Real Time Locating Systems (RTLS), disposable sensor systems, smart active labels (SALs) – the terminology surrounding radio-frequency identification (RFID) technology is unfamiliar and bemusing to most people in the IT business today. But that will not be the case 10 years from now. According to analysts IDTechEx, sales of active RFID systems will grow rapidly, from $2.7bn this year to $6.78bn in 2016. This year 1.3 billion tags will be sold, and next year it will be 2.4 billion.

The potential is enormous and it is already visible. Most people have probably already used RFID tags but not realised it. For example, anyone who has used an Oyster card to travel on public transport in London has well and truly joined the RFID revolution. Anyone who has an immobiliser for their car carries an RFID tag with them all the time.

The Oyster card system was the biggest RFID order in the UK so far – worth about $1.6bn. There are other high-profile applications as well – Marks & Spencer is using RFID in a selection of its stores to tag suits to ensure that they are well stocked with best-selling sizes. Scores of pilot schemes are being run in the retail sector and pharmaceutical companies are looking at RFID as a way of tracking the movement of drugs.

The opportunity, according to Andy McBain, EMEA RFID product manager at Symbol Technologies, is as big as the reseller wants it to be.

“There are potential RFID applications in virtually every market, especially where traceability of products and goods tracking are an integral part of the business,” he said. “Some large retailers are currently piloting RFID, but the logistics, manufacturing and back-office end of the retail chain are where the benefits will be most pronounced.”

Aside from increased efficiency and lower cost, the key argument for RFID adoption is that it will benefit the consumer by improving product availability. McBain said: “As any customer can tell you, there’s nothing more irritating than empty shelves. There is an opportunity for smaller resellers in these markets, because partnering with an established RFID vendor will give them as much access to the products and knowledge as large resellers have.”

Partnerships could be essential – certainly in the short term. RFID is a complex technology used chiefly for specialist applications in the supply chain, security and traceability. All of these require specialist market knowledge and, in most cases, an in-depth technical comprehension of RFID and how it works.

Raghu Das, chief executive of IDTechEx, said: “System integrators who put in RFID systems for a user tend to be vertically specialised in that industry.”

Deploying RFID for a transportation system, such as the Oyster card, is very different to implementing an RFID system to tag DVD packs in Tesco, according to Das. A lot of RFID projects at the moment are for ‘item level tagging’ where tags are embedded into the product when it is made and not applied as a separate label. These are major projects that require specialist knowledge and massive resources. Experience and expertise count, but there is also a shortage of good suppliers.

“These systems are, in the main, not just bolt-ins but require proper, methodical testing, set up and so on,” Das said. “Many companies installing RFID do it themselves rather than outsource it because there is some undersupply in experienced systems integrators.”

Das added that there are also other potential markets, aside from the obvious ones, that resellers prepared to invest in developing their knowledge can address.

“Different industries do need specialist solutions – for example, tagging athletes to monitor who wins races and record accurate timings, or tagging the internal parts of an engine to monitor temperature – and they all have very different requirements,” he said.

As solutions will always be of a specialised nature, integrators that want to get onto the market need to think specifically in terms of what the technology will enable their customers to do, McBain said.

“The most successful resellers will be those that think outside the traditional supply chain areas,” he said. “For example, RFID could be used by fire departments to allow them to track firemen through buildings or to track passengers around airports for security purposes and visitors at events and conferences allowing automated meeting requests based on location. VARs that explore the options now and do their research will be able to take advantage.”

The key to doing this, McBain believes, will be partnering with RFID vendors that have good training programmes, although it is not easy to ascertain how many of these exist today – most RFID solutions so far have been put together by specialist developers and large specialist systems integration companies that have seen little or no need to develop a channel.

Vendors such as IBM, Oracle and SAP – and most companies that are involved in data warehousing and

supply-chain management – have to be aware of RFID and its potential, but as yet are doing little to drive channel involvement.

However, things are starting to happen. Cognitive Solutions, for example, which produces label printing systems, has put together an RFID Development Kit which, it says, includes everything a reseller needs to begin experimenting and installing RFID. But to take advantage the VAR probably needs to be in the vertical sector already, such as those who sell processes improvement systems that involve bar-code systems and data collection.

To have any chance of winning significant contracts, VARs will need to adopt a focused vertical market strategy, according to Ivano Ortis, program manager for European vertical markets at IDC. It may already be too late to enter this market sector. The SME sector, meanwhile, looks to be moving towards managed services for RFID.

“Larger [customer] companies in each vertical are now moving to phase two trials or implementations,” he said. “While we see evidence of more SMEs looking at RFID, we expect managed services plus VARs, systems integrator and vendor networks to drive adoption in the medium to long term.”

Ortis also believes that resellers have an opportunity to catch the wave of interest from end-users in their own locality or existing customer base. Resellers can do this by showing customers how process improvements can improve their business and lower costs, which will require some vertical market expertise, or by partnering principally with key software providers and developing their own software skills.

Ortis said that software partners and skills are going to be more important than hardware because, as in the systems market, it is the application that really does the business while the hardware is just a platform. It is also more lucrative and requires less investment.

“By focusing primarily on partnering with RFID software providers, and relying on their network of hardware partners, you avoid interoperability and implementation issues,” Ortis said. “The best marginal opportunities exist in software and system integration activities, not hardware deployments, which in turn tend to require highly specialised skills in RF, site survey, simulation and design. If the channel player doesn’t hold these skills I would recommend they focus on lower-risk and higher-margin areas such as software and systems integration.”

Any entry into the RFID market by resellers with a broader networking and integration approach will need to be preceded by major investment in the area by a key middleware vendor. There are some prospects of this with IBM, SAP, Oracle and Microsoft among others all paying increasing attention to RFID technology. If these companies make a serious play and produce add-on features for their core products, this will make it easier for VARs to also enter the marketplace.

Indeed, software systems may be the biggest area of potential for resellers around RFID, said Jack Brandon, senior business development manager at Socket Communications, a specialist distributor of data collection and network connectivity products for mobile devices.

“I feel that the biggest business opportunity in the RFID industry is middleware – software systems that collect and manage the massive amounts of additional data produced by RFID systems and pass consolidated information and exception reports to corporate ERP systems,” Brandon said.

A systems integrator that does find a way into this market may well find that there are additional opportunities as well. The biggest is storage, according to Tim Young, director at data warehousing specialist Netezza,

“One recent estimate predicts that once RFID systems reach the product level, they’ll generate 10 to 100 times the data of conventional bar-code data, turning RFID into something of a Frankenstein’s monster,” he told CRN. “Even if you scale this number back to account for the fact that current RFID data is only available at the palette and case level, it’s still a huge increase in the daily volume of data. Consider the effect of generating an extra terabyte of data each day on the corporate IT system.”

Significant upgrading of infrastructure and data management systems will also be required to pave the way for RFID, he noted.

“The existing patchwork of older, general-purpose architectures simply isn’t designed to handle terabytes of constantly growing and changing data,” Young added. “Add to this the gargantuan volume of data that RFID has the potential to generate, and the need to address the issue of data management sooner rather than later becomes painfully obvious.

“The success of companies will strongly rely on how quickly and easily they can harness these massive amounts of data to make intelligent business decisions.”