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Management article
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Reference no. ICR071E
Published by: International Commerce Institute
Published in: "International Commerce Review", 2007

Abstract

Many early estimates of the benefits of RFID have proved to be wildly optimistic in terms of timing and/or scale. Companies thinking of investing in RFID face a dilemma: many of the biggest likely benefits of RFID implementation are, in principle, impossible to quantify. How, then, to build a robust business case for investment? One way forward is to plan and judge investment opportunities in the light of a deeper understanding of how technologies evolve. Typically, new technologies go through three stages of implementation. The first is substitution, where the technology is used to replace existing, established processes - where costs and benefits are easy to identify and quantify. The second stage is scale, where the new technology becomes just a routine part of daily business. Typically, the benefits here are much greater, but so are the uncertainties. How soon will it happen? What obstacles and pitfalls could sabotage our plans? In the third stage of structural change, the implications reach much further, often into areas that are impossible to predict. Investment projects, and new research, that focuses on the transition from substitution to scale will make the biggest contribution to turning RFID''s potential benefits into reality.

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Abstract

Many early estimates of the benefits of RFID have proved to be wildly optimistic in terms of timing and/or scale. Companies thinking of investing in RFID face a dilemma: many of the biggest likely benefits of RFID implementation are, in principle, impossible to quantify. How, then, to build a robust business case for investment? One way forward is to plan and judge investment opportunities in the light of a deeper understanding of how technologies evolve. Typically, new technologies go through three stages of implementation. The first is substitution, where the technology is used to replace existing, established processes - where costs and benefits are easy to identify and quantify. The second stage is scale, where the new technology becomes just a routine part of daily business. Typically, the benefits here are much greater, but so are the uncertainties. How soon will it happen? What obstacles and pitfalls could sabotage our plans? In the third stage of structural change, the implications reach much further, often into areas that are impossible to predict. Investment projects, and new research, that focuses on the transition from substitution to scale will make the biggest contribution to turning RFID''s potential benefits into reality.

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