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August 16, 2005

Packaged RFID targets RFID services for SMEs

RFID consultancy firm Packaged RFID Inc has broadened its reach into the SME market by partnering with Independent Professional Management Inc, a supplier of business applications consultants. Packaged RFID also is finalizing a partnership deal with one of the largest RFID consultancy-training firms in the US, which it plans to announce in coming weeks.

By CBR Staff Writer

The goal is for Packaged RFID to train IPM’s business-application consultants in RFID services in order to target Wal-Mart Stores Inc’s small- to medium-sized suppliers.

Our strategy is to knock the pants off PwC [PricewaterhouseCoopers] and Accenture with pricing and provide comparable talent, said Packaged RFID VP of alliances David Schnell.

Driving Packaged RFID’s partnerships is a lack of specialty RFID-services talent in the US, Schnell said. While the technology has been around for decades, RFID mandates from major US retailers, notably Wal-Mart, have accelerated the need for RFID-services consultants.

And when dealing with SME clients, services firms need consultants who have a combination of skills in the three core areas of an RFID implementation: middleware, business applications and hardware. After all, hiring one consultant who can do the job is preferable than hiring three.

For Packaged RFID, the solution is training IPM consultants who are versed in the business applications that RFID data feeds into, such as Oracle, PeopleSoft and SAP, with RFID middleware and hardware skills.

The partnership with Texas-based IPM also readies Packaged RFID for expansion in markets outside the US. IPM has placed consultants in the Australia, Ireland, Middle East, UK and Western Europe. Packaged RFID plans to open an office in London and Paris during the next year or so, Schnell said. Currently, the company has just one office, its Denver, Colorado headquarters.

The company’s initial focus is on the US because it is home to many Wal-Mart suppliers that have less than $100m in annual revenues – its target market. Big-ticket consultancy firms, which have the resources to invest in winning large deals, already are serving larger Wal-Mart suppliers, such as Johnson & Johnson and Procter & Gamble, Schnell said.

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We would rather focus on getting good wins, solid wins, he said.

Schnell said Packaged RFID was profitable, but declined to provide details.

For now, Packaged RFID is solely targeting Wal-Mart suppliers but plans to expand into other markets at some future point, Schnell said.

Still, the market for SME suppliers to Wal-Mart, the world’s largest retailer, is at least sustainable in the near term. Wal-Mart currently has more than 100 suppliers, large and small, that are required to ship only RFID-tagged cases and pallets to its 104 stores, 36 clubs and 3 distribution centers in Texas.

The retailer also is in communication with its next top 200 suppliers to implement RFID tags for other distribution centers by January 2006, said a Wal-Mart spokesperson. However, the company has no timeline for placing RFID mandates on it suppliers outside the US. We are focused on the Dallas-Fort Worth (Texas) implementation right now, she said.

Wal-Mart has about 68,000 suppliers worldwide.

There are other US companies that also have RFID mandates for suppliers, including retailers Target, Best Buy and Home Depot, as well as the US Department of Defense.

Currently, Packaged RFID has 26 RFID-trained consultants, which it plans to grow to 75 by years’ end, Schnell said. That may not sound like many, he said, but it’s certainly enough to get the ball rolling with many of the customers. The company’s consultants are remotely based.

Packed RFID differentiates itself from heavyweights such as Accenture by giving clients fixed-bid pricing, rather than a quote on a time and materials basis, Schnell said. Packaged RFID picks up any budget overages.

Since most of its clients have an RFID budget that is, on average, just 4% of revenue, the transparency of a fixed price is desirable, Schnell said.

The way Packaged RFID works with its SME clients is to first conduct a site survey, which can take between 2 days and 12 months. Typically, this costs $5,000 to $20,000, depending on a supplier’s operation. That so-called assessment and implementation plan fee is waived if the client hires Packaged RFID to do the job.

Packaged RFID, which was bought by RFID Ltd last month, would not disclose the name of the training company it plans to partner with.

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