The business value added by mature blockchain platforms will grow significantly in the next few years, from just over $176 billion by 2025 to $3.1 trillion by 2030, according to a Gartner forecast. But for now, enterprises struggle to understand what benefits they’ll see compared with their company’s existing processes.
The lack of industry agreement about product concept, feature set, and core application requirements adds to companies’ hesitancy to adopt blockchain platforms. Vendors aren’t speaking to target buyers’ use cases, and they’re not explaining the business outcomes companies can expect, according to the Gartner report How to Position Blockchain Platforms to Increase Adoption. Instead, they focus on the technical features of blockchain-enabling technology. The words “transactions”, “secure”, and “security” appear the most often in vendor communications about blockchain, the report says.
“Poor vendor messaging just creates confusion with buyers,” said Adrian Lee, Gartner senior director and co-author of the blockchain report. “Vendors need to clearly articulate what’s most critical.” CFOs want to understand how blockchain platforms help to increase revenue, optimise costs, and manage risks, he said.
IBM, Salesforce, SAP, and Oracle are among the first wave of big-name blockchain vendors and professional service providers. But Gartner doesn’t expect that a single blockchain platform will come to dominate the landscape within the next five years. Rather, it will be a multiplatform world. By 2021, 90% of current blockchain implementations will require replacement if a company is to avoid obsolescence and remain competitive and secure, the research firm says.
Companies will need to be able to fluidly adapt to the speed of change in the shifting blockchain market. That includes being prepared for the possibility that they’ll be replacing their platforms more than once. In the report Lee advises product managers to get ready for rapid evolution, a changing competitive landscape, future consolidation of offerings, and the potential failure of early-stage technologies.
Successfully navigating through all of this change will take a shift in corporate mindset for businesses that are used to running big enterprise resource planning systems for a decade or more before replacing them. “A Hyperledger platform might meet your requirements today, but in another year or two you might want to switch to Corda or another platform that will be better at what you need to do,” said John Riley, founder and CEO at CNC Blockchain Advisory, a US consulting and advisory company.
It’s easy to overestimate the capabilities and short-term benefits of blockchain as a technology to help organisations achieve their business goals, Gartner says. Companies shouldn’t have unrealistic expectations when assessing offerings from blockchain platform vendors and service providers. It will take time to realise value, said Riley, pointing to Walmart as an example. The retail powerhouse began testing its IBM Food Trust blockchain platform in 2017 to trace fresh food through the supply chain, and it’s only now that it’s requiring that suppliers of fresh greens and their own business partners join a blockchain platform.
Enterprises also should be aware that enterprise blockchain platforms may not be mature enough for on-premise deployments in large-scale enterprises. Enterprise blockchain architect Biser Dimitrov wrote in a recent Forbes article that improvements are generally needed in platform, interface, infrastructure and network, and security and analytics features for companies to fully benefit from decentralised ledger technology. Blockchain also is conflated with cryptocurrencies such as bitcoin and ethereum, but most enterprise blockchain implementations don’t require any associated cryptocurrency.
Business leaders in the corporate financial function should collaborate with senior IT executives to jointly review the capabilities and limitations of blockchain-enabling technologies and potential adoption benefits and pitfalls, said Adrian Leow, a Gartner senior director who co-authored the blockchain report with Lee. “IT leaders are better placed to assess the current status of emerging technologies, such as blockchain, to provide the required guidance on what components, vendors, and architectures are best suited to specific use cases of various business domains,” Leow said.
— Jennifer Zaino is a freelance writer based in the US. To comment on this article or to suggest an idea for another article, contact Drew Adamek, an FM magazine senior editor, at Andrew.Adamek@aicpa-cima.com.