Study Finds Government Application of RFID at Crossroads

Government technology executives see IT innovation, including the use of Radio Frequency Identification (RFID) technologies, as key to achieving their organizational strategy, according to a new report by BearingPoint, Inc. (NYSE: BE), the Information Technology Association of America (ITAA) and Federal Computer Week magazine. However, while most respondents view RFID as an emerging technology that will improve government processes and are investigating application opportunities for RFID, few organizations have actually deployed the technology.

Survey responses indicated that applications for RFID technologies within government organizations are many and varied. In addition to homeland security applications, asset visibility, business process and productivity improvements were seen as key areas for utilizing RFID technologies.

Despite the recognized potential benefits associated with RFID technologies, more than fifty percent of respondents indicated that the absence of guidance from government and industry around security and privacy policies and standards was resulting in their deferring further development activity. Other barriers to deploying the technology that government respondents identified included lack of funding, government-wide adoption, and intra-government coordination.

"At this stage in adoption, we weren't surprised to see that most respondents indicated they would spend less than $250,000 on RFID projects in FY2005 and less than $1 million in each of FY 2006 - 2008, which is consistent with what we are hearing through our work chairing ITAA's RFID Standards Task Group," said Nick Evans, global lead with BearingPoint's Emerging Technology practice. "The positive news is that respondents do indeed see the value that RFID can bring to their organizations, and once these typical barriers to adoption are overcome, we can expect to see a wide variety of applications successfully deployed.

"Another encouraging finding was the broad agreement among surveyed government executives that IT innovation continues to add significant value to their organizations," Evans said. "Nearly three-quarters of the respondents consider IT innovation to be 'important' or 'very important' to executing their organization's business strategies."

Jointly conducted by BearingPoint, one of the world's largest business consulting and systems integration firms, ITAA and Federal Computer Week, the survey of global government executives, from mid-September to mid-October, 2004 found that thirty-one percent of government annual IT budgets are directed towards IT innovation, including new initiatives such as RFID, versus IT commoditization and managing and maintaining existing systems.

"The survey clearly shows that most government IT executives believe that RFID technologies can help their agencies carry out their missions more effectively," said John Monroe, editor of Federal Computer Week. "There are still questions that need to be answered, but IT executives believe that the potential of RFID makes it worth the time, energy and effort to invest and learn more about the technology."

"Near term obstacles aside, RFID will clearly become the heart of inventory and supply chain management technology for large enterprises of all kinds, including government agencies," said ITAA President Harris N. Miller. "Early adopters such as the Department of Defense, to say nothing of major private sector retailers, have already sounded a resounding endorsement of the technology's benefits. The technology industry already is grappling with the challenges that a lack of standards and concerns over privacy present, is fine-tuning its solutions accordingly and is working to better educate its customers on the misunderstandings that frequently lead to these concerns." .TABLE Specific study findings include: * Seventy-three percent of respondents view IT innovation as key to achieving their particular organization's business strategy. * Forty-eight percent described RFID technologies specifically as important or very important to their business strategy, with only fifteen percent describing RFID as unimportant or very unimportant. * Fifty-six percent of respondents described RFID as an emerging technology that would improve government processes. * Forty-eight percent of respondents indicated that their government organization had investigated RFID technologies, but only sixteen percent had actually deployed RFID technology. About the RFID In Government Survey

The survey was conducted by BearingPoint, Inc., the Information Technology Association of America (ITAA) and Federal Computer Week. More than 170 government IT executives participated. The survey, which was conducted from mid-September to mid-October 2004, was developed to uncover the drivers and barriers for adoption of RFID technologies within the government and to identify the applications viewed as offering the greatest potential for benefit and return on investment.