Asset Tracking and Management using RFID for IT/Datacenters and Oil and Gas industry

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This research was carried out as a part of my dissertation. The objective was to understand the use of RFID for asset management ranging from tracking IT assets to its uses in asset/personnel tracking in Oil and Gas industry.

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Published in: Business, Economy & Finance

Asset Tracking and Management using RFID for IT/Datacenters and Oil and Gas industry

  1. 1. Research by Sameer Tandon & Vijay Hegde Exploring untapped RFID potential for Asset Management in IT/Data Center and Oil and Gas sector
  2. 2. Flow of events The motivation and direction RFID as a technology and as an enabler Research objective and methodology Integrated 5 lens framework IT Asset Management Oil and Gas industry Page 2
  3. 3. Asset Intensive Industries Page 3
  4. 4. The need of the hour The fact is that only 7% are completely satisfied with their service and maintenance performance. Page 4
  5. 5. Flow of events The motivation and direction RFID as a technology and as an enabler Research objective and methodology Integrated 5 lens framework IT Asset Management Oil and Gas industry Page 5
  6. 6. Straight from the horse’s mouth quot;RFID is one of those rare 'change the world' technologies “The use of RFID goes beyond that will force a rethinking of the supply chain. Companies many value-chain strategies” are seeing the benefits in areas like asset tracking and drug authentication. ” Mark Bauhaus, VP, Juniper Networks Julie Sarbacker, Director, Sun Micrsosytems RFID BU quot; RFID is being used today by their customers to grow business and to benefit consumers: from increasing visibility in the supply chain to decreasing counterfeit drugs; from providing asset tracking in hospitals to ensuring the safety of miners; from streamlining baggage handling at US airports to tagging valuable documents in the Vatican Library” Mark Bauhaus, VP, Juniper Networks Linda Young, Director, Business Development, AIM Global Page 6
  7. 7. Taking over from the legacy Barcodes have been around for decades But they are far from perfect… Page 7
  8. 8. Technology Basics Essentials RFID Tags Passive Semi-passive Active Host PC RFID Readers Page 8
  9. 9. RFID operating frequencies and associated characteristics Page 9
  10. 10. RFID market size and applications of RFID The Market is Booming! RFID Market 2004 - 2010 Page 10
  11. 11. Flow of events The motivation and direction RFID as a technology and as an enabler Research objective and methodology Integrated 5 lens framework IT Asset Management Oil and Gas industry Page 11
  12. 12. Typical questions when you are starting the project How to best use selected How to build solution capabilities? internal expertise? Do we have internal capabilities and capacity to How and where staff the project? do we start? How expensive will this project be? How Who does what do we keep the costs low? in this project? How to manage project and business How do we assure risks involved? success? Page 12
  13. 13. RFID Research Objective To assess the untapped business potential of RFID applications for asset tracking and management in Information Technology/Data Centers and Oil/Gas Sector Research Methodology Phase 1: Data Collection Phase 2: Development of Framework Phase 3: Application of framework Page 13
  14. 14. Flow of events The motivation and direction RFID as a technology and as an enabler Research objective and methodology Integrated 5 lens framework IT Asset Management Oil and Gas industry Page 14
  15. 15. Integrated 5 Lens Framework Value Business Challenges Return Proof Chain Impact On Of Analysis Analysis Investment Concept (ROI) Integrated 5 Lens Method Page 15
  16. 16. Integrated 5 Lens Framework Contd. Value Chain analysis • Identify areas of applicability for RFID, develop use cases and the benefits involved Business Impact Analysis • Prioritize the benefits and the associated use cases in the order of their impact on the business Challenges • Identify the various challenges involved ROI • ROI calculations to substantiate the business case for RFID adoption Proof-of-Concept • Select priority use cases and run a pilot test in the field environment Page 16
  17. 17. Integrated 5 Lens Framework Contd. ROI  Forrester’s Total Economic Impact (TIE) based ROI Analysis  “Risk” adjusted ROI  Risk-to-benefit and Risk-to-cost  Most likely benefits and Most likely costs Page 17
  18. 18. Flow of events The motivation and direction RFID as a technology and as an enabler Research objective and methodology Integrated 5 lens framework IT Asset Management Oil and Gas industry Page 18
  19. 19. Information Technology Asset Management (ITAM) Description N The growth has outstripped the manpower available to look after the resources! IT Assets Exponential Growth in: •Servers/Storage •Desktops/laptops •Memory cards Manpower •I/O Hardware •Peripherals (printers, routers) The Challenges: YoY server footprint growth of 13.5% (IDC) Blade servers and small IT assets account for majority “Run Book” automation depends on human intervention Page 19
  20. 20. The Manager’s perspective Key Drivers for RFID enabled IT Asset Management 5x times faster inventory management A Manager wants to… 10x times reduction in inventory errors Gain accurate IT asset visibility Reduce inventory management No line of site requirement for managing assets man hours Asset visibility – tracking the location of assets Automate data entry and reduce errors Includes human readable and barcode data on tags Reduce SOX compliance costs Enhance the security of critical Hands-off security – millions of dollar savings in potential security threat mitigation/insurance costs assts Become greener! Energy savings due to optimum asset utilization Small enough tags available for tracking hardware like blades, RAM and other assets Page 20
  21. 21. Survey Results Page 21
  22. 22. Lens 1: IT Asset Value Chain analysis Receive Assign IT Manage Maintain Locate IT Secure Shipments Assets Inventory and Retire Assets and Alert Highly Labor intensive process SOX Compliance Pain Points and Green Concerns IT Security / Data Assurance Theft / Loss Page 22
  23. 23. Lens 1: Use Cases Output 1 2 3 4 5 Automated Control point Manage rack Cubicle or Asset receiving of monitoring of level IT asset distributed maintenance assets assets inventory inventory and retrieval •Reduces •Asset visibility •Asset visibility •Rapid data * Faster asset shipment capture of location within •Generate and •Faster errors distributed a facility maintain inventory assets •Billing comprehensive management •Paper Sequence audit trail of less •Accuracy of assets process •Reduces IT audits limiting human •Access manual error •Security labour management Page 23
  24. 24. Lens 2: Business Impact Analysis Business Drivers of an organization Security Operational Efficiency Asset accounting and accuracy Asset utilization Output Quantified Business Benefits according to the above business drivers Priority list of use cases Higher priority to the use cases with higher business impact Page 24
  25. 25. Lens 3: Challenges Business Process Analysis Integration Infrastructure cost Recurring Cost Organizational acceptance Environmental/Scenario challenges Output Total cost (including pre-RFID labour rate for ITAM) Page 25
  26. 26. Lens 4: ROI Total benefits from priority list of use cases (lens #2) Total costs from challenges and pre-RFID labour costs (lens#3) ITAM Risks: risk-to-cost and risk-to-benefit TEI based ROI analysis Output Risk adjusted ROI, Payback Page 26
  27. 27. Sample Illustration Present Year I Year II Year III Total Value (PV) Total benefit $969,117 $1,453,675 $2,422,792 $4,845,583 $3,603,973 Total cost $2,479,983 $264,433 $294,500 $3,038,917 $2,577,676 Net cash flow -$1,510,867 $1,189,242 $2,128,292 $1,806,667 $1,026,297 Cumulative cash flow -$1,510,867 -$321,625 $1,806,667 $3,613,333 NPV $1,026,297 ROI 40% Payback Over 2 Years Page 27
  28. 28. Lens 5: Proof – of – Concept Each implementation is unique Pilot run by Vendors Priority use cases chosen for pilot run  Control point IT Asset tracking  Rack level inventory management Check whether perceived benefits meet the required expectations Produce performance benchmark results Pilot results used to develop implementation roadmaps Page 28
  29. 29. Conclusions RFID based solutions add significant value to IT Asset management (ITAM) RFID tag selection decisions will drive performance of RFID based solutions for ITAM Surging end user demand for RFID based ITAM Growing need for performance standards to spur ITAM adoption Limitations of ITAM usage Page 29
  30. 30. Flow of events The motivation and direction RFID as a technology and as an enabler Research objective and methodology The 5 lens integrated framework IT Asset Management Oil and Gas industry Page 30
  31. 31. Oil and Gas Industry The growth of the energy industry is astounding! And almost all of it is driven by the Oil and Gas industry… Page 31
  32. 32. IT Spending on Oil and Gas The Growth in IT spending has increased in the same vein! And as the graph on the left shows, the industry has to keep up with the demand… Page 32
  33. 33. Lens 1: Value Chain Analysis Bird’s eye view of Oil and Gas Supply Chain Exploration Production Refining Marketing Consumer Upstream •Exploration & Production Midstream of crude oil •Services and Repair Downstream •Refining Operations •Refinery transport •Sale and Delivery of •Storage and Distribution product •Terminal Management •Inventory tracking •CRM •Inventory Management •Marketing planning Page 33
  34. 34. Use Cases Output 1 2 3 Seismic and Human Capital Facilities Exploration wells Management •Monitoring and •Increases safety and •Quality control management of security of personnel at •Dyamic KPI collection mobile and fixed drilling and rig operations assets •Measure location and •Geo-fencing •Performance operational safety •Supply chain visibility monitoring in down- environment hole conditions •More directed •Inventory control •Faster location of emergency operations assets •CSR measures •Improve operational efficiency Page 34
  35. 35. Lens 2: Business Impact Analysis Business Drivers of an organization Supply chain collaboration and visibility Simplify and enhance operations Asset security Asset utilization Personnel management and security Output Quantified Business Benefits according to the above business drivers Priority list of use cases Higher priority to the use cases with higher business impact Page 35
  36. 36. Lens 3: Challenges Infrastructure cost Organizational acceptance across the ranks Scenario of implementation Integration across the supply chain Evolving standards and technology specifications Recurring costs (upgrade and maintenance cost) Damage to tags and readers owing to the harsh environment  List of challenges under the above category  Tag life time and performance under harsh Output physical conditions  Total costs including the pre-RFID labour costs Page 36
  37. 37. Lens 4: ROI Total benefits from priority list of use cases (lens #2) Total costs from challenges and pre-RFID labour costs (lens#3) Risks: risk-to-cost and risk-to-benefit Total Economic Impact (TEI) based ROI analysis Output Risk adjusted ROI, Payback Page 37
  38. 38. Sample Illustration Present Year I Year II Year III Total Value (PV) Total benefit $2,095,145 $4,190,291 $4,190,291 $10,475,727 $7,890,467 Total cost $3,015,498 $720,513 $720,513 $5,689,857 $3,685,910 Net cash flow -$920,353 $3,469,778 $3,469,778 $4,785,870 $4,204,556 Cumulative cash flow -$920,353 $2,549,426 $6,019,204 $10,805,074 NPV $4,204,556 ROI 114% Between 12 Payback and 24 months Page 38
  39. 39. Lens 5: Proof – of – Concept Each implementation is unique Pilot run by Vendors Priority use cases chosen for pilot run  Seismic and exploration wells  Human capital management  Facilities and asset utilization/maintenance Check whether perceived benefits meet the required expectations Produce performance benchmark results Pilot results used to develop implementation roadmaps Page 39
  40. 40. Conclusion Asset management using RFID adds significant value to the bottom line RFID enables effective maintenance and security of critical mobile and fixed asset Enables collaboration and visibility in vast and complex supply chain RFID based asset management ensures better safety of personnel Limitations with respect to usage of tags and readers in harsh environments Page 40
  41. 41. Thank You! Questions? Page 41

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