Radio frequency identification (RFID) will provide a short-term shot in the arm to the market for warehouse management software systems (WMS). But it won't be enough to return the industry to the glory days of the 1990's, when WMS sales routinely grew by nearly 9% a year.

That's one of the conclusions of a recent study by Steve Banker, service director, supply chain management, ARC Advisory Group (www.arcweb.com) and co-author of Warehouse Management Systems Worldwide Outlook: Market Analysis and Forecast through 2008.

"RFID is going to help the market," says Banker. "But it's not a big boost."

He adds that the global market for core warehouse management systems actually shrank by 3% in 2003. Going forward, Banker and ARC forecast a WMS market that will grow at about 1.3% a year without RFID, based on historical trends.

Factor in sales of middleware that allow users to encode and apply RFID tags to comply with mandates from Wal-Mart, the Department of Defense, and others, and the market grows at 2.7% a year. That's better than 1.3%, but still just keeping pace with inflation.

Why such a limited kick from a technology that is so much in the news? "In the short term, people will try to become compliant as cheaply as possible," Banker says. "That's going to be a warehouse activity and the advantage goes to WMS."

Longer term, Banker believes that the real benefit from RFID will come by moving the tagging and collection activities back into the manufacturing process, and sharing that information across the enterprise. "As soon as you move away from the warehouse, the advantage goes to other systems, like the ERP players," says Banker.