Fifteen years ago, one of the first major initiatives in the Internet of Things took place. In 1999, the Auto-ID Center was formed at MIT; it later became the Auto-ID Labs, a global consortium of researchers and practitioners. The goal of both organizations was to research and help implement radio-frequency identification devices (better known by their acronym, RFID). That same year also marked the first recorded use of the Internet of Things (IoT) term by an Auto-ID co-director. (While the concept of connected things goes back at least two decades, to our knowledge it was Kevin Ashton, a co-founder of the MIT Auto-ID Center, who first used the appealing IoT term in 1999.) RFID was arguably the first major IoT technology of any scale. While not all RFID devices are connected to the Internet, from the beginning the technology involved a networked collection of sensors that monitored physical devices.
One of us, Sanjay, was a co-director of the Labs and their MIT predecessor from the beginning, and worked with a variety of consumer packaged goods (CPG) and retail firms to employ RFID devices in supply chain processes. The great success of that work was the development of a standard for data from RFID devices, which are still being implemented as the cost of each device falls.
However, that standard-setting process was difficult and time-consuming. It took 15 years to develop and implement this one standard, an electronic product code called EPCGlobal. This is our worry about the Internet of Things. If it takes that long to develop similar standards for other processes and industries where the IoT is relevant, the progress of this technology will be set back considerably.
We need to do something differently this time, while repeating the positive experiences of the RFID effort. Below, we’ll describe the factors that worked well from the RFID experience, and then the things that need to change in order to make more rapid progress with other types of IoT applications.
What Worked Well with RFID
Collaboration of diverse players. RFID and the EPCGlobal standard were created by a combination of academic researchers, executives from retail and CPG firms, and eventually a company (GS1) charged with overseeing the standard. Researchers proposed alternative standards and technology implementation approaches, and company sponsors gave rapid feedback on what would and wouldn’t work in their context. This type of collaboration is essential in something as broad as RFID, and even more important for the general IoT, which is much more encompassing.
User companies in the driver’s seat. While there were a few other groups working on RFID, the Auto-ID/GS1/EPC collaboration was the dominant standard-setting group by far. It was primarily driven by user companies, not vendors. The IoT, unfortunately, already has too many standards bodies, and in most of them technology vendors play perhaps too prominent a role.
Highly influential players. Some hugely powerful entities were involved in the RFID standard. Walmart, the world’s largest retailer, was an early and active participant. Procter & Gamble was a leader from the CPG side. Even the Department of Defense was involved for military supply chain applications.
Tight focus on a desired outcome. There was a business process and a clear objective in mind from the beginning for RFID. The focus was on supply chain improvements, and reductions of stockouts—empty store shelves because of poor supply chain replenishment—in particular. Walmart was driven by an open acknowledgment that it had a high level of stockouts, when many other companies refused to admit any problem. The giant retailer was a strong driver of its own activities, as well as those of many suppliers. Although some suppliers resisted Walmart’s moves on RFID, many that did adopt the technology generally achieved substantial benefits in stockout reductions.
A view beyond devices. The real benefits of RFID and IoT come from broad, sweeping implementations that encompass not just sensor devices, but also a combination of data integration, analytics, and process change activities. Companies like Walmart and Macy’s that have embraced RFID, developed a vision for it, and aggressively implemented all of these types of change are the ones that have achieved business value.
What Needs to Happen Differently with the IoT
Faster process. As we mentioned, fifteen years is too long to develop a standard that relates to one class of devices for one industry collaboration. Part of the issue with RFID was that every participating organization had to employ exactly the same data standards and formats. With modern cloud computing and application program interfaces (APIs), ecosystem members can do some translating on the fly between different standards and formats. That should speed implementation somewhat.
Bottom-up efforts. RFID approaches were largely driven from a centralized, collaborative effort of large organizations. But in this era of apps, “bring your own device,” and ubiquitous computing approaches, we can speed adoption of consumer-oriented and small business IoT applications by leveraging bottom-up adoption as well as top-down standard-setting.
More carrots than sticks. While Walmart’s aggressive embrace of RFID was on the whole positive, its decision to mandate that all suppliers use the technology by 2005 set the movement back when many suppliers felt they could not comply. Carrots for compliance rather than the threatened sticks would probably have been more effective, and would have prevented a highly visible setback.
Even if we learn from the positive steps of RFID and avoid the negative lessons, nothing with the IoT will be accomplished overnight. It will inevitably involve collaboration and adoption across complex ecosystems, and an array of technology and organizational changes within every participant. But if we learn from the IoT’s early history, we can make the progress faster and make many companies’ uses of the IoT more successful.