COMPETITIVE ANALYSIS IDC OPINION. Richard Dean

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COMPETITIVE ANALYSIS Worldwide and U.S. RFID Services Competitive Analysis and Leadership Study, 2004: Disruptive Technology in Waiting and Why the Services Value Chain Matters Richard Dean

IDC OPINION Perhaps no other auto-identification and enterprise mobility concept has garnered as much attention in 2004 as the topic of radio frequency identification (RFID). Although its vast potential for reshaping retail supply chain processes and dramatically improving the way in which assets can be monitored and managed continues to be the subject of much debate, RFID today remains largely a disruptive technology in waiting. This is because current deployment practices of this transformational technology are rather limited to retail compliance mandates when compared with its broader potential. From the perspective of overcoming market challenges and to facilitate pervasive deployment of RFID, IDC sees a wide range of professional services and systems integration firms playing a crucial role in this process as these organizations: ` Stimulate, respond to, and manage the anticipated demand from enterprise firms that seek competitive advantages through auto-identification technologies ` Market, sell, and deliver innovative consulting, implementation, and managed services offerings that adequately address customers' unique operational objectives through the use of technology ` Help shape, at a higher level, the way in which customers can strategically visualize the future of business process transformation and its potential operational and financial impact

Filing Information: November 2004, IDC #32183, Volume: 1, Tab: Vendors Wireless Infrastructure and Application Services: Competitive Analysis

TABLE OF CONTENTS P In This Study

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Research Methodology............................................................................................................................. 2 Executive Summary.................................................................................................................................. 4 Key Findings ............................................................................................................................................. 5 Recommendations.................................................................................................................................... 6 S i t u a t i o n O ve r vi ew

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Vendor Profiles ......................................................................................................................................... 7 Future Outlook

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Essential Guidance

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Learn More

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Related Research ..................................................................................................................................... 126

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LIST OF TABLES P 1

Vendor Capsule Profile: Accenture .............................................................................................. 8

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Vendor Capsule Profile: Acsis...................................................................................................... 14

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Acsis' Dedicated RFID Professionals by Job Type and Geographic Location.............................. 15

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Acsis' Strategic Market Focus and Vertical Industry Opportunity Rankings ................................. 17

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Vendor Capsule Profile: BearingPoint .......................................................................................... 18

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BearingPoint's Dedicated RFID Professionals by Job Type and Geographic Location ................ 21

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BearingPoint's Strategic Market Focus and Vertical Industry Opportunity Rankings ................... 23

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BearingPoint's RFID Engagement Review and Analysis.............................................................. 24

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Vendor Capsule Profile: BT.......................................................................................................... 31

10 BT's Dedicated RFID Professionals by Job Type and Geographic Location................................ 33 11 BT's Strategic Market Focus and Vertical Industry Opportunity Rankings ................................... 36 12 Vendor Capsule Profile: Capgemini ............................................................................................. 37 13 Capgemini's Strategic Market Focus and Vertical Industry Opportunity Rankings ....................... 40 14 Vendor Capsule Profile: CSC....................................................................................................... 42 15 CSC's Dedicated RFID Professionals by Job Type and Geographic Location............................. 44 16 CSC's Strategic Market Focus and Vertical Industry Opportunity Rankings ............................... 46 17 Vendor Capsule Profile: Deloitte ................................................................................................. 50 18 Deloitte's Dedicated RFID Professionals by Job Type and Geographic Location ........................ 51 19 Deloitte's Strategic Market Focus and Vertical Industry Opportunity Rankings ............................ 55 20 Vendor Capsule Profile: HP ......................................................................................................... 63 21 HP's Dedicated RFID Professionals by Job Type and Geographic Location ............................... 66 22 HP's Strategic Market Focus and Vertical Industry Opportunity Rankings ................................... 69 23 Vendor Capsule Profile: IBM ........................................................................................................ 72 24 IBM's Strategic Market Focus and Vertical Industry Opportunity Rankings.................................. 77 25 IBM's RFID Services Model and Pricing Methodology ................................................................ 84 26 Vendor Capsule Profile: Intel........................................................................................................ 87 27 Intel's Strategic Market Focus and Vertical Industry Opportunity Rankings ................................ 88 28 Intel's RFID Solution Development and Architecture.................................................................... 89 29 Vendor Capsule Profile: Intermec ................................................................................................ 90 30 Intermec's Dedicated RFID Professionals by Job Type and Geographic Location ...................... 92 31 Vendor Capsule Profile: ODIN technologies ................................................................................ 94 32 ODIN technologies' Dedicated RFID Professionals by Job Type and Geographic Location ........ 95 33 ODIN technologies' Strategic Market Focus and Vertical Industry Opportunity Rankings............ 96 34 Vendor Capsule Profile: Oracle.................................................................................................... 99 35 Oracle's Strategic Market Focus and Vertical Industry Opportunity Rankings ............................. 102

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LIST OF TABLES — Continued P 36 Oracle's Project Effort and Schedule Estimates ........................................................................... 108 37 Oracle's Key Deliverables by Project Phase ................................................................................ 108 38 Vendor Capsule Profile: Patni Computer Systems....................................................................... 110 39 Patni's Dedicated RFID Professionals by Job Type and Geographic Location ............................ 113 40 Patni's Strategic Market Focus and Vertical Industry Opportunity Rankings................................ 115 41 Vendor Capsule Profile: SAIC ...................................................................................................... 118 42 SAIC's Dedicated RFID Professionals by Job Type and Geographic Location ............................ 120 43 SAIC's Strategic Market Focus and Vertical Industry Opportunity Rankings................................ 121 44 Worldwide RFID Consulting, Implementation, and Managed Services Expenditures, 2003–2008 ................................................................................................................................... 125

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LIST OF FIGURES P 1

Accenture's RFID Organizational Structure.................................................................................. 8

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Accenture's Solution Acceleration Framework ............................................................................ 13

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Acsis' RFID Organizational Structure ........................................................................................... 14

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BearingPoint's RFID Organizational Structure ............................................................................ 20

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BearingPoint's Partnership and Alliance Ecosystem .................................................................... 22

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BearingPoint's RFID Services Blueprint ...................................................................................... 22

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BearingPoint's RFID Services Blueprint ...................................................................................... 26

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BearingPoint's Six-Step Proven Course RFID Services Methodology: Strategy and Blueprinting .......................................................................................................................... 28

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BT's RFID Organizational Structure ............................................................................................ 32

10 Capgemini's RFID Organizational Structure ................................................................................ 38 11 Capgemini's RFID Services Methodology and Reference Architecture........................................ 39 12 Capgemini's RFID/EPC Sequential Services Portfolio ................................................................. 41 13 CSC's Organizational and RFID Solution Structure .................................................................... 43 14 CSC's Catalyst Services Methodology ......................................................................................... 49 15 Deloitte's RFID Organizational Structure ..................................................................................... 52 16 Deloitte's RFID Partner Ecosystem: Physical Layer..................................................................... 53 17 Deloitte's RFID Partner Ecosystem: Aggregation/Filtering Layer ................................................. 54 18 Deloitte's RFID Tipping Point Concept ......................................................................................... 58 19 Deloitte's RFID Adoption Methodology......................................................................................... 60 20 HP's RFID Organizational Structure ............................................................................................ 64 21 HP's RFID Solution Stack ............................................................................................................ 68 22 HP's Services Methodology ......................................................................................................... 71 23 IBM's RFID Organizational Structure ........................................................................................... 73 24 IBM's RFID Solution Strategy Framework.................................................................................... 79 25 IBM's RFID Services Methodologyand Engagement Flow .......................................................... 82 26 IBM's RFID Services Offerings..................................................................................................... 83 27 Intel Solution Services' RFID Technology Services Delivery Process.......................................... 89 28 Intermec's RFID Organizational Structure.................................................................................... 91 29 ODIN technologies' RFID Organizational Structure...................................................................... 94 30 Oracle's RFID Organizational Structure ....................................................................................... 100 31 Oracle's Iterative JCDM Delivery Methodology ............................................................................ 106 32 Patni's RFID Organizational Structure.......................................................................................... 112 33 Patni's RFID SmartVision Services Methodology......................................................................... 117

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LIST OF FIGURES — Continued P 34 SAIC's Go-to-Market Structure .................................................................................................... 119 35 SAIC's Results-Focused Services Methodology ......................................................................... 123 36 IDC Leadership Grid: Worldwide RFID Services Market .............................................................. 124

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IN THIS STUDY This research document identifies and profiles leading IT services vendors; the services divisions of hardware vendors; and consulting, implementation, and managed services organizations that are helping define and shape the adoption of RFID technology within the enterprise environment. It further segments and highlights the emerging competitive landscape for RFID auto-identification solutions across a number of vertical industries. Based on supply-side (i.e., vendor) and demand-side (i.e., end user) surveys of significant depth, this document also analyzes and profiles those firms that have made the investment to develop and market a solution strategy that supports the process of educating prospective customers about sensor-based solutions and how this potentially disruptive technology can transform complex business processes. The results of this extensive analysis offer one of the most comprehensive views of how the leading providers of RFID-based solutions are establishing a global market entry strategy during the formative stages of this space. It also assesses how these organizations will compete for mindshare across various industry segments over the next five years. The firms that participated in this research process are as follows: ` Accenture ` Acsis ` BearingPoint ` BT ` Capgemini ` Computer Sciences Corp. (CSC) ` Deloitte ` HP ` IBM ` Intel ` Intermec ` ODIN technologies ` Oracle ` Patni ` SAIC

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Research Methodology During July, August, and September of 2004, IDC interviewed and surveyed a broad segment of the emerging RFID consulting and implementation services ecosystem, including those firms with a heritage in: ` Systems integration ` Management and strategy consulting ` Network consulting and implementation ` Wireless and mobile professional services ` Device and hardware support ` Pure-play RFID vendors with services capabilities The research effort was designed to capture and segment the various types of companies that are active or considering becoming active in this market and compare and contrast the differences in each vendor's services strategies and operational methodology. It was also designed to educate and inform early RFID adopters so that these end-user organizations will be better positioned to evaluate the strengths and execution capabilities of each firm profiled in this research document vis-à-vis the broad and complex requirements for a successful and scalable implementation.

Participating Vendors and Survey Definitions and Questions Specifically, IDC invited 35 companies — ranging from relatively small regional firms to the largest global organizations — to participate in this project. To ensure the highest level of quality and consistency with this supply-side research process, IDC provided an identical survey instrument to each participant. The survey instrument sought answers to organizational details ranging from overall organizational structure to number and location of dedicated RFID services professionals, pricing methodology, and strategic alliances. In order to ensure a rigorous and consistent research methodology, vendors were provided with detailed definitions of RFID auto-identification services as well as relevant services definitions. These general services definitions include: ` Consulting services. These services are designed by a vendor to help ascertain and define the technology and business priorities of the client firm. ` Assessment services. These services are designed by a vendor to better assess the internal and external environmental readiness for process and technology change(s) within the client firm. ` Trial/pilot services. Initiated by a vendor in conjunction with a potential client, pilot projects are highly specialized engagements, typically lasting four to eight weeks, that are usually designed in a controlled or structured manner to test and prove a concept.

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` Implementation services. These services include the design and implementation phases of the engagement, where the activities involve procuring the necessary equipment, devices, and software, and integrating an RFID-based solution with an existing IT and communications infrastructure. ` Education and training. These services include documentation, training, and instruction on process changes as well as ongoing use of RFID-based technologies. ` Managed services. Under contractual agreement, this phase of a project typically involves the ongoing monitoring, management, maintenance, and analysis of the RFID-based solution. The actual survey instrument — consisting of nine detailed questions — was designed to address six broad sources of vendor differentiation and competitiveness. These areas include: ` Organizational strategy and direction. The strategies a vendor chooses to pursue have a major impact on its performance relative to that of its competitors. This research document offers a detailed description of each vendor's overarching services strategy, where strategy can be defined as the pattern of decisions and actions (e.g., overseas expansion, acquiring new assets) that managers take to achieve optimal organizational performance. ` Organizational structure. After defining a company's corporate, group, and functional strategies, management typically will design an organizational structure that helps achieve its strategic initiatives. The main function of the organizational structure is to provide the vehicle through which managers and other decision makers can best coordinate the activities of the various functions or divisions to fully leverage assets and capabilities. ` Strategic vertical industry focus. Although RFID technology has received a significant amount of attention for its supply chain automation attributes, this IDC study also specifically sought feedback on other industry sectors in which each vendor decided to invest its resources. Industry segments were ranked in order of the perceived attractiveness of the potential (or actual) market opportunity as it is aligned with each vendor's skills, capabilities, or partnerships. ` Internal and external capabilities. In an emerging market, services vendors often find internal assets, skills, and capabilities may not adequately complement the overall organizational strategy. Partnerships often help address any perceived deficiencies. The benefits a firm may derive from a strategic alliance or partnership are frequently a function of three main factors: partner selection, alliance structure, and the way in which the alliance is viewed (i.e., priority status) and managed. ` Description of service offerings and services methodology. Discussed in this study is the overall operating model, services architecture, and delivery methodology each vendor deploys. Collectively, these factors play a vitally important role in how each vendor is perceived within the market's ecosystem (i.e., by potential customers, partners, and competitors).

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` RFID services pricing methodology. Perhaps the most challenging component of the services framework is how to effectively price services in a new or emerging market opportunity because perceived customer value is difficult to assess. How each vendor might establish price points (e.g., time and materials, fixed price, value based) that adequately cover total expenses and provide enough profit while conveying customer value is also discussed in this study. Based on a detailed analysis of the content associated with each vendor's survey responses and supplemental market information, IDC compiled the relevant data and compared the responses for accuracy and consistency. The resulting work product was a highly detailed and robust compilation of vendor profiles. Finally, to add additional credibility to this research process, IDC also surveyed several early adopters and other end users whereby this feedback became an integral part of this study. A qualitative assessment of vendor performance and programs as well as end-user responses was then compiled and is aggregated in an IDC Leadership Grid, which is presented in the Future Outlook section. This Leadership Grid offers IDC's assessment of how well aligned with the overall RFID services market opportunity each vendor is and the level of ability each vendor has to gain market share based solely on the qualitative and quantitative information and data obtained during this specific research process.

SITUATION OVERVIEW Since retailing giant Wal-Mart and the U.S. Department of Defense ignited global awareness of RFID by announcing the intention to deploy the technology, the number of services vendors targeting this market has grown almost exponentially, despite concerns over integration; cost; potential tag shortages, and the uncertainty associated with an early, largely untested market. There is a critical need to address key concerns associated with RFID, including high cost; and lack of sophisticated software to integrate RFID with other business applications such as supply chain management and enterprise resource planning (ERP) systems. Of these issues, most enterprise firms see cost as a primary concern, while another group worries about the lack of standards around RFID, others worry about the early stage of the market, and still others are concerned by integration issues. While all of these issues conspire to have an impact on the potential adoption of RFID technologies and EPC standards, consulting and integration firms are rapidly building solutions to help address many of these issues. The objective of this document then is to provide a comprehensive analysis of how a number of leading RFID services firms are organized and positioned to compete and lead in a marketplace which IDC projects will exceed $2 billion by the end of 2008.

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Executive Summary Continuous advancements in wireless infrastructure and mobile applications have finally reached a point of intersection with the vision of what the concept of enterprise mobility truly represents for contemporary organizations. Increased processing speeds, storage capabilities, and wireless bandwidth are enabling thousands of enterprises to embark on initiatives to bring untethered access of back-end systems and applications to both an increasingly mobile workforce and various business processes. Among the enterprise mobility concepts receiving a significant amount of attention in 2004 is RFID and its promise to transform the supply chain experience for manufacturers, third-party logistics firms, retail establishments, and consumers. RFID and electronic product code (EPC) systems consist of a number of components, including tags, handheld or stationary readers, data input units, and system software, as well as the professional and managed services required to integrate and manage these technologies. Although the tags and readers are considered the backbone of the technology and come in all shapes, sizes, and read ranges, the primary objective of this study is to segment and analyze the competitive landscape of RFID services firms competing in the marketplace today. The result is a detailed analysis of 15 different firms competing in the early stages of the RFID marketplace. Although IDC attempted to survey more than 30 global vendors, not every firm chose to provide survey responses. Some cited immaturity of the market and services offerings not yet tested as reasons for not supplying data and related content. Another vendor, Symbol Technologies, which acquired RFID system vendor Matrics Inc. on September 9, 2004, was limited in what information it could disseminate externally. The acquisition of Matrics was an important step in executing Symbol’s vision of becoming a leader in the RFID marketplace, but due to the firm's current "quiet period" restrictions it was unable to comment further on the company’s RFID services or product strategy. IDC expects to profile Symbol's complete RFID strategy in forthcoming research. Therefore, the study is not meant to capture every services vendor; just those firms that responded in detail to this survey process. What follows, then, is IDC's assessment of vendor strategy, vision, capability, and the vendor's ability to gain market share.

Key Findings The key findings from this research effort include the following: ` RFID as a legitimate and sustainable business opportunity. The potential business process efficiencies achieved through wireless sense-and-respond technologies (e.g., improving inventory accuracy, reducing labor time associated with materials handling, counterfeit product mediation) are becoming more apparent within enterprises (particularly supply chain participants). As a result, based on detailed responses from survey participants and end-user feedback, RFID and wireless autosensing solutions have evolved into a legitimate

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consulting, implementation, and managed services opportunity for many of the world's most well-respected services organizations. ` Propensity to use external resources. Recognizing that RFID and wireless sensing solutions can be lengthy and rather complicated integration projects, approximately 66% of enterprise organizations considering an RFID solution in 2004 reported they would prefer to use external resources when implementing such projects. ` Increasing level of investment. Every vendor surveyed by IDC for this study anticipated increasing demand for services through 2005 and indicated substantial strategic investments in RFID-related capabilities to meet this expected demand. These investments included: ‰

Increased hiring and staffing of dedicated industry consultants, RF design and application engineers, and related wireless network professionals

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Increased marketing activities associated with building brand awareness around RFID solutions

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Development of selected partnerships to broaden best-of-breed technology alliances and vertical industry reach

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Creation of centers of excellence (e.g., RFID testing and solution centers) that introduce clients and prospects to the benefits of RFID

` Measurable business benefits. Supply chain participants regularly report increased concerns about the lack of visibility into real-time warehouse, transportation, and inventory management systems. Despite some current limitations, properly integrated RFID and EPC technologies are transforming the supply chain process and adding measurable business value with an identifiable ROI, particularly as full-scale rollouts advance in 2005. ` Success factors for RFID services organizations. When evaluating the skills and capabilities of RFID engagement partners, end users asses several factors before awarding the contract. These factors include: ‰

Experience in the field

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Quality of individuals presented

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Willingness to invest in the relationship

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Verifiable references

` Collaboration among supply chain participants. IDC has noted a number of large supply chain participants (e.g., manufacturing, distribution, and retail firms) are joining together to form RFID user or special interest groups. These groups are being formed to help improve the level of coordination among the individual firms that rely so heavily on each other and to increase the bargaining power of the larger group with RFID hardware, software, and services vendors.

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` The value of RFID starter kits. For small RFID projects (tagging patients' wrist bands in the hospital setting, etc.), so-called starter kits can prove to be valuable selling tools that can demonstrate the innovation associated with autoidentification technology. However, for large-scale RFID projects, starter kits are not viewed as useful tools in the selling cycle. ` Partnerships and alliances. In the early stages of a developing marketplace, alliances and partnerships often play an important role in defining how successful services vendors can be within the marketplace. Within the emerging RFID marketplace, partnerships and alliances will continue to play a significant role in the success of RFID engagements. ` General statistics from the survey responses. Nearly 72% of the respondents indicated they expect business to grow by 47% in 2005, which represents the fastest-growing segment of IDC's wireless infrastructure and application services market.

Recommendations IDC has noted several trends — some continuing, others emerging — among companies providing RFID services. A summary of these trends is presented in the following sections in the context of overall market movement.

RFID Service Offerings/Market Strategies Over the past 12 months, most vendors have logically focused on providing services around the Wal-Mart compliance and other mandates. These services have focused on the implementation tasks associated with ensuring Wal-Mart's leading suppliers tag shipping pallets. While an appropriate strategy in 2004, IDC believes the marketplace leaders in the years ahead will be those firms capable of supporting a wide range of client requirements, from RFID pilot phase to fully managed RFID data analytics and related services. Not only should RFID services vendors focus on activities associated with retailer compliance, these vendors should also think strategically beyond compliance and develop solutions which will have broader business process transformational implications. While IDC sees most suppliers linked to Wal-Mart’s January 2005 mandate are primarily focused on compliance, some early adopters — such as HP which has implemented RFID prior to Wal-Mart’s announcement — are actively trying to exploit the technology by leveraging the broader benefits of RFID within their own organizations.

Gainsharing Model One of the more intriguing competitive differentiators emerging in the RFID services marketplace involves vendors' utilization of a pricing model that allows for services rendered based partially on the amount of value created for a client through an RFID project. By sharing in some of the upfront risks associated with RFID projects for potentially greater rewards, services vendors can carve a unique value proposition that reduces fear and uncertainty from a client's viewpoint.

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Partnerships and Alliances Strategic alliances and partnerships have become increasingly popular in 2004 as a way for firms to deliver end-to-end customer solutions within the RFID marketplace. IDC sees this trend continuing in 2005. The key to successful implementation of a partnering strategy primarily rests with the partner selection process. Each party needs to assess not only the strategic fit of each firm's project methodology and vision, but also the alignment of each company's skilled resources. Most successful alliances materialize when the firms have enjoyed success in prior relationships and share uniformly in both the risks and rewards of the relationship. Conversely, one of the reasons why many joint ventures have a relatively high failure rate is that the partner selection process is flawed and expectations are not articulated well enough in advance of the engagement.

Vendor Profiles IBM and Its RFID Services Strategy and Structure Over the past decade, IBM has developed a leadership position as the IT market has shifted its focus from selling hardware, software, and services to the creation and implementation of solutions to clients' business problems. During the early years of the Internet's entry into mainstream commerce, communications and business operations in the mid- to late-1990s, value was created first through providing widespread access and then through the integration of business processes such as supply chain, customer relationships, and human resources. Today, IBM is again one of the leading solution vendors helping organizations move toward the more fundamental, industry-specific transformations of on-demand business. See Table 23 for a capsule profile of IBM. In its relationships with its clients, IBM has found that a majority of enterprises are concerned with four main issues: ` Demand for faster innovation ` Reducing expenses ` Integration across the organization's value chain (representing every transaction or interaction within an enterprise, with other enterprises, and with individuals) ` Demand for predictable ROI

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TABLE 23 Vendor Capsule Profile: IBM Company name

IBM

Headquarters location

Armonk, New York

Number and location of major global divisions/business units

IBM has a presence in over 160 countries and every major city around the world

Total revenue in most recent fiscal year

US$89.1 billion (December 31, 2003)

Total number of employees (as of June 2004)

325,000

Source: IBM, 2004

IBM recognized the potential value of RFID early on and moved aggressively to support its clients by investing in a dedicated organization focused on research and development, participating in industry standards organizations (e.g., Auto-ID Center, EPCglobal), and producing thought leadership — all in an effort to drive an understanding of the business value of RFID. This new organization, the Wireless Emerging Business Opportunity (EBO), was established under IBM's EBO initiative, which identifies new areas of opportunity that require significant investment because they hold substantial revenue potential, either as a future, separate business or a valuable capability in the solutions IBM delivers to clients. Under the auspices of the Wireless EBO, IBM has built an extended RFID ecosystem, drawing on strengths from across the company. Internal and External Capabilities

As seen in Figure 23, IBM currently has a core team of nearly 400 experienced professionals focused on global RFID business opportunities. These professionals reside within IBM's core lines of business, including: ` Business Consulting Services (BCS) ` Integrated Technology Services (ITS) ` Software Group (SWG) ` IBM Research ` Systems Group Strengthening the commitment to the pervasive computing concept, in September 2004, IBM announced it will invest an additional $250 million over the next five years and employ 1,000 people in a new business unit, Sensors and Actuators, to support

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products and services related to sensor networks. The new unit will also focus on helping businesses deploy and extract value from sensor-based networks.

FIGURE 23 IBM's RFID Organizational Structure

RFID Ecosystem Sales and Distribution — Industry and Solutions Global Services — Business Consulting Services and ITS Software Group — Websphere, Pervasive Computing, DB2 IBM Research IBM Pervasive/Wireless Emerging Business Team IBM Business Partners

IBM Worlwide and Geographies Sales and Distribution — Industries and Solutions Global Services

Personal Systems Group

Technology Group

Software Group

Systems Group (Servers, Storage)

IBM Research

Note: Currently, IBM has a core team of nearly 400 professionals focused on RFID worldwide. These professionals reside within IBM's core lines of business, including BCS, SWG, Systems Group, and IGS. Source: IBM and IDC, 2004

Below is an IBM estimate breakdown of those resources into the specific categories: ` Vertical industry specialists: 40 ` Solution architects: 250 ` Software integration specialists: 100 ` Worldwide leadership: 10

The global coverage breakout can also only be approximated at: ` Americas: 45% ` EMEA: 35% ` Asia/Pacific: 20%

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In addition, the focused RFID team is supported by over 2,000 Supply Chain Business Consulting Services professionals worldwide, with an average experience of 15 years, backed by close to 10,000 experienced Information Technology Services (ITS) resources and an extensive research and software development team. IBM's go-to-market approach for RFID includes a combination of industry-focused and cross–industry teams. For each of its major industry sectors (e.g., distribution sector [includes consumer packaged goods, retail, travel and transportation, pharmaceuticals], industrial sector [includes automotive, aerospace and defense, electronics, chemicals and petroleum], public sector, SMB, etc.), IBM has formed RFID Go-to-Market teams that are led by representatives from its Business Consulting Services and Sales and Distribution lines of business with support from IBM's Emerging Business Opportunities (EBO) teams. These teams are global and include designated leaders for each major geography (Americas, EMEA, and Asia/Pacific). Responsibilities include defining industryspecific sales strategies, building and managing sales and services delivery teams, and defining industry-specific solutions and solution accelerators. These industry teams manage the RFID pipeline and solution delivery and coordinate investments with the cross-industry RFID teams outlined below. RFID Sales Teams

Each of IBM's industry go-to-market teams have established formal RFID sales teams within each major geography. The RFID sales teams are led by a designated solution sales representative. The team is responsible for identifying and qualifying customer opportunities and then coordinating the IBM sales engagement effort across all relevant lines of business. Once an opportunity has been identified, the solution sales leader pulls in sales specialists, consultants, and technology services or software group representatives from each of the appropriate lines of business to address the customer's requirements. For example, if the customer is focused on RFID testing and network design, the solutions sales leader would pull in resources from IBM's Integrated Technology Services (ITS) organization. If the client is interested in an RFID pilot, a joint Business Consulting, ITS, and potentially SWG team is assembled. RFID sales teams are organized by industry and geography. RFID Solution Management

IBM has established a Global RFID Solution Management Council across all industries. This team takes the primary responsibility for providing input to the IBM RFID software solution strategy. In addition, this team's objectives include: ` Developing baseline RFID offerings and solution strategies ` Ensuring synergies and rationalizing offerings cross the IBM business units that are developing and deploying services and solutions ` Participating in industry and RFID technology focus groups to ensure IBM's offerings and solutions adhere to relevant standards

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The solution council is made up of dedicated RFID professionals from each of the relevant lines of business, and solution development investment runs into multimillions of dollars. RFID Solution Marketing

IBM has established a worldwide RFID Marketing Council with a dual objective of defining a unified market message that articulates IBM's professional-grade RFID solution capability and develops and executes a coordinated marketing plan. The council is made up of RFID-dedicated professionals from each of the relevant lines of business, and the total marketing investment runs into multimillions of dollars. RFID Technology Solution Team

Within IBM SWG, the Pervasive Computing group has a dedicated team focused on RFID and industrial automation. The team has been working on extending IBM middleware with RFID capabilities and works closely with our cross-IBM team on solutions, engagement execution, and marketing activities. This organization is responsible for ongoing development of the IBM RFID Software solution and integration with other IBM middleware products. IBM Research

IBM Research and Watson Labs have a significant history with RFID. During the 1980s and 1990s, IBM was deeply involved with RFID research and development and created several patents around tag and reader protocols and communication. Even though most of this work has been sold or licensed to other industry vendors, IBM still retains many RFID-knowledgeable scientists and researchers who can be deployed on client projects. This is particularly helpful when clients have specific physics or data collection challenges around RFID. This group of researchers is available to clients across industries and has been actively involved with many first-of-a-kind projects with RFID. These projects are aimed at jointly defining new software or other technology solutions with IBM's clients. Alliances and Partnerships

IBM's alliance focus for RFID is centered on a solution integration platform and delivery of new, technology-enabled business processes that help companies achieve lasting business value. Its partnership strategy is reflective of this focus. Overall, IBM is executing a broad partner strategy in support of RFID and has pre-established relationships with industry-leading vendors across the solution landscape. In the areas of RFID enablement, foundational architecture, and wireless supply chain, for example, notable partners include: ` Alien ` Intermec ` Symbol (Matrics)

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` Philips ` Arcom

In addition to Verisign, Magellan, SAMSys, Tagsys, Texas Instruments, ThingMagic, and Intel, IBM also works with WhereNet, Bluesoft, Savi, Aeroscout, and other active tag players. Moreover, leveraging IBM's well-established supply chain consulting practice, the vendor has extended many of its existing software vendor relationships to include RFID services for PeopleSoft, SAP, RedPrairie, Manugistics, i2, and JDA. IBM is also in the process of defining new working relationships with MeadWestvaco and OAT Systems. In addition, IBM has strong relationships with many data pool providers — Transora, WWRE, UCCNet, and UDEX — which may provide a good foundation for any future EPCNetwork activities it wishes to explore. In the industrial sectors, IBM has a strong working relationship with Rockwell. Strategic Market Focus

IBM has selected and mobilized a set of IBM's industry sector teams that have integrated RFID into key industry solution areas. The key sectors are: ` Distribution (retail, consumer packaged goods, and travel and transportation, pharmaceutical) ` Industrial (automotive, aerospace and defense, industrial products, chemicals and petroleum, forest and paper, electronics) ` Public (government, education, healthcare) and SMB

See Table 24 for a more detailed description of IBM's strategic focus industries. Supply and Demand Price Fluctuation Analysis and Future Opportunities

IBM has completed over 30 RFID projects since January 2004. These projects were primarily made up of business case and deployment strategy projects, pilot planning, technology infrastructure assessments, and pilot implementations. This does not include tag and reader testing, vendor benchmarking, and site survey services that IBM also provides. IBM expects to complete at least 40 additional engagements by end of this year. IBM's average engagement value ranges widely from under $20,000 to over several million dollars. Given the current immaturity and complexity of the market, an average engagement value has not been firmly established. The complexity of the engagements varies from business case assessments for small, single product category companies to global multi–supply chain and multi-product category companies. Pilot implementation spans from implementing a simple standalone solution in one distribution center to implementing heavily integrated solutions with new workflow functionality across multiple facilities, divisions, and platforms.

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TABLE 24 IBM's Strategic Market Focus and Vertical Industry Opportunity Rankings Market Focus Ranking

Commercial

Transportation and warehousing

3

X

Discrete manufacturing (e.g., consumer packaged goods, apparel, furniture, and pharma)

1

X

Process manufacturing (e.g., food, paper, petroleum/chemicals/stone/clay/glass, primary metals)

2

X

Public safety (includes government initiatives and pharma)

1

X

Retail trade (e.g., department and specialty stores)

1

Wholesale trade (including import and export business and global trade management)

3

X

Oil and gas exploration

4

X

Education (schools and colleges)

4

X

Construction

4

X

Industry Segment

Government

Both

X

Note: Market focus is ranked on a scale from 1 to 5, with 1 being the strongest focus and 5 being virtually no focus. Source: IBM, 2004

Business case and deployment strategies can range from a six-week project for a single-division, $500 million manufacturer to a 12-week project for a $25 billion global consumer products company. Most engagements have been company specific, but some have been joint efforts involving two or more trading partners . Deployment engagements typically start with one pilot limited to select distribution centers and retail partners and then expand to a more compete rollout. In the second half of 2004, as RFID technology and client strategies have developed, IBM has witnessed a shift in the scope and complexity of client engagements from business case and strategy work to pilots and planning for scaled deployments. The engagements are expected to be more complex, and as the market accelerates, IBM expects the average engagement size to grow. These larger engagements average $2 million in early phases, but scale to upward of $3 million in later phases depending on the complexity. Projects that require more integration and new wireless infrastructure technologies can drive these numbers significantly higher. As IBM assesses the RFID project pipeline, the vendor expects the total number of engagements in 2005 to exceed 120, which IDC estimates could provide $100 million in revenue.

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Strategy and Direction

IBM's RFID strategy is to help its clients drive innovation in their business through the application of this emerging technology. To accomplish this, IBM defines key market areas such as supply chain optimization, asset management, process manufacturing, and security, where RFID can be applied to gain business value. IBM engages industry experts to develop industry-specific use cases that drive tailored value propositions. IBM supports its solutions efforts by building delivery capabilities and skills, coordinated marketing activities, and sales execution activities. This strategy has four pillars: ` Develop end-to-end business solutions – process and technology ` Leverage and extend IBM software capabilities where appropriate ` Build a strong RFID ecosystem with tag, reader, and ISV partners, with a focus on open standards ` Align solution and sales efforts to industry-focused efforts

Overall, IBM has a solution integration strategy that is focused on implementing the right technologies to deliver measurable value for clients. IBM also recognizes that some customers initially will look to comply with specific customer or regulatory mandates, which IBM's strategy addresses. At the core of the vendor's RFID Solution Strategy is a comprehensive, flexible solution framework (see Figure 24) designed to deliver rapid ROI while providing a road map for the future. Drawing upon the experience of IBM and its industry-leading clients, the solution framework reflects the complete set of components required to support successful RFID initiatives and brings together a comprehensive combination of technologies and implementation services to support transformation, including: ` RFID enablement hardware, software, and testing service offerings designed to provide the base level RFID infrastructure required for transformation ` The integration middleware and services to link RFID data both across the enterprise and to trading partners ` The new business processes and applications that provide RFID context and reveal its true value ` The strategic consulting services to support business executives in making sense of the whole thing — from the business opportunity RFID represents to their specific enterprise, to the viability of the technology in their environment, to the road map for achieving success

The vast majority of IBM's RFID projects are services led — where IBM helps clients define the right RFID road map or business process and then assists them with selecting and implementing the right solutions.

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FIGURE 24 IBM's RFID Solution Strategy Framework Strategy Services and Business Process Expertise

RFID Enablement Services and Enablement Infrastructure

RFID Business Process Transformation

RFID Feasibility Study

RFID Strategy and Business Case Assessment RFID Road Map Development Overall Project Management RFID Pilot Deployment

ITS RFID Testing Services Business Process and Applications

Solution Technical Design

Pilot Implementation and Management

Communication and Connectivity

Application Adaptors Websphere Portal and Websphere Gateway Websphere Business Integration

RFID Capabilities Lab Review RFID Pilot Planning and Execution

RFID RFID Enablement Enablement

Integration Platform Business Scenario Accelerators

RFID Readiness Workshop

Business Strategy

Integration Platform

RFID Site Survey RFID Technical Solution Design RFID Enterprise Deployment RFID Total Management Services

On Demand Services

Source: IBM and IDC, 2004

RFID Enablement Services and Foundational Architecture

This phase refers to the hardware, software, and services required to establish the foundational infrastructure for capturing real-time RFID data. This layer of the solution includes the tags and readers along with the technology residing at the edge of the server to capture, assimilate, and transport data. RFID Enablement includes three main components mirroring the "monitor, decide, and take action" philosophy of AutoID: monitoring tag reading and data capture; acquiring and assimilating appropriate information about the products that have been scanned from product catalogs, data pools, and (as industry standards and capability evolve) PML servers (business rules engines and mobile agents are then utilized to distill the data into actionable information); and use of actuators (warning lights, security gates) to notify humans of high-priority events at the point the tag is read and/or the information is communicated through the business process integration layer to enterprise applications. IBM’s RFID Edge Controller, running embedded IBM software on solid-state devices, implements the local tag data capture as well as control of these notification devices, such as warning lights. The IBM Premises Server, built on WebSphere middleware filters and acts upon RFID data from the Edge Controller, while also providing security and management services. Premises Servers located at plants and distribution

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centers map RFID events into the transactional business events delivered to the enterprise applications. To support clients, IBM also delivers a full toolset of RFID enablement and networking offerings. In addition to leveraging RFID-specific partnerships to provide tags, readers, and servers, IBM's ITS organization has developed a series of services components proven to help its clients in developing and implementing an RFID infrastructure, including: ` RFID Feasibility and Readiness assessment to identify issues and exposures to implement RFID technology within the specific customer environment and determine where enhancements to current techniques and procedures need to be made ` Testing (either in IBM's unique RFID testing labs or in a customer site environment IBM helps establish) to measure the effectiveness of RFID technology in the specific customer environment, using actual products ` Analysis, design, pilot, and rollout of the actual infrastructure to support RFID ` Ongoing maintenance of the infrastructure Integration Platform

RFID's business value is compelling when it is placed within the context of enterprise business processes. The process integration layer of the IBM RFID solution framework links the real-time data produced by the foundational RFID enablement layer to the business processes the data supports. This is the very essence of IBM's solution set — enterprise and multienterprise integration. IBM's technical support of its client's RFID integration provides three key advantages: ` Acceleration of initiatives ` Improved management systems ` Reduced risk

Primary differentiation is through the creativity of IBM's WebSphere middleware. Solutions include WebSphere products and integration services. IBM's offerings include WebSphere Application Server, WebSphere Business Integration and DB2. In addition, IBM has identified and is developing a full set of solution accelerators — business process scenarios and application adaptors — and provides business integration services to perform the actual implementation. Not only will RFID enhance enterprise business processes, it promises to transform trading relationships with partners. The communication and connectivity layer (refer back to Figure 24) provides a mechanism for sharing RFID data across organizations and enabling interenterprise process integration. Greater value is achieved through the delivery of RFID function, improved accuracy and consistency of information, and improved visibility of that information by all trading partners through global data synchronization and product information management that is required to drive ROI

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across trading partners. Offerings include WebSphere Product Center, WebSphere Portal, WebSphere Gateway, Exchange Partner Enablement, Item Synchronization, and EDI/AS2/XML Data Transmission Enablement, along with the implementation services to make the actual connections. Strategy Services and Business Process Expertise

This component includes the enterprise business processes and associated applications that leverage the RFID data coming through the integration middleware to optimize supply chain planning and execution, asset management, and customer experience — it is here that the business value of RFID is revealed. Each business solution consists of consulting and integration skills, along with application software from strategic partners, joined with the integration tools providing the RFID data. Business solutions are grouped into six logical categories: ` Work in process manufacturing ` Supply chain planning and execution ` Asset management ` Security and Access Control ` Customer experience management ` Traceability

Strategy services include the strategic consulting services IBM provides to support executives in making sense of the business case — from the business opportunity RFID represents, to their specific enterprise and the viability of the technology in their environment, to the road map for achieving success. IBM works with clients to assess current capabilities, needs, and requirements, as well as projected applications of RFID. A business case assessment engagement assumes a conceptual view, or hypothesis, that will be proven (or disproved) as part of an overall pilot effort. It is based upon IBM's best assumptions and knowledge about how RFID will impact the client's processes and operations. The business case assessment helps to define areas that need to be piloted (relative to contentious areas and benefits), determine assumptions that will need to be tested in the pilot, and focus the RFID effort on the areas of greatest benefit. Through the assessment engagement, IBM works with the client to determine the long-term deployment strategy based upon increased critical mass and tag price management. IBM works with its clients to define a technically sound plan to operationalize their deployment strategy. That plan must ensure that the RFID solution will work as designed, that it will not interfere with existing technologies, and that it delivers the anticipated benefits as defined. The final choices of technology standards and middleware platforms will affect system performance, RFID solution management, and overall enterprise supply chain management. Pilots validate the business case and cost benefits statements to understand the impact RFID will have on business,

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partners, process, and resources and to test integration of systems internally and externally. There are certain challenges inherent to a pilot, including: ` Site readiness and new process adoption ` Technology reliability across product categories and business processes ` Extrapolation of test results from across the entire business ` Relative costs to execute the pilot ` Depth and breadth of system integration and legacy modifications

Post-pilot metrics include success quotient (as defined pre-pilot), speed of adoption, and implementation strategies. RFID Services Methodology

IBM recommends that clients take a structured approach to implementing RFID, with a primary focus on how RFID can enable and improve business processes. Its services framework is designed to help clients achieve an integrated execution initiative with the ability to have concurrent work streams to accelerate a client's RFID readiness. IBM's services framework is just a framework — it provides a general guideline that can be customized to fit client-specific requirements. IBM's RFID service methodology and engagement flow is outlined in Figure 25. Not every IBM client migrates through this methodology in a sequential path or initiates activity with IBM during an assessment phase. For example, IBM has multiple consumer packaged goods clients who worked with another firm for the business case phase, but came to IBM for design and pilot services. This also includes conducting tag and reader testing and site surveys that are often associated with assessment activity. Further details around IBM's specific offerings such as business case assessments, pilot testing, site surveys, pilot implementations, and implementation planning are outlined Figure 26.

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FIGURE 25 IBM's RFID Services Methodology and Engagement Flow Step 3 Develop Business Case Step 1

Pilot System Develop ment

Step 2

Solution Definition Workshop

Pilot Planning & Design

Step 5

Step 6

Test Pilot System

Execute Pilot

Rollout Planning

Step 4 Pilot Infrastructure Setup

RFID Feasibility Study

Alt A RFID Technology and Product Testing

Pre/post pilot activities Core pilot activities

Source: IBM, 2004

FIGURE 26 IBM's RFID Services Offerings

Assess Assess

• Business Case Assessment • RFID Test Center Quick Start Services • Solution Development Workshop • RFID Feasibility Study • RFID Execution Road Map

Plan and Design

Implement

• RFID Site Survey • RFID Capabilities Lab review • RFID Technical Solution Design • Including Software Domain Mapping and Trading Partners • RFID Partner Selection • Business Process Transformation

Pilot • RFID Pilot • Define/Validate Pilot Requirements • Build Pilot • Test Pilot • Pilot Oversight and Performance Results

• RFID Enterprise Deployment • Trading Partner Implementation • Initial Facility Implementation • RFID Systems Deployment • Application Design and Implementation • RFID Hardware Installation • Security Tools Deployment • Network Integration and Implementation • Process Transformation • Training • Application Integration and Implementation

Run

• RFID Total Management Services • Maintenance • Software Help Desk • Remote Systems Monitoring • Onsite Services

• Application Integration and Implementation • Testing • RFID Integration Testing

Source: IBM and IDC, 2004

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RFID Services Pricing Methodology

IBM's pricing policies for RFID are consistent with its pricing strategy for other services and solutions. To date, IBM has offered many fixed-price projects for business cases, tag and reader testing, solution definition workshops, site surveys, and single distribution center pilot implementation, given high-scope clarity. For more complicated or heavily integrated pilot implementations, IBM would typically recommend a design phase to lock down scope and cost variables and then could proceed with either a time-and-materials or fixed-price relationship. Given client uncertainty around RFID, IBM is seeing a higher desire for fixed-price deals. See Table 25 for additional details regarding IBM's RFID services model and pricing methodology.

TABLE 25 IBM's RFID Services Model and Pricing Methodology Service Type

Description of Services Offered

Pricing Methodology

Consulting services

Business case assessments

Mostly fixed price based on scope

RFID test center quick-start services Solution development workshop RFID feasibility study RFID execution road map RFID site survey RFID capabilities lab review RFID technical solution design (including software domain mapping and trading partners) RFID partner selection Business process transformation Assessment services

Business case assessment

Mostly fixed price based on scope

RFID test center quick-start services Solution development workshop RFID feasibility study RFID execution road map

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TABLE 25 IBM's RFID Services Model and Pricing Methodology Service Type

Description of Services Offered

Pricing Methodology

Trial/pilot services

Pilot design

Fixed price for simple pilots; time and materials or combination fixed/time and materials for more integrated pilots

RFID site survey RFID capabilities lab review RFID technical solution design (including software domain mapping and trading partners) RFID partner selection Business process transformation Pilot planning and testing Define/validate pilot requirements Build pilot Test pilot Pilot oversight and performance results RFID pilot RFID enterprise deployment Application integration and implementation Application integration and implementation Implementation services

RFID enterprise deployment

Fixed price when scope is well defined only. Many aspects of RFID systems deployment are addressed with packaged pilot offerings.

Trading partner implementation Initial facility implementation RFID systems deployment Application design and implementation RFID hardware installation Security tools deployment

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TABLE 25 IBM's RFID Services Model and Pricing Methodology Service Type

Description of Services Offered

Pricing Methodology

Network integration and implementation Process transformation Training Application integration and implementation Application integration planning Testing RFID integration testing Managed services

Maintenance

Custom agreement

Software help desk Remote systems monitoring Onsite services Source: IBM, 2004

FUTURE OUTLOOK Perhaps no other auto-identification and enterprise mobility concept has garnered as much attention in 2004 as the topic of RFID. Although its vast potential for reshaping retail supply chain processes and dramatically improving the way in which assets can be monitored and managed continues to be the subject of much debate, RFID today remains largely a potential disruptive technology in waiting. While RFID will be widely deployed in 2005, the intrinsic benefits of the technology will still be focused primarily on meeting specific mandates within certain supply chain applications. IDC believes services firms wishing to lead in this emerging era will help clients achieve competitive advantage through more discriminating usage of RFID technologies that drive process changes within their organizations. Thus the marketplace for RFID services continues to emerge, with entrants entering virtually on a daily basis. Based on this research process, Figure 36 offers IDC's view of the RFID services marketplace leaders on two criteria: ` Alignment with market opportunity. Seeks an answer to the key question: How well aligned to the potential market opportunity is a particular vendor's strategy and vision?

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` Ability to gain share. Seeks to answer the key question: Does this vendor possess the financial strength, marketing prowess, and services execution capability – either directly or indirectly – to gain share in the marketplace?

FIGURE 36 IDC Leadership Grid: Worldwide RFID Services Market

High

Niche

Leadership

Accenture IBM

Low

Ability to Gain Share

HP

BearingPoint

SAIC

Capgemini Intel

CSC Oracle

Crisis Potential

Low

Deloitte

Legacy

Opportunity Alignment

High

Note: The leadership grid ranks the top 10 vendors. Source: IDC, 2004

While each of the RFID services vendors profiled in this report – particularly the top 10 - have special qualities and unique capabilities that help firmly establish a favorable position in this space, IDC sees Accenture and IBM as currently leading the marketplace, based largely on its existing capabilities and the continuous investments each vendor makes in generating awareness and winning new projects. These two firms have identified the strategic importance of developing individual solutions based on the process framework of creating a broader services market opportunity, not just

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following one that was developed elsewhere. It is this forward-looking approach that has helped establish both vendors as leaders in this nascent market. Both Accenture and IBM recognize the strategic benefits of creating a new market opportunity are to capture additional value that is often available through higher potential profits (first mover advantages) and the longer-term brand awareness that is frequently cultivated from such a maneuver. Other vendors profiled, BearingPoint, Deloitte, Hewlett-Packard, and Capgemini are also solid performers with significant upside potential. These firms have indicated explicitly that RFID is a critical focus for the foreseeable future and have invested accordingly.

RFID Migration Path In the future, IDC believes RFID deployments will migrate beyond compliance and begin to generate greater business value. Industries outside of the retail supply chain (e.g., public safety, healthcare) will adopt the technology at increased levels. As this process unfolds, leading services organizations will continue to support the needs of these end users through consulting, implementation, and managed services. From the perspective of facilitating pervasive deployment of RFID, IDC sees a wide range of services and integration firms playing a crucial role in this process. These firms are targeting an opportunity that will exceed $2 billion by the end of 2008. Mostly pilots in 2004, full rollouts of RFID should ramp up in 2005. The projected number of pilots that convert to full-scale implementations will approach 83% in 2005. Table 44 offers IDC's worldwide RFID consulting, implementation, and managed services expenditures between 2003 and 2008, which shows a five-year compound annual growth rate (CAGR) of nearly 75%.

TABLE 44 Worldwide RFID Consulting, Implementation, and Managed Services Expenditures, 2003–2008 ($M)

2003

2004

2005

2006

2007

2008

2003–2004 Growth (%)

2003–2008 CAGR (%)

Consulting services

88

159

288

502

757

1,129

80.7

66.6

Implementation services

33

64

127

234

430

779

93.9

88.2

9

16

28

51

95

179

77.8

81.9

130

239

443

787

1,282

2,087

83.8

74.2

Managed services Total

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TABLE 44 Worldwide RFID Consulting, Implementation, and Managed Services Expenditures, 2003–2008 ($M)

2003

2004

2005

2006

2007

2008

2003–2004 Growth (%)

2003–2008 CAGR (%)

Notes: RFID services is an emerging subset of IDC's wireless infrastructure and application services market. Spending estimates include all vertical industries, including supply chain participants (e.g., manufacturing, retail). RFID consulting (e.g., assessment) services in 2004 will lead to substantial full-scale implementation projects in 2005, 2006, and 2007. Market demand post-implementation managed RFID services offerings will increase in 2008 and beyond. Source: IDC, 2004

ESSENTIAL GUIDANCE Some vendors, in IDC's view, see RFID services opportunistically — a transient service to be offered as a singular solution to the Wal-Mart mandate. However, in IDC's view, RFID mandates may actually be inhibiting the growth of the technology because supply chain participants seemingly are focusing on the strict requirements of meeting compliance, and their services partners are meeting these needs. But amid the hype, there are technology and business process issues that many businesses presently excited about the potential of RFID may not yet have fully considered. For example, the topic of storage and data management will become both a technology and business process concern as more information flows from supply chain and retail transactions. RFID-based transactions will generate an immense amount of data that enterprises must handle and interpret. One response to this issue is intelligent application of business intelligence software and analysis. Storage, management, and subsequent use - of the data through ERP and CRM applications will become critical elements of a successful RFID implementation. In this report, IDC had provided a foundation for its theory that within the RFID ecosystem, the services value chain matters and services organizations are the coordinating mechanism that makes the solution operational. Services organizations that understand the many technology and business process issues associated with sensing technology and can articulate a value proposition that encompasses creating and sustaining value will, in IDC's view, continue to excel in this marketplace. This involves the careful balancing of long-term and short-term goals–the substrategies that comprise a company’s overall strategy (operational effectiveness, customer management, and services innovation). By complementing the short-term requirements with the long-term needs, companies create a well-balanced agenda of action and value that supports the goals and objectives of the firm and the firm's clients.

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LEARN MORE Related Research ` Enterprise Mobility Trends: Leading Services Vendors Seek Positional Advantage in the Embryonic RFID and Auto-Sensing Solution Marketplace (IDC #32033, October 2004) ` Mobilizing the Pharmaceutical Industry: Combating the Counterfeit Drug Problem with RFID-Based Solutions and FDA Regulatory Mandates (IDC #31662, August 2004) ` How IBM Enables an On Demand Retail Environment Through Wireless, Sense and Respond Technology, and a Robust Service and Support Architecture (IDC #31519, July 2004) ` Accenture Helps VF Corporation in RFID Tagging for Wal-Mart Compliance (IDC #31466, July 2004) ` Services Strategies for Global RFID Deployment: HP Announces RFID Solutions Architecture (IDC #31325, May 2004) ` Mobilizing the Supply Chain: Developing RFID and EPC Professional and Managed Services for the Consumer Packaged Goods and Retail Sectors (IDC #30472, December 2003)

Synopsis This IDC study identifies and profiles leading IT services vendors; the services divisions of hardware vendors; and consulting, implementation, and managed services organizations that are helping define and shape the adoption of RFID technology within the enterprise environment. It further segments and highlights the emerging competitive landscape for RFID autoidentification solutions across a number of vertical industries. "The pursuit of true enterprise mobility continues to be driven by early technology adopters seeking competitive advantage in a particular vertical industry. In the case of supply chain participants, the deployment of RFID and related wireless sensing solutions is helping to create that long-term competitive advantage. In support of this objective, leading services organizations are helping design, build, and manage the RFID infrastructure that can deliver long-term value." — Richard Dean, program director, Infrastructure Integration and Support Services

Copyright Notice This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit www.idc.com to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit www.idc.com/offices. Please contact the IDC Hotline at 800.343.4952, ext. 7988 (or +1.508.988.7988) or

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