Blockchain: Enterprises moving past the Hype

Deloitte published their 2019 Global Blockchain Survey earlier this month, which indicated positive progress towards enterprise blockchain adoption beyond the hype of it all.

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Deloitte published their 2019 Global Blockchain Survey earlier this month.

According to Deloitte, the report was published based on results collected from a survey of 1,386 senior executives across a dozen countries, at companies with more than US$500m in annual revenue for US respondents, as well as more than US$100m in annual revenue for respondents outside of the US. These respondents mostly had a broad understanding of blockchain and were familiar with and able to comment on their organisation’s investment plans.

Here are some highlights from the Deloitte report

  • As compared to 2018, more respondents surveyed have indicated that blockchain is critical and one of their top 5 strategic priorities
    • 53% surveyed indicated so as compared to 43% last year
    • 6% collectively indicated that they have not reached a conclusion about or that the technology will was irrelevant, as compared to 8% last year
  • With the increasing diversification of blockchain use cases seen over the past years, more executives surveyed are also seeing more compelling use cases on blockchain, and are less skeptical of its viability as a technology
    • 86% surveyed, as compared to 84% last year, believed that the technology is broadly scalable and will eventually achieve mainstream adoption
    • 83% surveyed, as compared to 74% last year, believed there is a compelling business case for blockchain technology
    • Also, interestingly, while 77% believed that they will lose their competitive advantage if they do not adopt blockchain (up from 68% last year), there was a drop in those who believed in how disruptive the technology is (56%, down from 59% last year), and an increase in those that saw blockchain as a hype  (43%, up from 39% last year)
  • Despite the optimism, the fact is that not many have increased or improved the deployment of the technology  
    • Only 23% have already initiated a blockchain deployment, down from 34%
  • The top issues corporations are grappling with are, in order of magnitude: replacement of legacy systems (30%), regulatory issues (30%), potential security threats (29%), lack of in-house skills and understanding (28%), uncertain ROI (28%), and concerns over sensitivity of competitive information   
  • In addition, when it comes to blockchain, most organisations surveyed were also in at least one consortium
    • This was mainly due to the potential cost benefits, accelerated learning, and risk-sharing they can experience, despite the challenges that need to be overcome. This includes, but is not limited to, alignment to the goals of the consortia, the participation and governance structure, IP, risks, and voting issues.
  • Overall, the report concludes that blockchain, as a technology, is moving towards the traditional path of maturation and beyond the hype
    • Enterprises are willing to explore and adopt blockchain based on better understanding of the technology and its use cases, and are now moving towards asking the pragmatic understanding on how to implement it in their businesses

The results from this survey saw similar sentiment with KPMG’s 2019 Technology Industry Innovation Survey  published in February this year.

In a survey with over 740 global leaders in the tech industry, more than 40% indicated that they were likely to implement blockchain technology in the next 3 years, with close to half agreeing that the technology will change the way their company does business in the near future. Interestingly, the biggest challenges the executives surveyed saw in as a hurdle to enterprise adoption of blockchain was that of an unproven business case (24%), its technology complexity (14%), and a lack of capital to fund new investments (12%).  

Blockchain seeing greater acceptance and adoption

Indeed, aside from these reports, we can observe a lot more big corporations wading into the deeper ends of blockchain, whether in investments or adoption, this year.

According to International Data Corp, the total corporate and government spending on blockchain should hit $2.9 billion this year. This represents an increase of 89% over the previous year, and it is expected to reach $12.4 billion by 2022. More encouragingly, Forbes also released a list of 50 companies valued over a billion dollars that are utilising blockchain technology, going beyond the usual tech companies and financial services, and extending into other industries like oil and gas, consumer retail, and healthcare. A new report by the World Economic Forum published in April shows that more than 40 central banks worldwide are experimenting with blockchain technology.

The overwhelming increase in headline cases we have seen over the past recent months, is despite the crypto winter that we have just observed in 2018, during which the majority of the cryptocurrencies lost a significant portion of their market valuation. This suggests and supports the observation of a shift in mindset by corporations to separate the identity of blockchain as an underlying technology, from cryptocurrency, which boom initially helped to raise the profile of the entire ecosystem in the first place.

While it is ironic that blockchain as a technology was developed and arose as a defiance to the traditional system and incumbent behemoths, it cannot be denied that enterprise adoption of blockchain would be key to further driving the mass adoption of blockchain technology.