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Research by
                                           Sameer Tandon
                                           & Vijay Hegde

Exploring untapped RFID potential for Asset Management in
           IT/Data Center and Oil and Gas sector
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
Asset Intensive Industries




Page 3
The need of the hour




                                 The fact is that only 7% are
                                completely satisfied with their
                                  service and maintenance
                                        performance.



Page 4
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
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
Taking over from the legacy




         Barcodes have been around for decades


                        But they are far from perfect…




Page 7
Technology Basics

     Essentials
         RFID Tags




                         Passive   Semi-passive
           Active

                                         Host PC
         RFID Readers




Page 8
RFID operating frequencies and associated
         characteristics




Page 9
RFID market size and applications of RFID




                                               The Market
                                                   is
                                                Booming!




                                           RFID Market 2004 - 2010




Page 10
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
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
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
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
Integrated 5 Lens Framework




            Value     Business    Challenges      Return      Proof
            Chain      Impact                       On         Of
           Analysis
                      Analysis                  Investment   Concept
                                                  (ROI)


                          Integrated 5 Lens Method




Page 15
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
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
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
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
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
Survey Results




Page 21
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
Thank You!




                       Questions?
Page 41

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

  • 1. Research by Sameer Tandon & Vijay Hegde Exploring untapped RFID potential for Asset Management in IT/Data Center and Oil and Gas sector
  • 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
  • 4. The need of the hour The fact is that only 7% are completely satisfied with their service and maintenance performance. Page 4
  • 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. 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. Taking over from the legacy Barcodes have been around for decades But they are far from perfect… Page 7
  • 8. Technology Basics Essentials RFID Tags Passive Semi-passive Active Host PC RFID Readers Page 8
  • 9. RFID operating frequencies and associated characteristics Page 9
  • 10. RFID market size and applications of RFID The Market is Booming! RFID Market 2004 - 2010 Page 10
  • 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. 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. 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. 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. 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. 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. 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. 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. 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. 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
  • 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Thank You! Questions? Page 41