So why do some retailers and manufacturers feel they are being scared into adopting the technology?

On the one hand, some companies are reluctant to move forward with RFID tags in absence of a clear path to realizing a timely return on investment. But the industry seems to be heading in RFID's direction, and no company wants to be left behind or give its competitors an opportunity to gain an advantage.

For many, the choice is clear: either tag or lag.

RFID does promise to save companies money, either in their roles as suppliers or buyers, but it must be considered a long-term investment, said Yankee Group analyst Bob McCullough.

"Even though the payoff isn't going to be immediate, there's always that group of CIOs on the forefront who are willing invest now in a technology that can deliver future savings," he said.

Codes of Conduct

Privacy advocates leery of RFID have been pointing out how the technology could be misused to track all kinds of consumer-buying habits, and comparisons to Big Brother are common in their arguments. Do these privacy groups have a valid point or are they just standing in the way of progress?

"The reality is that these advocacy groups are basically looking for governance around something that simply is not happening yet," McCullough said. "But saying they are getting in the way of progress may be too harsh a judgment." In fact, the Yankee Group analyst thinks the role of privacy groups "is warranted as a check and balance" for a rapidly evolving RFID industry.

With consumers increasingly concerned about privacy, many analysts recommend that CIOs take a hands-on approach to the issue. One way to respond would be to ensure that responsible codes of conduct are introduced hand-in-hand with any RFID tag deployments.

In this respect, companies already involved in supply-chain applications of the technology have an excellent opportunity to become leaders, McCullough said. For example, they could promise never to allow an RFID-enabled product to leave a store without the consumer having the option of turning it off, McCullough suggested. "Certainly, some will go in that direction."

Education Is Key

A Forrester Research report published last year found that 81 percent of consumers surveyed said they would find RFID acceptable as long as the tags were disabled prior to leaving the store. Moreover, 58 percent of the respondents indicated that they would have no problem with the technology if retailers agreed not to use it to collect data about customers or their shopping habits. (continued...)

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