures could conclude that anything other than some serious IT spending is in order. The spending required to address the concerns of the businesses responding to this survey could not possibly result in a short-term lowering of prices... I suspect quite the opposite would take place.

The survey answer cited in the Larstan conclusions was: "The ability to track items via RFID could significantly affect pricing and delivery for customers." Without any additional information, the conclusion that I cannot help but draw from the information I cited previously is that this answer means that prices will go up and delivery times will increase at least in the near-term.

3. Does the motive of organizations such as Larsten that charge fees for publishing content such as this survey tarnish their ability to provide meaningfully objective information to industry?

In a word, yes. Typical analyst companies will establish their independence from the industry that they provide coverage for in order to show that they are unbiased. Their motive is to charge top dollar from their research which they cannot do if it is clear to their customer base that their results were "purchased" by some manufacturer. Larstan, on the other hand, solicits "sponsors" for industry reports that they intend to publish. They are clearly not an independent analyst company yet they are providing RFID reports as if they were.

In addition, what does this say about companies like Paxar and ObjectStore whose employees are quoted in the mini-papers published by Larstan? They clearly benefit from the sale of RFID-related equipment and services, so are they the sponsors of the survey and accompanying reports?

BOTTOM LINE

The bottom line is to use multiple sources of information when preparing for decisions regarding your company. Keep in mind the possible motives behind reports and research. Organizations like EPCGlobal have a strong motive for getting companies to buy into their RFID standards since joining their network is mandatory.

Keep in mind that the only one looking out for your best interests is you. So read with a critical eye.
Some sources of mostly unbiased RFID research and analysis:
AMR Research http://www.amrresearch.com/content/resourcecenter.asp?id=438

Forrester Research http://www.forrester.com/RFID
Gartner http://www.gartner.com
META Group http://www.metagroup.com
VDC http://www.vdc-corp.com/autoid/index.html

---

John Schlosser is the Principal Consultant for Shepherd Technology which provides technology solutions for small to medium sized companies in the North Texas region.
http://www.shepherdtrack.com
You can read more articles from John here at Buzzle.com or at The RFiD Society's website at http://www.rfidsociety.org