Businesses have 'major misunderstanding' of RFID

27 Apr 2005

COPENHAGEN: Too many businesses are making the mistake of implementing radio frequency identification (RFID) technology right through their supply chains without looking at where the return on investment is going to come from, a top SAP executive has claimed.

Speaking yesterday at Sapphire, SAP’s global customer and media in the Danish capital, Claus Heinrich, a member of the software giant’s executive board, said: “There is still a major understanding about RFID. Companies think it means RFID-enabling their whole supply chains. In fact, it should only be done where it delivers value. RFID is also about more than simply replacing the barcode. In a lot of cases, the barcode is still a very good solution.”

In an interview with journalists at the event, Heinrich argued that businesses were making the same mistake with RFID as they made in the past with other new technologies, namely “implementing it first and then looking for the business value rather than the other way around”.

However Heinrich was not dismissing RFID as an overhyped fad. Far from it. The author of a new book on the subject, ‘RFID and Beyond’, he saw RFID becoming a key technology of the future and one that would have a huge influence in the business sphere. “The business impact will be very, very high,” he predicted.

In order to maximise its impact, however, the issue of data privacy would first need to be dealt with, Heinrich argued. While noting that “every technology has a challenge with data privacy, not just RFID” Heinrich said there was too much misinformation about RFID in circulation. To tackle this, SAP is currently hosting a series of global workshops on the data privacy issue, which involves bringing a range of interested parties together. A number of these have already been held with two more to come later this year, in Washington DC and in China. “We are building an RFID community to share information about RFID and privacy issues,” said Heinrich. “The basic idea is that transparency is the key. If our customers don’t take the privacy issue seriously, then it could suddenly become a major PR problem for them.”

By Brian Skelly