The Auto-ID Trajectory - Chapter One Introduction

 

 

1.    Introduction

1.1.   Automatic Identification

1.1.1.                  Auto-ID Technologies

This thesis [1] is concerned with the automatic identification (auto-ID) industry which first came to prominence in the early 1970s. Auto-ID belongs to that larger sector known as information technology (IT). As opposed to manual identification, auto-ID is the act of identifying a living or nonliving thing without direct human intervention (see exhibit 1.1). Of course the process of auto-ID data capture and collection requires some degree of human intervention but the very act of authenticating or verifying an entity can now be done automatically. An entity can possess a unique code indicating personal identification or a group code indicating conformity to a common set of characteristics. Some of the most prominent examples of auto-ID techniques that will be explored in this thesis include bar code, magnetic-stripe, integrated circuit (IC), biometric and radio-frequency identification (RF/ID). The devices in which these techniques are packaged include labels and tags, card technologies, human feature recognition, and implants. Generally the devices are small in size, not larger than that of a standard credit card.

Exhibit 1.1   Manual versus Automatic Identification Techniques

1.1.2.                  Auto-ID Applications

Traditionally auto-ID has been synonymous with bar code labels on supermarket store items, financial transaction cards (FTCs) used to withdraw money from automatic teller machines (ATMs), and subscriber identity module (SIM) cards in mobile phones. Today auto-ID devices are being applied in very different ways to what they were originally intended. For instance, frequent air travellers can bypass immigration queues using their biometric trait, prisoners can serve their sentences from home by wearing electronic tags and animals can be identified by implanted transponders. While the nature of auto-ID is one that is innately compatible to mass market diffusion, it does also accommodate well for niche applications where for instance security is paramount and access is limited to only a few authorised persons. Auto-ID has also become an integral part of electronic commerce (EC) applications, particularly those related to the government vertical market segment.

 

1.1.3.                  The Significance of Auto-ID

Prior to the 1970s who could have envisaged that every packaged item sold on a supermarket shelf would be equipped with a bar code label. And that by the early 1990s the majority of the population in more developed countries (MDCs) would be carrying a magnetic-stripe or smart card to conduct financial transactions, without having to visit a bank branch. And furthermore, that by the turn of the twenty-first century that it would be enforceable by law to implant domesticated animals with a microchip. These examples not only indicate the pervasiveness of auto-ID but also how reliant the world has become upon the technology, including public and private enterprise. The impact of auto-ID is not only irreversible but auto-ID is now an essential part of life. It is interwoven in a highly structured manner with the way we live and work and is a seamless part of our day-to-day routine activities. The technology is so widespread and diffused that it seems to possess an almost omnipresent quality.

 

1.1.4.                  Auto-ID Innovation

Auto-ID technologies are complex artefacts. In their natural state they are simply inventions seeking an economically significant purpose. Only when the devices are applied to a given context as part of an information system (IS), and they achieve a desired result, can they be considered product innovations. For example, a plastic card with a magnetic-stripe is quite useless unless it grants the cardholder the ability to make an EFTPOS (electronic funds transfer point-of-sale) transaction at a restaurant to pay for a meal. Furthermore, one need only consider just how complex an auto-ID system is: first cards need to be produced by a manufacturer based on a common set of standards; second the cards need to be acquired by a financial institution and set up with the appropriate parameters; third an end-user with that financial institution must adopt the card and be inclined to make an EFTPOS transaction; and fourth the merchant must accept EFTPOS payments and have predefined agreements with the appropriate financial institutions to enact a valid transaction. The auto-ID innovation process requires that there be dynamic interaction among numerous stakeholders including technology providers, service providers and customers. All too often studies will only focus on the first of these, neglecting to understand that the other members are equally important to the innovation process.

 

1.2.   Previous Research

A vast amount of research has been conducted on individual auto-ID technologies. Apart from top-secret defence projects, much of the research has taken place in industry, the results of which have been commercially sensitive, usually protected by company-specific intellectual property rights. The competitive environment in which these technologies are being developed is based primarily on cost and product differentiation that does not ascertain a setting where sharing information is encouraged. Most publicly available research covers elementary topics with reference to a single device only. There are some works however, that have gone into greater depth about particular aspects of auto-ID devices (mostly technical in nature) and these have been cited in table 1.1. A more thorough investigation is given to some of these references in chapter two as they are critically analysed within an innovation context. An extensive list of sources can be found in the Bibliography and Online Resources.

1.2.1.                  Current Knowledge

Most books and papers published on the topic of auto-ID are either wholly focused on presenting technical aspects of a particular device or show how it is being applied commercially. Experts continue to publish new material on niche topics related to auto-ID devices but few offer a holistic approach to understanding the industry.  Contributions are primarily aimed at making the wider community, including potential customers of auto-ID, aware of what technology options are available to them. The vast majority of refereed publications focus on only one technology. However, more recently a few contributions have appeared making reference to multiple auto-ID technologies. For instance, the current development receiving attention surrounds the storage of a biometric pattern onto a bar code or smart card. This indicates that auto-ID organisations, specialising in a given technique, are at least beginning to consider themselves as members of a larger system, that being the auto-ID industry. And as obvious as this may seem, that is precisely what is lacking today, the notion of an auto-ID technology system within which organisations and institutions innovate together dynamically.

 

1.2.2.                  The Emergence of the Auto-ID Paradigm

It is surprising to note that from the hundreds of articles reviewed, that the term automatic identification has appeared in the titles of only a limited number of publications including: Moran (n.d.), Berge (1987), K. R. Sharp (1987), Schwind (1987), Gold (1988), Hewkin (1989), I. G. Smith (1990), Adams (1990), J. Cohen (1994), LaMoreaux (1998), O’Gorman & Pavlidis (1999), and Swartz (1999). [2] This does not mean that the term is not popular for it is continually used in the main body of papers, irrespective of the type of technique being discussed. Rather what it may indicate is that the term auto-ID carries a loaded meaning when it is used in a paradigmatic fashion. Perhaps as a concept that has industry-wide applicability, admitting to the reality that numerous auto-ID solutions are co-existing and that there are common experiences that can be shared between stakeholders in the innovation process.

Four works must be especially highlighted here in support of the emerging auto-ID paradigm described above. [3] The first is Automatic Identification and Data Collection Systems, by Jonathan Cohen (1994). Its contribution to the field is its attempt to give a thorough industry-wide perspective, though it falls short of its aim in terms of its unbalanced focus on bar code technology. It also does not compare auto-ID technologies and dedicates little space in the form of predictions about the future of the industry. The second work is by Hewkin (1989), ‘Future Automatic Identification Technologies’; and the third by Swartz (1999), ‘The Growing “MAGIC” of Automatic Identification’. These works are both short articles centred on the need to understand auto-ID innovation. One will note a ten year interval between these publications. Neither goes into great depth but both offer insights worthy of research efforts yet to be fulfilled. There is an apparent need for research in auto-ID innovation and the characterisation and prediction of the auto-ID industry. It is in response to this pressing need that this thesis is making its new contribution to knowledge. Hewkin understands the auto-ID market well and emphasises the need for industry-wide communication flows between the different auto-ID players, independent of their major auto-ID product focus. Swartz, on the other hand, who has been able to witness the changes in the industry over the last decade, analyses the most prominent auto-ID technologies and describes the emerging auto-ID paradigm. His insights are very important in that they assist and garner support for some of the findings of this thesis. Finally I.G. Smith (1990) presents the AIM (automatic identification manufacturers) activity group in a brief article, stipulating that their focus is broader than just bar code, “[s]o the automatic identification industry has an almost unique global communication network… The members of AIM collectively cover all the established technologies as well as most of the emerging ones” (pp. 49, 52). In the small survey of organisations and their respective auto-ID product focus (p. 51), what is apparent is that AIM is promoting the idea of one auto-ID industry sharing in common resources.

 

1.2.3.                  The Gap in the Literature

At the macro level there is a requirement for a well-researched, up-to-date work that traces the evolution of the auto-ID industry; a summation of the last forty years of change. This thesis offers an intricately interwoven discussion on the history, background, development and likely future directions of auto-ID. Currently researchers are offering fragmented perspectives on the auto-ID selection environment by focusing on a given technology and mostly neglecting the rest or at best mentioning them in passing. [4] At the micro level the key issues that have affected auto-ID innovation and its ancillary extensions need to be explored. Demystifying the complex auto-ID innovation process is important as well and has not been adequately explored. [5] Another gap in the literature is predicting the trajectory of auto-ID. This is perhaps where least work has been done in the field. The outcomes of a study such as this have far-reaching implications, both to practitioners and end-users, of a technical and philosophical nature. For example, how does one understand competition in the auto-ID industry? Are new EC application requirements driving the path of auto-ID? How will auto-ID technology be used in the future? What are some of the long-term impacts of the widespread introduction of auto-ID devices?

 

1.2.4.                  The Auto-ID Trajectory

The fundamental question the thesis will seek to answer is what is the auto-ID trajectory? The question requires an interdisciplinary approach and is intended to allow for the characterisation of devices from their inception into the market to the present day, in a hope to predict future trends in the industry. In other words, what is the destiny of auto-ID and just how intertwined will it become to applications that everyone relies on? How far can the human-computer metaphor be taken, now that the prospects of chip implants for auto-ID have been confirmed? And what risks or benefits may this pose to humans and the general economy? [6] How much further can engineers develop individual auto-ID technologies and how will these be affected by other breakthroughs in the IT sector. The nature of these questions implies a holistic methodology to understanding the auto-ID technology system- a novel approach seeking to discover new facts.

 

1.3.   Purpose

The purpose of this study is to establish the auto-ID paradigm. It is to convey to stakeholders that the dynamics within the technology system (TS) are paramount to the success of individual auto-ID devices. [7] It is also important to determine how one auto-ID device should be considered within the wider auto-ID selection environment. In addition, forecasting the auto-ID trajectory is not only meant to assist technology and service providers but also to prepare end-users for potential change. The thesis is designed to also bring to the fore thought-provoking and challenging philosophical questions that are often neglected at the expense of other topics exclusively centred on technical breakthroughs.

 

1.3.1.                  Aims and Objectives

There are six objectives that will assist in achieving the proposed aims (see diagram 1.1):

1.                         To review the literature in the broad field of technological innovation (particularly IT studies) with a view to identifying the key elements shaping auto-ID innovation

2.                         Using the outcomes of objective 1, develop a systems of innovation (SI) framework suitable for the analysis and forecasting of auto-ID technologies

3.                         By applying the SI framework defined in objective 2, examine the dynamic innovation process of five auto-ID technologies

4.                         Having characterised the most prominent auto-ID devices in objective 3, explore ten EC applications to consider the pervasiveness of auto-ID

5.                         Examining the data collected in objectives 3 and 4, establish trends and patterns within the auto-ID selection environment

6.                         Establish a paradigm for understanding innovation by evaluating the present state of the auto-ID industry and predicting future developments. Present the theoretical, philosophical, and practical implications of the auto-ID trajectory.

Diagram 1.1       Diagram Schematic of Objectives Relating to Chapters

 

1.4.   Conceptual Framework and Methodology

1.4.1.                  Systems of Innovation

Traditionally studies in innovation have followed one of two theories, the neo-classical or the more recent evolutionary. Neo-classical economic theory [8] focuses on the production function as the major indicator of product/process innovation. On the other hand, the evolutionary theory [9] of innovation is characterised by the concepts of reproduction, variety and selection (Andersen 1997, p. 175). It is considered by many that the former theory has depreciated as a tool for investigating modern product and process innovations. Among its primary limitations is that technological change is treated as an exogenous factor (Edquist 1997, p. 16). The more recent evolutionary theory of innovation has become more accepted in that it is an interdisciplinary approach with the ability to bring within a “...single framework the institutional/organisational as well as cognitive/cultural aspects of social and economic change” (Carlsson & Stankiewicz 1995, p. 23). It is this framework that will be used to set system bounds of the thesis.

Founded on the principles of evolutionary theory, is the systems of innovation (SI) approach. SI is a conceptual framework rather than an established theory in which most innovation investigations that have taken place in the 1990s have followed empirically. Researchers in Europe, Asia and North America have used this approach as will be shown in the literature review (ch. 2). This decade has witnessed national, regional, sectoral and technological systems investigations in innovation that have shifted from a product-focused view to a view that incorporates the whole process of innovation including the institution, organisation and market orientation. It is in this light that the research will be conducted, deviating from the norm only on the condition that a micro-level investigation focusing on the auto-ID industry alone will be conducted. While other schools of thought are presently emerging, particularly in the field of information technology methodologies and socio-technical theory, none offer such a complete interdisciplinary understanding of technological change. “The systems of innovation approach also allows for the inclusion not only of economic factors influencing innovation but also of institutional, organisational, social and political factors” (Edquist 1997, p. 17). This will allow for the investigation of previously ignored material important to understanding auto-ID innovation.

 

1.4.2.                  Case Studies

Due to the exploratory nature of this thesis, the most appropriate methodology to use is that of multiple case studies. As has already been mentioned, the five auto-ID technology case studies will include: bar codes, magnetic stripe cards, smart cards, biometrics, radio-frequency identification (RF/ID) tags and transponders. However, these case studies refer to a technology alone and not to a product or process (Keenan et al. 1997, p. 21) that is in direct conflict with the SI approach. For this reason embedded cases on each technology have been chosen. Table 1.2 shows the vertical applications matched to auto-ID technologies that have been chosen to illustrate the industry’s selection environment.

Table 1.2      Multiple Embedded Case Studies

Auto-ID Technology Focus | Vertical Applications/Innovations

Bar Codes | Retail, Education

Magnetic Stripe Cards | Financial Services, Transportation

Smart Cards | Telecommunications, Health Care

Biometrics | Government Services, Entertainment

RF/ID Tags & Transponders | Animal Tracking & Monitoring, Human Security & Monitoring

 

The embedded case studies approach has been adopted to give the reader an understanding of how auto-ID technologies have been diffused in a wide spectrum of critical applications. Multiple case studies as opposed to a single case study methodology should add value to the general conclusions of this thesis by identifying a broader range of factors affecting the innovation of auto-ID technologies. [10] The reader should expect a narrative style of presentation offering a diverse range of perspectives.

 

1.4.3.                  Underlying Assumptions

The underlying assumptions of the research work can be found in table 1.3 on the following page. The study has been undertaken with these implicit assumptions.

Table 1.3      Underlying Assumptions of the Research

Assumptions

1.       The study will be qualitative as it is exploring and examining auto-ID innovation.

2.       Given the importance of history in the study a descriptive style of writing will be used.

3.       Innovation is an ongoing process that is influenced by stakeholders and internal and external factors.

4.       In the literature review, only innovation thought after the Industrial Revolution will be considered, and those studies pertaining to automation will be used more than others.

5.       The systems of innovation (SI) framework is a valid interdisciplinary approach to adopt for this study as it has its foundation in the established evolutionary economic theory.

6.       The researcher has the ability to include whichever factors from the SI framework that she deems relevant to the study. Some factors may be relevant to one case and irrelevant to another.

7.       Greater emphasis will be given to the perspective of the auto-ID firm than the other stakeholders since a technological trajectory is closely linked to the product development path taken by a firm.

8.       There are five core auto-ID technologies. These are bar code, magnetic-stripe card, smart card, biometrics, RF/ID tags and transponders.

9.       The most prominent global EC applications are those in the vertical market segments of retail, education, financial services, transportation, telecommunications, health care, government services, entertainment, tracking and monitoring of humans and animals.

10.    Auto-ID research will become increasingly important as the global population continues to grow and logistics become more of an issue for governments throughout the world.

11.    Future trends can be predicted by reviewing past and present events that have taken place in the auto-ID industry over the last forty years.

 

1.4.4.                  Outline

Finally the structure of the thesis has been aligned to satisfy the objectives stated in section 1.3.1. Chapter two will review innovation thought since the period after the Industrial Revolution to understand the established theories and frameworks introduced in the literature over time. An appropriate theory, framework, and method of investigation need to be chosen after critically observing the strengths and weaknesses of each major work reviewed. Similarly, landmark auto-ID studies will be identified so that specific progress to auto-ID can be presented, highlighting the gap in research. Chapter three presents the research methodology. The overall investigation plan is defined along with the mechanisms to be used to gather data. Chapter four will set the historical background for auto-ID. It is important insofar as identifying how manual and auto-ID devices have been used over the centuries, and to challenge the reader to consider how auto-ID is likely to be used in the future. Chapter five examines and characterises prominent auto-ID devices using case studies and chapter six presents how these devices were developed and the dimensions of innovation relevant to each. Chapter seven illustrates the widespread diffusion of auto-ID by using ten EC applications. The intent here is to show the selection environment and versatility of auto-ID techniques. It is also relevant to examine auto-ID within an application context and to understand just how important auto-ID has become in day-to-day operations. Chapter eight predicts the auto-ID trajectory and the trends and patterns which show the future direction of the technology. Other converging media are described here as well, to indicate how new recombinations may be developed to create even more powerful devices to identify living or non-living things. The paradigm shift from technology that people carry, to technology that people wear and bear, is also explained therein. Chapter nine presents the findings of the study, as well as a summation of the past, present and potential impacts of auto-ID. Finally, chapter ten brings the study to a close by conveying the overall conclusions. These conclusions are equally relevant to the stakeholders in the wider information technology (IT) community.

Endnotes

[1] Please note, the Harvard system of referencing has been used consistently throughout this thesis as outlined in the University of Wollongong, Information and Communication Technology (IACT) department style guide. The use of explanatory footnotes is permitted by the Harvard system (Jennings 1997, p. 16). It must also be noted, that the works cited in the main body of the thesis are referenced in the bibliography (hardcopy sources) or the online resources.

[2] Several of these works were republished in 1990 collectively in a book edited by Ron Ames titled, Perspectives on Radio Frequency Identification: what is it, where is it going, should I be involved?

[3] While these works point to the emergence of an auto-ID paradigm, it is not to be assumed that this was the conscious intent of each of the authors.

[4] While different auto-ID communities, (those in bar code, those in smart card, those in biometrics etc.) are working towards developing their respective technologies separately, they may lack the broader awareness of the opportunities or threats that exist.

[5] One of the only authors to have intentionally written (at any great depth) on the topic of innovation as related to any auto-ID technology is R. A. Lindley. Her book titled, Smart Card Innovation (1997), is the only work (to date) that looks at the complex innovation process of smart cards in its entirety. Other smaller works (Hewkin 1989; Ames 1990, ch. 6; Allen & Kutler 1997, pp. 19-20, Swartz 1999) contain sections or paragraphs on innovation but are not preoccupied by the theme itself.

[6] One has only to allude to the historical events in manual identification to consider the possible effects of a well-orchestrated siege on privacy by any world leader or government (see ch. 4). Even as early as 1943 observers realised the potential threats of computerised systems which could be operated for wrong ends by “…an unscrupulous government which sets to work to use that machinery for totalitarian purposes” (Clark, p. 9). Wicklein (1981, pp. 8, 191f) also wrote that “…[t]he biggest threat of a multifaceted, integrated communications system is that a single authority will win control of the whole system and its contents [and] operate it without adequate restraints”.

[7] Although the underlying messages of this thesis can, to an extent, also be applied to other innovations in IT, such as personal digital assistants (PDAs) and other digital technologies. See Brodsky (1995).

[8] See Schumpeter (1934).

[9] See Nelson and Winter (1982).

[10] It is possible however, that findings may conclude otherwise- that the innovation of auto-ID technologies are influenced by similar factors.