By  on January 12, 2005

Managing the hype surrounding the next big thing in technology is no small feat.

“This is probably a bigger issue now than it’s ever been,” said Phillip Maxwell, senior vice president and chief information officer at Neiman Marcus Group. “New technologies have always been overhyped early in their development cycle, but they are hyped even more so now than in the past. You hear about something and while it may be a great idea, it is not at a production level,” not ready for mainstream adoption.

Radio frequency identification (RFID) technology is a classic example.  Buzz in business and popular media, reinforced by Wal-Mart’s advocacy, has created expectations that cio’s now must dismantle. Not once, but continually.

Like Maxwell, Ron Ehlers, vice president of information services at Pacific Sunwear of California, believes RFID holds great promise in retail. Just not yet. “I get that question all the time: ‘What are you doing in RFID?’ And the answer is: ‘Nothing,’” Ehlers said.

RFID systems, comprising computer chips with antenna to transmit information in an automated fashion, may transform product tracking and management one day, but many issues remain to be worked out.

“It’s costly; it’s not standardized, and I understand the success rate of the chips is in the 70 to 80 percent range,” Ehlers said. That performance is unacceptable: “You can’t have a 70 percent accurate system,” he said.

One executive, who asked not to be identified, said word of mouth on RFID is anything but happy hype these days. Suppliers subject to Wal-Mart’s mandate to tag cartons and pallets with RFID technology are hard-pressed to find a return. “There isn’t anybody who has figured out how this investment is going to make anybody any money,” he said. “It’s about adding an awful lot [of cost] to improve upon something that was already working pretty well,” that is, Wal-Mart’s much-admired supply chain capabilities.

RFID “is not quite there yet and it is probably a couple years away,” said Michael Stanek, chief financial officer of Northern Group Retail.New technologies can trip retailers into bad strategy, Maxwell said. “The question we should be asking is: ‘What is the business problem we are trying to solve?’ And then go look for solutions,” rather than commit to RFID and then find a place to deploy it. “Too many times these new technologies are solutions looking for problems. We, as technologists, can get caught up in that when our key focus should be: What can we do to improve the business?”

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