A system of recording transactions via a peer-to-peer network, blockchain is gaining momentum among companies that are trying to figure out exactly what the technology is, how it works, and how it will ultimately impact the way they do business.
In its new “Breaking blockchain open” survey, Deloitte helps companies address those questions while also clearing up some of the confusion surrounding blockchain, which the research firm says is “really just a sophisticated ledger system.”
More specifically, blockchain is a versatile technology that can record financial transactions; store medical records; or even track the flow of goods, information, and payments through the supply chain. The latter is particularly relevant for buyers who are increasingly being tasked with driving waste and cost out of the supply chain as part of their procurement duties.
Not Living Up to Expectations
For now, at least, many of the companies Deloitte surveyed think that blockchain is overhyped and not living up to expectations. Globally 39% feel it’s overhyped, and nationally that number rises to 44% (up from 34% in a 2016 Deloitte survey).
“This perception may be driven by the steep increase in token values over the last 18 months, and survey members conflating blockchain with the incentive layer of public blockchains, namely tokens,” Deloitte reasons, noting that these “fits and starts” aren’t surprising in light of blockchain’s newness.
“While executives in the financial services sector, for example, are leading the way in using blockchain to reexamine processes and functions that have remained static for decades,” Deloitte states in its report, “their counterparts in other sectors remain more reserved as they work to develop appropriate use cases for blockchain.”
Even so, 74% of the companies that Deloitte surveyed do see a compelling business case for the use of blockchain technology. Still, just 34% are actually making moves in that direction. And while more than 41% of respondents say they expect their organizations to bring blockchain into production within the next year, 21% of global respondents (and 30% of U.S. respondents) say they still lack a compelling application to justify its implementation.
No Shame in Trying
For those organizations that do jump into the blockchain pool, Deloitte says “it’s important to note that there’s no shame or harm [in] getting out again if they’re not seeing the results they want.” While 78% of the companies surveyed believe they stand to lose competitive advantage if they do not eventually implement blockchain, they also see a variety of obstacles moving forward. For example, 33% believe their current return on investment (ROI) in blockchain technology remains “uncertain.”
“Even without a completely solid business case to implement, we believe that organizations should, at the very least, keep an eye on blockchain,” Deloitte concludes, “so that they can take advantage of opportunities when they present themselves.”
Growing in Spite of Itself
Despite companies’ reluctance to dive into the blockchain pool, experts see real potential for the technology. Focused on the value of technology innovation (versus the dollars spent on it), Gartner predicts that the business value-add of blockchain will grow to $176 billion by 2025 and that it will exceed $3.1 trillion by 2030.
“In 2019, the usefulness of AI, IoT, and blockchain technologies in the supply chain will move beyond hype,” OpenTexts’s Mark Morley writes in “Three Ways Blockchain, AI and IoT will Create Real Change in 2019.” “We should witness a surge in use cases across small- and large-scale applications and a wide range of industries within both the public and private sector.”
Morley points out that new standards will evolve for how supply chain-related information should be archived within a blockchain environment. Standards bodies such as GS1 (the governing body for industry standards such as the barcode), are “likely to introduce new blockchain related standards in 2019 to help accelerate the deployment of blockchain environments across global supply chains,” Morley writes.
“With standards in place, we’ll see companies implementing blockchain technology in the supply chain and starting to participate in multiple blockchains when it comes to shipping and logistics across regions,” he adds. “This will lead to greater efficiency and allow for a more secure and transparent way of tracking shipments and associated transactions.”