Universität Rostock
Wirtschafts- und Soialwisschenaflichen Fakultät
Studiengang: Business Informatics

An economic analysis of RFID systems in the area of library applications

Bachelorarbeit
zum Erwerb des akademischen Abschlusses
Bachelor of Science in Business Informatics

vorgelegt von: Katharina Schulze
vorgelegt am: 12. September 2005

Abstract

In times of budget cuts especially for publicly funded libraries and a steadily increasing value of information, ways have to be found to allow libraries to continue or increase the service they offer to their customers in search for information while reducing costs and increasing efficiency. One possible way to solve this situation of opposing goals seems to be the introduction of RFID technology in libraries that promises higher automation, more self-service opportunities for library customers and at the same time less employee time needed for tasks such as processing of lending transactions or inventorying of media. The advantages that RFID technology offers are widely accepted and would surely contribute to the libraries’ striving for higher efficiency and customer service, the current prices for RFID hard- and software however cause sever skepticism on the market concerning the actual savings that can be achieved with this technology when considering the high costs that first have to be amortized.

This thesis shall offer a framework for the calculation of the profitability of implementing an RFID system in libraries. Introducing the RFID technology in the first part of this thesis with its components, communications and other important aspects shall provide the required knowledge to understand the functioning and to asses the requirements for a specific library.

Afterwards this three application fields within the library, the prevention of theft of media, the lending process and the localization and inventorying of items, are analyzed to estimate the cost saving potential for each area and thus its possibility to contribute to the amortization of the invested capital for an RFID system. These three application fields and their combination are then analyzed in three cases studies with differently sized libraries to see what influences the amortization time.

From these case studies it can be concluded that the conversion to RFID technology is not equally sensible for all libraries at this point of time. Those libraries with a large stock of media to be equipped with RFID transponders face very high costs while those with high circulation rates for their media are most likely to amortize the invested capital quickly since the highest saving potentials are seen during lending processes.

So for those libraries with a small stock of media and high circulation rates, preferably with a high degree of self-service to be expected should thoroughly analyze their situation and their savings potential now, since for them it might already be plausible to install RFID technology. For those with a larger stock of media and less circulation it is wiser to wait until prices decrease more and use this time for careful analysis and planning since RFID technology is hardly evitable in the future.
 

Kurzdarstellung

Mit beständigen Kürzungen im Budget besonders für öffentlich finanzierte Bibliotheken und einem gleichzeitig konstant steigenden Wert für Informationen sehen sich Bibliotheken gezwungen, neue Wege zu finden um Ihren Service beizubehalten oder gar auszubauen und gleichzeitig Kosten zu senken und Effektivität zu steigern. Ein möglicher Lösungsweg für dieses Problem mit gegensätzlichen Zielen scheint RFID Technologie zu sein mit der Aussicht auf höhere Automatisierung, mehr Selbstbedienungsmöglichkeiten für Bibliotheksnutzer und der gleichzeitigen Reduzierung der Inanspruchnahme von Bibliotheksangestellten für das Bearbeiten von Ausleihvorgängen oder Inventuren.

Die Vorteile von RFID sind unumstritten und würden sicherlich die Bibliotheken bei ihrem Bestreben nach höherer Effektivität und besserem Service unterstützen, die momentanen Preise für RFID Geräte und Software verursachen aber starke Skepsis im Markt in Hinblick auf die zu erwartenden Einsparungen, da zuerst die hohen Investitionskosten amortisiert werden müssen.

Diese Arbeit soll einen Rahmen für die Berechnung der Wirtschaftlichkeit von RFID Systemen in Bibliotheken geben. Eine Einführung in die RFID Technologie mit ihren Bestandteilen, Kommunikationsabläufen und anderen Aspekten sollen das Wissen vermitteln, um die Funktionsweise und auch die Anforderungen für eine bestimmte Bibliothek verstehen zu können.

Anfolgend werden drei Anwendungsfelder innerhalb der Bibliothek, Diebstahlschutz, Ausleihvorgang und Lokalisierung und Inventur, analysiert um das Einsparungspotential jedes Feldes und damit den möglichen Beitrag zur Amortisierung des investierten Kapitals abzuschätzen. Diese drei Felder und ihre Kombination werden dann in drei Fallstudien mit drei unterschiedlich großen Bibliotheken in Hinblick auf die Unterschiede in der Amortisationsdauer analysiert.

Aus diesen Fallstudien wird ersichtlich, dass eine Umstellung auf RFID Technologie nicht für alle Bibliotheken gleich sinnvoll ist. Für solche mit einem großen Bestand an Medien fallen hohe Kosten an, um diese Medien mit Transpondern auszustatten während Bibliotheken mit hohen Medien-Umlaufraten durch die großen Einsparungen beim Ausleihvorgang am schnellsten das investierte Kapital amortisieren können. Die Bibliotheken mit kleinerem Bestand und hohen Umlaufraten bei hoher Selbstbedienungsbereitschaft sollten schon jetzt eine tiefgehende Analyse ihrer Situation und Einsparungspotentiale vornehmen da für diese Bibliotheken eine Umstellung auf RFID bereits sinnvoll sein kann. Bibliotheken mit größerem Bestand und geringerem Umlauf sollten besser noch abwarten bis die Preise für RFID Geräte sinken und die verbleibende Zeit für eine sorgfältige Analyse- und Planungsphase nutzen da RFID Technologie in der Zukunft unumgänglich scheint.

Contents

Acknowledgments ... I
Abstract ... II
Kurzdarstellung ... III
Contents ... IV
Abbreviations ... VII

1. Introduction ... 1
1.1. Background andMotivation ... 1
1.2. Methodology ... 2
1.3. Delimitations ... 3
1.4. Structure ... 3

2. On RFID Systems ... 4
2.1. Information in organizations ... 4
2.1.1. Auto-ID systems ... 5
2.2. RFID ... 8
2.3. Components of an RFID system ... 8
2.3.1. Transponder ... 9
2.3.1.1. Architecture ... 9
2.3.1.2. Characteristics ... 10
2.3.2. Reading devices ... 12
2.3.2.1. Architecture ... 13
2.3.2.2. Characteristics ... 14
2.3.3. Host Computer ... 15
2.4. Functioning of an RFID system ... 16
2.4.1. Communication within an RFID system ... 16
2.4.1.1. User - system ... 17
2.4.1.2. Host computer - reading device ... 18
2.4.1.3. Reading device - transponder ... 18
2.4.2. Frequencies ... 20
2.5. Costs of an RFID system ... 22
2.6. Problems with RFID systems ... 24
2.6.1. Standardization ... 24
2.6.2. Threats for RFID systems ... 24
2.7. Application areas of an RFID system .... 27
2.7.1. Supply ChainManagement ... 27
2.7.2. Track and Trace ... 29
2.7.3. Document authentication ... 30
2.7.4. Animal identification ... 30
2.7.5. Crowd control ... 31

3. Use Cases - RFID in libraries ... 33
3.1. Theft control ... 33
3.1.1. Situation Analysis ... 34
3.1.2. Problems ... 34
3.1.3. Model evaluation ... 35
3.1.4. Suggestion of Solution ... 37
3.2. Process of lending items ... 38
3.2.1. Situation Analysis ... 39
3.2.2. Problems ... 40
3.2.3. Model evaluation ... 40
3.2.4. Suggestion of Solution ... 43
3.3. Inventory and localization of items ... 45
3.3.1. Situation Analysis ... 45
3.3.2. Problems ... 45
3.3.3. Model evaluation ... 46
3.3.4. Suggestion of Solution ... 47
3.4. Combination of the different use cases ... 49

4. Case Studies ... 52
4.1. Library of the university of Rostock ... 52
4.1.1. Theft control ... 52
4.1.2. Process of lending items ... 53
4.1.3. Inventory and localization of items ... 53
4.1.4. Combination of the different use cases ... 53
4.2. Library of the university of Kassel ... 54
4.2.1. Theft control ... 54
4.2.2. Process of lending items ...55
4.2.3. Inventory and localization of items ...55
4.2.4. Combination of the different use cases ...56
4.3. Public library of the city of Rostock ...57
4.3.1. Theft control ...57
4.3.2. Process of lending items ...57
4.3.3. Inventory and localization of items ...58
4.3.4. Combination of the different use cases ... 58
4.4. Comparison of the results ... 60

5. Outlook and conclusion ... 62
5.1. RFID technology in the future ... 62
5.2. Effects on RFID in libraries ... 63
5.3. Recommendations ... 64
Bibliography ... 66
List of Tables ... 69
Contents An economical analysis of RFID systems in the area of library applications List of Figures ... 70

A. Data material ... 72
A.1. Questionnaire for libraries ... 72
A.1.1. Questionnaire ... 72
A.1.2. Obtained data ... 73
A.2. Vendors of RFID library solutions ... 75
A.2.1. Names and addresses of vendors ... 75
A.2.2. Obtained data ... 75
A.3. BIX Bibliotheksindex ... 77
A.3.1. Information on BIX ... 77
A.3.2. Obtained data ... 77
A.4. Lending process time analysis ... 83
A.4.1. Bar code system ... 83
A.4.2. RFID system ... 84

B. Statistical Calculations ... 85
B.1. Calculation cost function for RFID systems ... 85
B.1.1. Calculation for the amount of mobile reading devices needed ... 85
B.1.2. Calculation for the amount of EAS panels needed ... 85
B.1.3. Calculation for the amount of booking stations needed ... 86
B.1.4. Calculation for the amount of self-service booking stations needed ... 86
B.1.5. Calculation of the installation costs ... 86
B.1.6. Calculation of the schooling costs ... 87
B.1.7. Construction of the cost function for the RFID system ... 87
B.1.8. Construction of the cost function for an EAS system ... 88
B.2. Calculations for Use Case Theft control ... 89
B.2.1. Calculation of the lostmedia per year ... 89
B.2.2. Calculation of the average cost per lost item ... 91
B.3. Calculations for use case lending process ... 91
B.3.1. Calculation of the estimated time using RFID ... 91
B.3.2. Calculation of the estimated time using bar codes ... 93
B.3.3. Calculation of the number of yearly lendings ... 93

1. Introduction

Even though RFID - radio frequency identification - is by far not a new technology many research activities are currently in progress. Due to many factors, decreasing costs, better standardization and higher acceptance just to name some, the attractiveness of RFID has significantly grown in many different application fields. High prices for RFID hardware have so far prevented this technology from sweeping onto the mass market. During the last years however the pressure has grown with the increase in attractiveness to develop RFID hardware at lower costs and higher standardization and is now at the point to drastically change the face of many markets and economies [cG]. The EPCglobal, one of the organizations striving strongly to spread this technology, believe that RFID, ”if widely adopted, could eliminate human error from data collection, reduce inventories, keep product in-stock, reduce loss and waste, and improve safety and security” [EPCb].

More and more application fields are being discussed from the securing of passports against counterfeiting over completely automated production lines to the self-service store that needs personnel only for restocking the shelves.

The possibilities seem enormous but it has to be carefully evaluated, as with every new technology, where the best application possibilities lie to prevent large investments in hardware and systems that will soon after be realized as not suitable for this specific application field. So it has to be analyzed very precisely what benefits are to be expected from this new technology and how they weigh in comparison to the remaining high costs for RFID hard- and software.
 

1.1. Background and Motivation

With RFID technology about to aim for mass markets and the financial problems of libraries on the other hand constantly fighting with reductions in personnel and acquisition budgets, the idea appeared to combine both. Even though still new, some early adopters have already implemented RFID technology in libraries hoping for large scale savings and high quality benefits for their library users. Without a satisfying answer remains however the question of the profitability of RFID technology in libraries and whether the high investment costs for the deployment of such a system can really be amortized quickly. This question shall be looked at and even though it seems impossible to precisely answer it to its full extend, so at least a starting point shall be given for a deeper analysis which then will hopefully lead to an answer for each library individually. To analyze and answer the question of profitability the following questions need to be elaborated on:

• How does RFID technology work? What is influencing its components and performance? Where is RFID technology currently used? Which factors influence the usefulness of RFID technology?
• In which way can RFID technology improve current processes? What are possible benefits from using and RFID system?
• What are the costs arising from the deployment of an RFID system? How are those costs influenced?

Having researched and answered these questions an answer to the most important question might be given:

• Is RFID technology in libraries profitable?
   

1.2. Methodology

RFID technology is just starting to emerge into popularity therefore literature concerning this topic is very limited. The Auto-ID center (see 2.6.1 Standardization for more information on this organization) and other organizations interested in RFID have however published several articles and white papers that were found to be highly useful. Difficulties even increased when searching for literature related to the specific application area of RFID technology in libraries. Only very few articles were found, most of which were issued by providers of RFID systems customized for libraries and were therefore feared to be less objective.

To nevertheless obtain sufficient data material to scientifically base thoughts and conclusions, questionnaires were sent to libraries throughout Germany and to internationally renown providers of RFID solutions for libraries. This data was supplemented by data found in nation wide statistical surveys of libraries conducted by renown organizations such as the Bertelsmann Foundation or the German Library Association (Deutscher Bibliotheksverband dbv) although those surveys were not directly related to technology or RFID in libraries.

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