RESTON, Va., 25 February 2005. Federal Government spending on radio frequency identification (RFID) technology is expected to grow 120 percent by fiscal year 2009 (FY09), according to a report released by INPUT market analysts.
The Department of Defense (DoD) is using RFID technology to improve its supply chain management process with results and costs savings being proven in the current war in Iraq. Although growth within civilian agencies will start out slow, INPUT expects substantial growth to begin in FY07 as business cases emerge demonstrating similar cost benefits in areas outside of 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 analyst, federal market analysis 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."
As a result of realized cost savings from using RFID technology, DoD 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 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 programs, such as the Department of Homeland Security's Free and Secure Trade (FAST) program, will encourage greater acceptance within civilian agencies in the future," added Campbell.
To date, the majority of RFID contracts have been awarded to smaller firms specializing 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 program level versus agency-wide," stated 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."
INPUT's "Radio Frequency Identification" TargetView report is available to clients of INPUT's Federal Market Analysis subscription program. For more information, see http://federal.input.com.
INPUT provides government market intelligence. Established in 1974 and based in Reston, Va., the company provides information services, industry analysis, consulting, software solutions, and events to help technology vendors win more government business, and to help government organizations further advance their IT initiatives. INPUT tracks more than a half trillion dollars in contract and grant opportunities within the US federal, state & local government markets, as well as tender opportunities throughout the European Union and United Kingdom. For more information, see www.input.com.