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Can SAP win RFID race?

Companies considering radio frequency identification technology are being met with a myriad of choices, as SAP, Oracle and other big vendors jump on the RFID bandwagon.

Rick Pople, a general manager in a Los Angeles shipping yard, saw immediate improvements after his employer, NYK Logistics, decided to use radio frequency identification (RFID) technology to track trailers and shipping containers.

The company chose best-of-breed RFID vendor WhereNet Corp., of Santa Clara, Calif.

"Our drivers are spending half the time they used to [in order] to complete their work," Pople said. "We've finally stepped away from the days of using clipboards in the yard."


In [the] next 20 years, someone's going to be in the Fortune 50 because of RFID.

Jeff Woods
analystGartner, Inc.

With reviews like that, RFID appears to be on its way to fulfilling many people's predictions. So, who is going to win the most RFID customers? That remains to be seen. One thing is sure: There are plenty of RFID dollars to be made.

RFID technology, which uses microchips to track products and goods in the supply chain, typically requires an initial investment of between $100,000 and $200,000 for a warehouse with minimal data, said Jeff Woods, an analyst with Stamford, Conn.-based Gartner Inc. A full implementation of the technology could cost tens of millions of dollars.

SAP is racing ahead in the RFID space, building the technology directly into its core product, R/3. Oracle entered the fray late last month, announcing that its warehouse management software would support RFID. Companies including Microsoft, Intel Corp. and Sun Microsystems Inc. are still mapping out the types of solutions they want to provide, Woods said.

"In [the] next 20 years, someone's going to be in the Fortune 50 because of RFID," Woods said.

"RFID might help a hospital become dramatically more efficient, or it might help a retailer eliminate 50% of labor in their store. We think that this technology is one of those that changes the course of business, but we're also not naive [enough] to think that it will do so over the next year or two."

SAP speeds ahead in RFID race

SAP has already emerged as a leader in the RFID space. This month, the company introduced a software package at the National Retail Federation exhibition in New York. The package includes SAP's new Auto-ID infrastructure, SAP's event management and supply chain management software, and SAP Enterprise Portal.

SAP's solution, currently available only to beta users, is built on SAP Web Application Server. But while SAP's RFID package may be among the most elaborate, other service providers and applications on the market can deliver similar features, Woods said.

"For the past 15 to 20 years, we've been building supply chains around bar-code processes," he said. "The two markets playing out -- the infrastructure providers and the warehouse management applications providers -- are racing to figure out what are the new RFID processes."

Like SAP, network computer maker Sun Microsystems Inc. is looking to produce a complete RFID software infrastructure package, said Vijay Sarathy, a product line manager in the company's Auto-ID business unit.

Santa Clara, Calif.-based Sun plans to offer hardware, software and services that connect to the Electronic Product Code Network. A release expected in mid-2004 will include two large components that will feature event management filtering aggregation infrastructure for RFID data, he said.

The company has set up a testing center in Dallas to take advantage of Wal-Mart Stores Inc.'s interest in RFID tags. Wal-Mart has mandated that all of its suppliers use the tracking technology by 2005.

"Ultimately, it's about integrating with the back-end systems and improving your [efficiencies]," Sarathy said. "But, today, people are focused on the tags, antenna and readers, and getting a whole RFID system working. So there's a dire need for a facility for testing."

Oracle made a splash last month at its annual AppsWorld conference in San Diego, where the company announced it would build RFID support into its Warehouse Management System Software, which is part of the company's E-Business Suite.

"Oracle has been late to the table but, by building support into their maturing business suite, they should be considered by Oracle shops," Woods said.

Other technology vendors are also considering an entry into the RFID market.

Computer chip maker Intel Corp. said it doesn't want to enter into the low-cost tag market, but it is considering whether to develop more expensive tags that will offer increased functionality.

Microsoft is developing the application program interface (API) for the RFID reader devices, Woods said. The program will be based on Microsoft's .NET Web services framework and will have an interface to existing products, according to the company.

Microsoft and Intel are members of the Metro Group Future Store Initiative. Founded by Metro Group, a German consumer packaged-goods company and grocery store chain, the program is expected to create industry standards.

Metro plans to introduce RFID in virtually all aspects of its business. IBM, SAP and other technology providers helped fund the project.

Smaller, best-of-breed providers include WhereNet, which provides tags and infrastructure; High Jump Software, an Eden Prairie, Minn.-based company that specializes in inventory management and RFID applications; and Manhattan Associates, a New York-based supply chain management software company that is partnering with Printronix Inc. to provide an RFID software and infrastructure package.

"It's probably three years or four years down the road when the secrets will start to leak out about the best business processes, and companies can begin to piggyback on the shoulders of some of the early-adopter giants," Woods said.

For more information

Check out our Featured Topic on SAP's Zencke on RFID, NetWeaver and upgrades.

Check out our Featured Topic on SAP and RFID.

To provide feedback on this article, contact Robert Westervelt.

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