RFID set for growth explosion

US government spending on radio frequency identification (RFID) technology is expected to rocket 120 per cent by 2009, public sector analyst firm Input has predicted.

Although the study expects that growth within civilian agencies will start slowly, it forecasts substantial growth in 2007 as business cases emerge demonstrating similar cost benefits in areas outside the supply chain process.

"Perhaps the biggest challenge facing agencies adopting RFID is how to construct a system architecture that will handle substantially increased amounts of data," said Chris Campbell, senior federal market analyst at Input.

"RFID technology has also brought the issues of privacy and security to the forefront as government agencies struggle with secure ways to store personal data, especially in light of the growing concern over identity theft."

Input's latest report notes that the US Department of Defense is successfully using RFID technology to improve its supply chain management process with results and costs savings being proven in the current war in Iraq.

The study points out that the Department of Defense is examining other ways to further refine the supply chain process, such as tracking the useful life of specific parts and tracking weapons and even soldiers in the field.

On the civilian side, most government agencies have decided to hold off on implementing RFID technology until they can better understand the expected cost benefits.

"Process improvements, and more importantly cost savings, obtained through the employment of RFID in a limited number of existing programmes, such as the Department of Homeland Security's Free and Secure Trade, will encourage greater acceptance within civilian agencies in the future," said Campbell.

To date, according to Input, the majority of RFID contracts have been awarded to smaller firms specialising in RFID and supply chain management.

"We expect this trend to continue in the near-term because adoption of RFID will continue to be at the programme level versus agency-wide," said Campbell.

"In the long-term, as RFID becomes more widely accepted, contract awards will begin to shift toward the larger IT firms that offer a full suite of professional services and will be able to walk federal agencies through the design, integration, and training needed to fully integrate RFID systems into the business processes of an agency."