As Hype Becomes Reality, a Radio Frequency Identification Ecosystem Emerges Part Two: The Middleware Dilemma, Partnerships, and What Next?

The Middleware Dilemma

As the radio frequency identification (RFID) ecosystem evolves, it is becoming clear that not all of the position players are going to survive a shake-out as technologies overlap. One category in the ecosystem, namely middleware, is especially vulnerable. Forrester Research defines middleware as the "platforms for managing RFID data and routing it between tag readers or other auto identification devices and enterprise systems" and places emphasis on its functionality, which includes the following.

• Reader and device management
• Data management
• Integration with applications
• Process management
• Packaged content and delivery

RFID middleware is currently at the eye of the storm, and expectations are high as RFID middleware is expected to work at the edge of an enterprise's interdependent supply network. In fact, middleware is becoming more critical as the diversity of sensor devices that populate an enterprise's sensory network expands. However, the converging dynamics of data collection are putting pressure on middleware, and this is taking its toll. As a result, SAP, IBM, and other vendors are adding features that overlap with typical middleware functionality. Middleware functionality is also being incorporated into some reader devices. However, middleware players are also expanding their product footprints—into business intelligence (BI) and data analytics.

Companies are coming into the RFID ecosystem, from all directions and from varied backgrounds. New entrants like Hewlett Packard, Texas Instruments, Philips, AT&T, NCR, and Cisco Systems are focusing on the RFID market, and it is currently not clear what role these large technology companies will play, whether it will involve platform integration, middleware, or even business applications that leverage RFID technology. One thing is for certain, however, these new entrants have the resources and monetary clout to make a large investment in RFID technology. Like the RFID market in general, middleware is still in a state of immaturity, and the pure-play RFID middleware solution providers will be left with the dilemma of either being swept away by the tidal wave of new mega-vendor entrants, or of diversifying into applications and analytics, where they must compete with vendors that are already well-established in these fields.

The most likely scenario for the pure-play middleware vendors is that they either diversify or get absorbed, short of a full scale change in their business model. Their situation is analogous to the first supply chain event management (SCEM) vendors. These vendors arose in order to fill and take advantage of the gaps left by large enterprise resource planning (ERP) and supply chain planning (SCP) vendors in the cycle of supply chain visibility and event management, only to get consumed or driven out by the same larger vendors that finally came through with their own SCEM solutions. While RFID middleware vendors are vulnerable to the same fate, it is not likely to happen as quickly, because over time RFID middleware requirements will morph and standards will wreak havoc on existing RFID infrastructure. For example, EPCglobal Network has recently finalized its middleware EPC Application Events (ALE) standard, which is meant to filter, smooth, aggregate, and manage RFID data and to coordinate the volume and scale of data.

Forces Are Putting Pressure on Middleware

Speaking of standards, enter Gen2. EPCglobal ratified the specification for the Ultra High Frequency (UHF) Generation 2 air interface protocol (Gen 2) in December, 2004. Following the EPCGlobal conference in September 2005, which heavily espoused the merits of Gen2, the release of the next generation of RFID tag technology will reward those who waited, and cause some anxiety for those who were driven to meet retailers' mandates by quickly using Gen1. Gen2 adoption will likely not occur in scale until 2006, as potential migration costs must be examined and the true maturity level of the technology established.

Middleware vendors are at the forefront of addressing the dynamics of changing standards and protocols. This might be the most challenging and least appreciated component of the RFID infrastructure, because it is the least visible to the business community. But one thing you can count on is that if anything goes wrong with middleware functionality following an implementation, its importance will rise to the top extremely quickly. The handoff of control from the data collection domain to the applications and infrastructure domain is crucial to an RFID architecture success. Any mishap could wreak havoc on an RFID implementation.

Device control is another requirement and capability of RFID middleware that is likely to see considerable new challenges as the creative minds from the hardware vendor category come up with new and exciting, miniaturized, and volume-enriched devices at lower costs. Data collection has come a long way since simple label printed bar codes. We are just now realizing the full measure of modern device technology and techniques, which will continue to evolve.

Partnership Is a Required "Means to an End"

It has become apparent that regardless of the category of RFID solution provider, they are going to partner with other vendors and service providers in order to hasten their time to market with an RFID solution. As with most partnerships, there is a degree of uncertainty regarding the nature of the bond between the two companies and the strength of the combined product. Nonetheless, the relationship between software solution providers and hardware manufacturing vendors is likely to stabilize and strengthen over time, despite the fact that most of these relationships are not binding and options for multiple partnerships abound. Partnerships between applications solution providers and middleware or integration partners, on the other hand, are more binding in that the investment in and dependence on the developed software is more marked. Table 1, below, lists some partnerships RFID vendors are involved in.

Table 1 RFID Vendor Partnerships

What Next?

The current interest in RFID technology is not going to subside any time soon, because the real world applications we have already seen are merely the tip of the iceberg. Part Three of this article will examine the vast array of possibilities for the application of RFID Technology. It is a fun but futuristic look at where we might find RFID Technology in our everyday lives, not even realizing it until it is pointed out as the under-pinning technology. A study conducted in 20002001 by the Massachusetts Institute of Technology (MIT) Forum for Supply Chain Innovation predicted that the RFID "hype" would peak in the first half of this decade, and that a vast number of companies and "short-sighters" would enter the RFID market during this period. Thus far, their predictions have been quite accurate. The MIT study also alluded to the likelihood that the second half of this decade would see a significant increase in end-user RFID applications in different industry sectors. Many new and exciting ways to leverage RFID technology are on the horizon.

This is Part Two of a three-part article. Part Three will focus on the opportunities that abound for RFID and the impact that such opportunities may have on various industries, including asset management, supply chain management (SCM), and retail item tracking.