Q&A: For Industry Partners Building RFID Solutions on the Microsoft Platform, Opportunities Abound

REDMOND, Wash., Feb. 17, 2005 — Nearly a year after it was formed in April 2004, the Microsoft Radio Frequency Identification (RFID) Council is meeting again this week in Seattle. Representatives from approximately 60 major RFID hardware, solution and services companies are meeting to further explore ways to collectively address industry concerns and deliver RFID solutions to the market via the Microsoft platform.

RFID, usually associated with the retailing and manufacturing industries, combines the benefits of the silicon chip and radio frequencies to provide increased levels of product and asset visibility across the supply chain. Customer benefits include reducing human error in data collection, reducing inventories and improving product availability. The Microsoft RFID Council is charged with developing innovating RFID solutions on the Microsoft platform, thus enabling industry partners to use the Microsoft platform and Web services to develop compelling business solutions for customers.

To learn more about Microsoft’s RFID strategy, the benefits of building RFID-enabled solutions on the Microsoft platform, and the Microsoft RFID Council, PressPass spoke with two Microsoft managers and officials of two industry partners on the Microsoft RFID Council:

  • Balasubramanian Sriram , product unit manager for RFID at Microsoft

  • Javed Sikander , group program manager for RFID strategy at Microsoft

  • John Koenigs , president and CEO of Richardson, Texas-based GlobeRanger Corp., a leading provider of RFID, mobility and sensor-based design, deployment and management software and solutions

  • Dave Douglas , executive vice president of products and strategy at Cambridge, Mass.-based ConnecTerra, Inc., which provides enterprise infrastructure software for device computing

PressPass: What is the significance of RFID technology?

Sikander: RFID technology allows you to get real-time information about products and assets in your entire supply chain. Retailers or manufacturers that have complex processes around product shipments, product receivings and product storage in warehouses can use RFID technology to locate, identity and track these products automatically, without requiring manual intervention, so it can potentially create significant value in the supply chain.

PressPass: What is Microsoft doing on RFID from a product perspective?

Balasubramanian Sriram, Product Unit Manager, Microsoft

Sriram: Microsoft sees RFID system implementations playing out on three levels: hardware (tags and readers), platform software (device abstraction, data aggregation, and data smoothing), and solution customization based on vertical market applications. Microsoft is working to deliver functionality within the platform to better enable partners and customers to develop and deploy solutions. Microsoft is also offering solutions by enabling RFID in Microsoft Business Solutions–Axapta 4.0, an enterprise resource planning (ERP) solution with core strengths in manufacturing and e-business and strong functionality for the wholesale and services industries.

PressPass: What is the Microsoft RFID Council and what progress has it made?

Koenigs: GlobeRanger has been enthusiastic about the Microsoft RFID Council from its inception. The Microsoft platform has provided us with continual advantages, which we have passed on to our solution partners, enabling them to provide many of the most successful RFID solutions in the industry today.

Sikander: The RFID Council was formed with a goal of creating an equal system of industry partners that can work together with Microsoft to address the key challenges customers are facing with respect to the adoption of RFID technology. The Council started with a handful of industry partners in three distinct spaces:

  • The RFID devices space — companies that make the RFID hardware, such as RFID readers, printers, antennas

  • The solution providers space — companies that build business applications for end-customers that leverage the data coming from RFID devices

  • The services industries space — companies that implement the solutions for customers

Another goal of the Council was to provide some early feedback on the Microsoft RFID product strategy and work with us to align this strategy so that it would benefit all of the partners and the customers. Since the Council’s first meeting in April 2004, we have been working very closely with these industry partners to create a very strong RFID strategy that will allow our partners to take advantage of the Microsoft Windows platform and Web services to develop the business solutions for our joint customers.

Dave Douglas, Executive VP, Products and Strategy, ConnecTerra, Inc

Douglas: ConnecTerra joined the Microsoft RFID Council in order to make sure that we are aligned with Microsoft’s technology direction in the RFID market. Microsoft is a leader in the industry, and it’s important to many of our customers and partners that we be in sync with Microsoft’s direction in this space.

PressPass: Please describe some scenarios for an RFID solution built on the Microsoft platform.

Sikander: A common scenario these days involves major end retailers delivering industry mandates that require suppliers to put RFID tags on boxes and pallets being shipped to distribution centers. The suppliers put a unique identifier number on these RFID tags called an EPC (electronic product code) before shipment. When products reach the end retailer, these tags are read, thus automatically identifying the products. Using these tags, the end retailer can get very high visibility of their store-level inventory — information that some retailers now share with their suppliers, allowing them to know in near real-time whether the product was put on the store floor or somewhere else. This level of granular visibility allows the suppliers to respond to the demand variation to ensure delivery of key products to stores without large amounts of existing inventories.

For instance, retailers plan to use the RFID technology to enable item-level visibility of certain products in stores. The FDA recommends RFID as a technology to reduce counterfeit drugs. Some pharmaceutical manufacturers are already using the technology to reduce counterfeiting, shrinkage (theft) and diversion — the illegal possession, delivery or use of a drug or a prescription.

Item-Level Inventory

Another scenario involves retailers that want their inventory at an item level. Let’s take the example of a clothing retailer that has a lot of RFID-tagged items in store and, at any given time, wants active visibility into what is available in the store, what has been sold and what is available in its distribution channels. The RFID tags readily provide that information, enabling the retailer to respond to changing demands. For example, if the retailer has put a particular item on sale, the retailer wants to be able to track the movement of that item. If the items are selling and if the shelf is empty, the retailer needs to know immediately so that it can replenish the shelf from back up. Microsoft’s product can enable scenarios like this, where a retailer needs a system for taking perpetual inventory.

Managing Moveable Assets

A third scenario involves asset management — specifically, moveable assets. Most organizations have these in some form. For example, hospitals have wheelchairs. In a large environment, a lack of visibility into where these assets are at any given time often results in the acquisition of more and more assets. So in the case of a large hospital, to make sure you can find a wheelchair at any given time, you just keep buying more and more wheelchairs. One way to resolve this is to use RFID tags on the wheelchairs that will identify at any given time where a particular wheelchair is. You could build a system that would point you to the nearest available wheelchairs. That kind of visibility could enable a lot of things used in the hospital to be reused. And by better asset management, you can achieve better asset utilization, and better asset utilization means savings in terms of asset efficiencies, investment capital and capital assets.

So these are the types of key scenarios that Microsoft can help its partners and customers address by building functionality into its platform. We provide the horizontal base, the horizontal functionality, that our partners can use to develop applications addressing these types of scenarios. The RFID capability that Microsoft is building into the platform provides the functionality to collect data from RFID devices seamlessly. The platform will provide a rich run-time engine that can be used to create business rules. At the execution of those business rules, a company could generate actions allowing for decisions to be made in the RFID-enabled business applications used in existing enterprise resource planning (ERP) systems.

PressPass: What RFID solutions do partners currently deliver on the Microsoft platform? How have customers responded to these solutions?

Douglas: ConnecTerra is releasing a new version of our core RFID product, RFTagAware v1.2, which takes advantage of the Microsoft platform as well as Microsoft SQL Server and other Microsoft platform technologies to provide easy integration with existing applications and customer or partner extensibility using Microsoft .NET tools. We have gotten a very positive response from our partners and customers who rely on .NET to create business-critical systems. We are currently pursuing a number of customer opportunities whose time-to-solution and cost requirements could not be met without our ability to deliver on .NET.

John Koenigs, President and CEO, GlobeRanger Corp

Koenigs: GlobeRanger provides a suite of products as part of its iMotion Platform, which is made up of several technology components developed and optimized from the ground up on top of the Microsoft platform, leveraging the .NET Framework to produce highly scalable, real-world solutions. The components include the iMotion RFID Reader Emulator, an intuitive, flexible and powerful visual RFID reader emulator; the iMotion Edge Device Manager, a combination of a run-time engine and user interface for the configuration, management and monitoring of RFID readers which also provides initial data collection, aggregation and reporting functions; and the iMotion Edge Process Manager, which is used in the execution of business rules and logic — for instance, to transform raw RFID data into actionable business events for integration into systems such as Microsoft BizTalk Server.

The GlobeRanger partner base has been extremely successful with the iMotion solution and the underlying Microsoft platform. We have successfully trained more than 120 developers and have more than 40 production installations across six different industries.

PressPass: What major market challenges are the members of the RFID Council addressing?

Sikander: Today, if a customer wants to deploy RFID for a scenario across an enterprise, it can turn to numerous Microsoft partners — such as GlobeRanger and ConnecTerra — to build RFID solutions in a scalable, extensible way. As initial mandate-based demands being to ease, companies implementing RFID solutions need to be able to decrease the cost and increase the efficiency associated with existing RFID investments. Microsoft is working to build functionality into its platform that will allow customers and partners to do this in a strategic fashion. This is the biggest issue the council is addressing — helping Microsoft to create this very solid RFID offering in its platform that’s based on the same design principles that Microsoft uses to build products like Microsoft SQL Server and BizTalk Server. The council members are advising Microsoft on implementing the best approach that will allow our customers to reduce the price and increase the efficiency of developing and rolling out systems across an enterprise.

Douglas: By nature, RFID solutions are highly distributed and can scale to very large deployments. In addition, out-of-the-box solutions need to be customized to fit the specific needs of various customers. The Microsoft platform has core services on which we at ConnecTerra can rapidly build distributed solutions that can scale to meet the upcoming demands of our customers. In addition, the rich development environment of the Microsoft platform allows our solutions to be easily customized using the tools that our customers are already familiar with.

Sikander: The second challenge that a lot of our customers are facing is around the differences in the various RFID-enabled hardware devices out there today. No two RFID readers are the same. They don’t communicate back with the software layers in the same fashion, they have different interfaces, they have different protocols and command sets. So for a customer who wants to deploy an RFID system across an enterprise and maybe also work with partners and deploy these partners’ products, it’s a challenging task to build one-off interfaces for all the different systems. That’s why we are approaching RFID hardware partners and asking them to work with Microsoft to develop what we call device providers that will allow their devices to seamlessly work in a Windows environment. That will eventually enable customers to use pretty much any device they want without having to write a custom piece of code or develop a custom adapter.

PressPass: What are the benefits to RFID partners in using the Microsoft platform?

Koenigs: Internally, we have been able to follow an accelerated development schedule, which has allowed us to continually provide more functionality in a more accessible package than our competition. Both GlobeRanger and our partners benefit from using the power of the Microsoft platform and its many associated tools and products that compliment leading-edge RFID solutions.

Douglas: In order to get the expected return on investment (ROI) out of RFID, companies need to carefully manage the development and deployment costs so that they don’t wipe out the anticipated value of deploying RFID. The Microsoft platform has a proven track record of enabling scalable solutions with reasonable development, deployment and ongoing operational costs. By using the Microsoft platform in ConnecTerra solutions, our customers are confident that our solutions can scale to meet their needs, will be easy to customize and cost-effective to deploy and operate.

Sikander: The benefits vary according to type of partner. Let’s take the solution providers first. These are companies who know the businesses of large customers, like retailers, pharmaceutical companies, manufacturers, hospitals. They understand what solutions are needed to address the business problems of these large customers. They are the domain experts, and that is their core strength. Now, these partners would rather focus on their core strengths and on providing these compelling solutions for their customers than on spending a lot of energy on building horizontal functionality to deal with RFID data. Microsoft is providing that horizontal data functionality, and all our industry partners can now exploit that to build compelling RFID-enabled business applications.

Regarding the hardware-industry partners, they want their devices to be used in more and more scenarios. They want it to be very easy to hook up their devices in a network, and they want software built for RFID to automatically recognize their devices and be able to pull data from those devices. For the hardware companies that are providing RFID devices, the ability to have their devices seamlessly work in a Windows environment holds a lot of value.

As for the service companies, they are looking for very strong, very robust, scalable, extensible RFID products that they can implement for large customers. The Microsoft platform provides that, using Web services for sharing EPC data between partners. It’s a very compelling go-to-market platform for our services industry partners.

PressPass: What areas of RFID is Microsoft currently focusing on?

Sriram: Microsoft is initially focusing on building a platform for RFID applications which provides functionality primarily around reducing task redundancy (device abstraction), data modification (smoothing) and data transformation. Microsoft anticipates providing a set of tools to help customers and partners simplify the development, implementation and scalability of RFID solutions. Microsoft will also work with its partners to provide compelling, integrated solutions for specific vertical markets.

Sikander: If you look at the RFID ecosystem, there are the tag manufacturers that produce the RFID tags, there are device manufacturers that produce antennas and readers and printers that write data to these tags, and there are the business solution providers. There is also something that the industry calls “RFID middleware.” This is the software that sits between the device and the business solution, and this is what Microsoft is building — an equivalent of this middleware functionality. We will not call it RFID middleware — that’s not the appropriate term for it — but I’m using the term because that’s what the market understands today.

In addition to this, we know there are a lot of companies out there that need out-of-the-box solutions. To serve these companies, we have a division called Microsoft Business Solutions (MBS) that is helping small and midsized businesses, large corporations, and divisions of global enterprises deploy RFID technology in their supply chain. With plans to include RFID technology as a part of its business management applications, MBS will offer a range of capabilities, from RFID reader management to functionality required to translate reader events into information translatable into business processes. Future releases include Microsoft Business Solutions–Axapta 4.0, Microsoft Business Solutions–Navision 5.0 and the next major release of Microsoft Business Solutions–Great Plains. From the platform perspective, Microsoft aims to provide companies with a flexible and extensible framework on which partners can implement customer-specific processes.

PressPass: Please describe the customer-privacy concerns around RFID technology and explain how Microsoft is addressing these concerns.

Sikander: There is some concern that retailers will use RFID tags to track the buying habits of people. The tags may make it easy to steal private data. For example, if I buy a shirt at a major retailer and it has an RFID tag on it, somebody could walk up to me with an RFID device and collect details about how much I paid for that shirt, where I bought it and other private information. Or somebody could drive by a house and, using a powerful RFID reader, take an inventory of RFID-tagged stereo equipment, televisions, VCRs, DVD players, jewelry, etc. If the RFID tags are not removed or killed, they remain on the products and create these challenges. One answer to that is to kill the tag at the point-of-service, but then you take away some key benefits around profits and returns.

Microsoft understands and realizes there are some privacy concerns here that need to be addressed. We have developed and deployed a set of standards, based on the Fair Information Principles, which govern how all technology manages our principles of information collection and use. These standards provide a guide to all developers to ensure that all technology we provide to our customers meets the principles of putting people in control of their information. Our work through the RFID Council and ongoing engagement with RFID standards body EPCGlobal is another important way we are working collectively to ensure we are developing and supporting solutions that keep customers’ privacy needs at the forefront.

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