SAP's Heinrich sees RFID revolution

By Robert Westervelt, SearchSAP.com News Writer 30 Oct 2003 | SearchSAP.com

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BOSTON -- Speaking at Forrester Research's Executive Strategy Forum yesterday, SAP executive board member Claus Heinrich hyped radio frequency identification (RFID) technology, urging suppliers and manufacturers to get on the RFID bandwagon even before standards are established.

Otherwise, Heinrich said, suppliers risk being left behind with antiquated technology.

"The best-in-class companies are adapting technology to suit their business processes faster then ever before," Heinrich told a group of several hundred IT managers. "By adopting new concepts faster, companies stand to gain a competitive edge."

Heinrich's comments centered on the value of innovation and on SAP's Enterprise Services architecture, which Heinrich said was developed to accommodate new technologies such as RFID.

Heinrich pointed out that the massive retailer Wal-Mart hopes to begin using RFID tags to track pallets from its suppliers in 2005 and, he added, the Department of Defense is urging its suppliers to begin using the technology.

SAP has invested heavily in RFID and sees it as a key emerging technology and a potential area of competitive advantage, said Joshua Greenbaum, principal consultant at Daly City, Calif.-based Enterprise Applications Consulting. SAP is working with several customers on RFID projects and has support for the technology already built into its software, Greenbaum said.

"There is enough functionality and enough viability for the technology, and companies should be looking at it today," Greenbaum said. "We're really on the cusp of the revolution."

RFID tags, which use microchips to store data and tiny antennae to transmit the information, are still too expensive for widespread use, Greenbaum said. The cost of the tags, now estimated at about 40 cents each, are much too pricey to be used for tracking a $20 item, he said.

"SAP is saying that companies should support RFID technology and explore it," Greenbaum said, "so that at the moment the price tag crosses that functionality threshold, companies who are on board will reap tremendous benefits. RFID is one of the most exciting new technologies to hit IT in a long time, and I think there is a tremendous amount of value for companies across a wide range of areas."

Conference attendee James McMahon, a marketing technology manager with Coca-Cola Co., said the company has been using bar code technology underneath soft drink bottle caps to track its products. McMahon said he was at the event hoping to glean information about emerging technologies such as RFID.

"It's an exciting technology, but more information needs to be available," he said.

Heinrich predicted that IT budgets will shift in the next three years to take advantage of emerging technologies like RFID.

"You have invested in a lot of systems," Heinrich told attendees. "Now you need to leverage those systems and build upon existing applications with new technologies."

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